HC dismisses frivolous writ plea filed by directors against the issue of SCN for unauthorized dealing in forex

Case Details: Nataraj Dakshinamurthy v. Special Director, Directorate of Enforcement, Chennai - [2021] 133 taxmann.com 68 (Karnataka)

Judiciary and Counsel Details

• • Krishna S. Dixit, J.
  • Raghavan, Sr. Counsel and Raghuram Cadambi, Adv. for the Petitioner. 
  • M.B. Naragunda, ASG and Unnikrishnan M., CGSC for the Respondent.

Facts of the Case

In the instant case, a show-cause notice alleging violation of sections 3(b), 5, 6(2)(a), and 10(6) of the Foreign Exchange Management Act, 1999 was served on company ‘D’ and its directors including the petitioner. The Petitioners filed an instant writ alleging that impugned notice lacked in minimum material facts and thus, petitioners were put in a disadvantageous position of not being able to reply to same.

High Court Held

The High Court found that impugned notice gave sufficient particulars making out a specific case which petitioners were asked to meet. It was further noted that the impugned notice mentioned about petitioners being persons in-charge of and responsible for the conduct of the business of notice company during the relevant period; it mentioned their consent, connivance, and neglect; it specified a sum of Rs. 180 lakhs as being equivalent of foreign exchange that was tainted because of the alleged violation. The High Court held that instant writ petition being devoid of merit and was liable to be dismissed and petitioners were to be granted a period of four weeks for submitting their reply to the subject notice.

List of Cases Referred to

• • Walter Annamunthodo v. Oil Fields Workers Trade Union 1961 AC 945 (PC) (para 5)
  • K.K. Ahuja v. V.K. Vora [2009] 94 SCL 140 (SC) (para 5)
  • Shylendra Swarup v. Dy. Director Enforcement Directorate 2020 SCC Online SC 600 (para 5)
  • S.N. Sinha v. State of Karnataka ILR 2012 Kar. 448 (para 5)
  • S.N. Bangur v. Klen & Marshalls Mfrs. & Exports (P.) Ltd. [2002] 3 CTC 342 (Mad.) (para 5).