SUBORNO BOSE versus ENFORCEMENT DIRECTORATE & ANR.

Citation: [2020] 4 S.C.R. 60 · Decided: 05-03-2020 · Supreme Court of India · Bench: A.M. KHANWILKAR · Disposal: Dismissed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2020] 4 S.C.R.
[2020] 4 S.C.R. 60
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SUBORNO BOSE
v.
ENFORCEMENT DIRECTORATE & ANR.
(Civil Appeal No. 6267 of 2020)
MARCH 05, 2020
[A. M. KHANWILKAR AND DINESH MAHESHWARI, JJ.]
Foreign Exchange Management Act, 1999 – ss.10(6), 16(3),
46 & 47; Proviso to s.42(1) – Adjudicating authority held that the
appellant-Managing Director of the Company and the Company
had violated s.10(6) r/w ss.46, 47 and paragraphs A-10 and A-11
(Current Account Transaction) of the Foreign Exchange Manual
2003-04 – Appeal before Special Director (Appeals), FEMA &
Commissioner of Income-Tax, Delhi was dismissed – Appeal before
High Court – Dismissed – Held: s.10(6) is a deeming provision
pointing towards specified circumstances, which would result in
having committed contravention of the provisions of the FEMA Act
or for the purpose of the stated Section – In the present case, the
finding of fact was that the import of goods for which the foreign
exchange was procured and remitted was not completed as the Bill
of Entry remained to be submitted and the goods were kept in the
bonded warehouse and the Company took no steps to clear the
same – s.10(6) is clearly attracted being a case of not using the
procured foreign exchange for completing the import procedure –
Contravention referred to in s.10(6) is a continuing actionable
offence– Once it is held that the contravention is a continuing
offence, the fact that the appellant was not looking after the affairs
of the Company in 2000 (the year of contravention) would be of no
avail to the appellant until corrective steps were taken in right earnest
after his taking over the management of the Company (in terms of
MoU dtd. 22.10.01) and in particular after becoming aware about
the contraventions – No error committed by the adjudicating
authority in finding that the appellant was also liable to be proceeded
with for the contravention by the Company of which he became the
Managing Director and for penalty therefor as prescribed for the
contravention – First appellate authority and the High Court justly
affirmed the said view – Foreign Exchange Management
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(Realisation, Repatriation and Surrender of Foreign Exchange)
Regulations, 2000 – Regulation 6.
Foreign Exchange Management Act, 1999 – Proviso to
s.42(1) – Benefit under – When can be availed – Discussed.
Dismissing the appeal, the Court
HELD: 1.1 Section 10(6) of the Foreign Exchange
Management Act, 1999 is a deeming provision pointing towards
the specified circumstances, which would result in having
committed contravention of the provisions of the FEMA Act or
for the purpose of the stated Section. The specified circumstances
are (i) when a person acquires or purchases foreign exchange for
any purpose mentioned in the declaration made by him to
authorised person does not use it for such purpose; (ii) that
person does not surrender the acquired or purchased foreign
exchange to authorised person within the specified period, and
(iii) the person uses the acquired or purchased foreign exchange
for any other purpose for which purchase or acquisition of foreign
exchange is not permissible under the provisions of the FEMA
Act or the rules or regulations or direction or order made
thereunder. Each of these are standalone circumstances. In the
present case, the finding of fact is that the import of goods for
which the foreign exchange was procured and remitted was not
completed as the Bill of Entry remained to be submitted and the
goods were kept in the bonded warehouse and the Company took
no steps to clear the same. As a result, Section 10(6) of the FEMA
Act is clearly attracted being a case of not using the procured
foreign exchange for completing the import procedure. [Paras 9,
10][72-E-H; 73-A]
1.2 The High Court opined that the contravention referred
to in Section 10(6) by its very nature is a continuing offence. That
view is agreed with. The penalty provided for such contravention
is on account of civil obligation under the FEMA Act or the rules
or regulations or direction or order made thereunder. If the
delinquency is a civil obligation, the defaulter is obligated to make
efforts by payment of the penalty imposed for such contravention.
So long as the imported goods remained uncleared and obligation
provided under the rules and regulations to submit Bill of Entry
SUBORNO BOSE v. ENFORCEMENT DIRECTORATE
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[2020] 4 S.C.R.
was not discharged, the contraven

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