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Shailendra Swarup V/s Enforcement Directorate, The Deputy

Facts of the Case

This appeal has been filed before the Honorable Supreme Court pursuing to the order passed by the Honorable High Court of Delhi dismissing the appeal filed by the appellant wherein the order passed by the Appellate Tribunal of Foreign Exchange Regulation  Act, 1973 was challenged before it.  The appellant herein though in the individual capacity but is the company registered under the Companies Act, 1956, the said company was registered and commenced its business from the year 1983. The business expansion policy of the company was successful, and so it observed lot transactions in the year 1985, there were as reported 20 remittances from the period the 12th of June to 21st November, 1985 through Standard Chartered Bank which served the company in its banking transaction. In the following matter the issue then came from the Reserve bank of India that said that the company though after various intimations and reminder did not send by any modes of communication document needed to verify such import of commodities by the company that documents despite many reminders from the Authorized Dealer was failed to receive such documents, the company was required to submit the exchange control copy of the customs bill of entry and/or postal wrappers as evidence for import of such goods in India.

The Enforcement Directorate as the controlling authority wrote via various modes of communication to the company from the year 1991 to 1993 from such document with respect to purchase and sale orders. The Company on 9th of July, 1993 submitted the document related to four transactions to the authority and submitted the certificated of Chartered Accountants for all the other 16 transactions that was questioned and stated that due to such old record and unorganized administration the company could not trace back the records. The company later in the year 2000 on the date of 10th January amalgamated and merged to form the Xerox Modicorp Ltd. The Deputy Director from the Enforcement Directorate sends show-cause notice to the company and the directors of the company regarding the non-compliance on the 19th February 2001. The Deputy Director sent a show-cause notice required the appellant that to show cause that why there should not exist the proceeding regarding the violation of section 51 of the Foreign Exchange Regulation Act.

The reply was filed by the successor of the earlier company on the date 26th March, 2001 by filing the letter reply. The Enforcement Directorate under section 51 proceeded to cause the personal hearing and proceeding was continued by the Enforcement Directorate under the provisions of the Foreign Exchange Regulations Act, 1973. The appellant herein filed a submission stating that the appellant is the practising advocate in the Honorable Supreme Court of India and along from now accepted the position as the non-executive director in the company as the position states there exists no executive responsibility into day to day functions of the company.

The appellant further submitted that he was not in the company’s employment, so there exists no liability pertaining to the employment of the company. The appellant herein submitted the affidavit signed and dated by the company secretary of the company stating with clear reason that such appellant herein was a part-time non-executive director and has no role to play in the functions of the company and such person has no responsibility of any decision taken by or for the company. As the company was required to file the submission in a way as a reply the same was done by the company on the date of 29th October 2003.  The matter after the due personal hearing and the proceeding the decree passed understanding the matter with the laws in force charged the appellant to the fine of INR 1, 00, 000/- and dismissed the proceeding. The appellant therein then filed the appeal before the appellate tribunal of the Foreign Exchange Regulation Act whereby the order was challenged. As after the due submission of the proceeding before the Enforcement Directorate, the appeal was dismissed and the same by way of criminal appeal in the Honorable High Court of Delhi.

Issues of the Case

  1. Whether the non-executive director bears any liability with regards to any executive function of the company?
  2. Whether the charges are appropriate against the appellant?
  3. Whether such dismissal by the appellate authority valid?
  4. Whether the dismissal by the Honorable High Court is valid?


The Honorable Supreme Court after hearing the learned counsels representing both the parties in the matter above and considering the facts and the precedents submitted established by the Honorable Judges to support the prayers and pleadings of the parties in the matter above states its observation herein that it is important to understand as in the other law as it is important for any person to be charged with the criminal appeal is important to follow the process under the law and another requirement in compliance with the principle of natural of justice. As in section 50 of the Foreign Exchange Regulation Act, 1973 it s the duty of the adjudicating authority should follow the due course of the law by establishing a proper proceeding of the matter and the appellant should be given an equal opportunity of being heard as the section contemplates that any communication of any allegation against a person should be completed in its all aspects mentioned in the section and a complaint and/or allegation is compliant only when such complaint is complete in all its aspects, and the due process of the law can be contemplated as complete. The Honorable Court further in the above matter notice that it was dismissed and discharged against the appellant, the notice that was sent stating the brief rationale about the working and functions of the appellant. The adjudicating officer after hearing the appellant has no reason for filing such decree charging appellant with any penalty as such explanation due considerable to understand the matter and no such penalty exists under the law with regard to this situation the Court decide the penalty imposed on the appellant in complete error and has no basis.

The appeal filed with the Court is allowed, and any decree or decision of any other court or authority stands to have no effect and is set aside.