2017 (11) TMI 618

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....received the Show Cause Notice, being No. T-4/21M/97(SC-II) dated 25.09.1997 (hereinafter referred to as "the Show Cause Notice") from the Directorate of Enforcement, New Delhi. The Appellant was called upon to show cause as to why adjudication proceedings, as contemplated under Section 18(2) & 18(3) read with Section 68(1) & 68(2) of the Foreign Exchange Management Act, 1973 (hereinafter referred to as "the FERA"). 3. The Appellant had lastly worked in the State Bank of Hyderabad in the Managerial capacity. He voluntarily left the employment around twenty years ago due to his health condition and has been working as a Consultant in the financial area to various clients on referral basis. 4. One MVR group attached the Appellant and as....

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....f companies. 8. The Appellant was a Director for a short period from March to October 1996, during which no transaction took place. The Appellant in his letter dated 27.03.1996 to the Managing Director immediately after joining as Director, whether the company was involved in any violation under FERA, or any deviation from the Exchange Control prevailing now or at any time in the past; to which the company did not response to that. He by letter dated 05.10.1996, the Appellant resigned from his Directorship as no single Board meeting was convened since the time of his joining; coupled with his ill health. 9. It was stated by the Appellant, when he was called for rendered his full and honest co-operation to the Officers of the Responden....

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....;s position is much better; for the Appellant did exercise his due diligence by seeking and checking for pending FERA cases no sooner he assumed as a Director. 12. It is a matter of fact that it is the Noticee No. 14 i.e., Shri S. Srinivas Ragahavan who signed the response dated 30.03.1996 (Annexure A-2 supra) in the capacity of Director of Maxwell Exim Foods Ltd. Denying any pending FERA violation. 13. While the Adjudicating Authority chose to exonerate in precedence to Noticee No. 14. 14. The Appellant admittedly resigned on not holding any Board meetings. All these circumstances established that the Appellant has acted cautiously and legitimately within the parameters of the law, as was expected of a prudent law abiding citizen.....

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....tions committed by the persons in charge of MVR Group of companies. The Appellant was neither part of the management managing the affairs of the MVR group of companies nor was he in any way concerned with the company. This fact has been clearly acknowledged by the Adjudicating Authority while passing the impugned order. Yet the Adjudicating Authority chooses to impose the penalty on the Appellant. Having found nothing against the Appellant, the Adjudicating Authority ought not to have imposed the penalty. 20. In the impugned order the Adjudicating Authority found nothing against the Appellant, however, the Special Director observes erroneously that the Appellant ought to have exercised due diligence in knowing the details of the company ....