Directors found liable for penalties despite claiming innocence, ordered to pay Rs.10,000 each.

The tribunal found two applicants, who were directors of a company, liable for penalties imposed by authorities. Despite claims of being dummy directors, the tribunal held them responsible. They were directed to deposit Rs.10,000 each, leading to a waiver of the balance penalty upon compliance. The judgment underscores directors' obligations and liability for company actions, emphasizing the importance of fulfilling responsibilities to avoid legal consequences such as financial penalties.

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Issues:
Waiver of pre-deposit of penalty for two applicants arising from a common order.

Analysis:
The judgment pertains to two applicants who filed applications for the waiver of pre-deposit of penalty of Rs.1 lakh each. The applicants are directors of a company engaged in importing food supplements and selling them in retail packs. The adjudicating authority confirmed the duty demand, interest, and penalty on the company, as well as imposed penalties on the applicants and the General Manager. The main contention raised was that the applicants were dummy directors of the company, with one being a driver and the other being the wife of a director. The General Manager claimed to be the real owner of the company. The tribunal found that the applicants were directors of the company on record, holding them liable for the penalty. As a result, the tribunal directed both applicants to deposit Rs.10,000 each within six weeks. Upon compliance with this directive, the pre-deposit of the balance penalty on both applicants was waived, and the recovery of the penalty was stayed pending the appeal process. The judgment was dictated and pronounced in open court by one of the judges.

This judgment highlights the importance of the role of directors in a company and their liability for penalties imposed by the authorities. The tribunal considered the submissions from both sides and concluded that the applicants, being directors on record, were responsible for the penalty. The argument that they were dummy directors was not accepted, especially in light of the General Manager's claim to be the real owner of the company. The tribunal's decision to waive the pre-deposit of the balance penalty upon the deposit of Rs.10,000 by each applicant demonstrates a balanced approach to ensuring compliance while providing relief to the appellants during the appeal process. The judgment emphasizes the need for directors to fulfill their obligations and responsibilities within a company, as their actions can have legal consequences, including financial penalties.

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