K.J. IN THE HIGH COURT OF JUDICATRE AT BOMBAY CIVIL APPELLATE JURISDICTION (1) FERA APPEAL NO.8 OF 2008 (1) FERA APPEAL NO.8 OF 2008 (1) FERA APPEAL NO.8 OF 2008 Telstar Travels Private Limited ) a company incorporated under the ) Companies Act, 1956, having its ) registered office at Mistry Court ) 208, Dinshaw Vachha Road, ) Mumbai- 400 020 )..Appellant Versus Special Director, Enforcement ) Directorate, Mumbai )..Respondents ---- (2) FERA APPEAL NO.9 OF 2008 (2) FERA APPEAL NO.9 OF 2008 (2) FERA APPEAL NO.9 OF 2008 Shri Arun N.Desai, Managing ) Director of M/s.TELSTAR Travels ) Private Limited, a Company ) incorporated under the Companies ) Act, 1956, having its registered ) office at Mistry Court 208, ) Dinshaw Vachha Road, Mumbai-20 )..Appellant Versus Special Director, Enforcement ) Directorate, Mumbai )..Respondents ---- (3) FERA APPEAL NO.10 OF 2008 (3) FERA APPEAL NO.10 OF 2008 (3) FERA APPEAL NO.10 OF 2008 Shri Sujeet A.Desai, Age-42, ) Director of M/s.TELSTAR Travels ) Private Limited, a Company incorp-) orated under the Companies Act-1956) having its registered office at ) Mistry Court 208, Dinshaw Vachha ) Road, Mumbai-400 020 )..Appellant Versus Special Director, Enforcement ) Directorate, Mumbai )..Respondents ---- : 2 : (4) FERA APPEAL NO.11 OF 2008 (4) FERA APPEAL NO.11 OF 2008 (4) FERA APPEAL NO.11 OF 2008 Shri Rajesh A. Desai, Director of ) M/s.TELSTAR Travels Private Limited) a Company incorporated under the ) Companies Act, 1956, having its ) registered office at Mistry Court ) 208, Dinshaw Vachha Road, ) Mumbai-400 020. )..Appellant Versus Special Director, Enforcement ) Directorate, Mumbai )..Respondents ---- Mr.Vikram Nankani with Madhur R.Baya for the appellants. Smt.N.V.Masurkar with Shri S.M.Shah with H.P.chaturvedi for the respondents in FERA 8/2008. Smr.S.V.Bharucha with M.I.Sethna with H.P.Chaturvedi for respondents in FERA 9/2008 to 11/2008. ---- Coram : F.I.Rebello & R.S.Mohite,JJ Coram : F.I.Rebello & R.S.Mohite,JJ Coram : F.I.Rebello & R.S.Mohite,JJ Date : 14.03.2008. Judgment :- ( Per : R.S.Mohite,J) Judgment :- ( Per : R.S.Mohite,J) Judgment :- ( Per : R.S.Mohite,J) 1. All the aforesaid appeals impugned a common judgment and order dated 28.11.2007 passed by the Appellate Tribunal for Foreign Exchange, New Delhi in four separate appeals filed by the four appellants before us. By the impugned judgment and order, the Appellate Tribunal for Foreign Exchange, partly allowed the appeals and modified an adjudication order dated 12.3.2001 passed by the Dy. Director, Directorate of Enforcement, Mumbai. By his order dated 12.3.2001 the Dy. Director, : 3 : Directorate of Enforcement, Mumbai had found that the appellants had contravened the provisions of Sections 14 & 8 (1) of the Foreign Exchange Regulations Act 1973. On such finding, he had imposed the following penalties :- (a) On M/s.Telstar Travels (P) Ltd., Mumbai : Rs.90,00,000 (Rupees Ninety Lakhs only) for contravention of Section 14 of FERA and a further amount of Rs.85,00,000/- for contravention of Section 8(1) of FERA ; (b) On Shri Arun N.Desai, Managing Director : An amount of Rs.20,00,000/- (Rupees Twenty Lakhs only) (c) On Shri Rajesh Desai : An amount of Rs.20,00,000/- (Rupees Twenty Lakhs only) ; (d) On Shri Sujeet Desai : An amount of Rs.20,00,000/- (Rupees Twenty Lakhs only). . The Appellate Tribunal, while upholding the charges and the finding relating to contravention of Section 14 and 8(1) of FERA, reduced the penalty amount by 50%. A common appellate judgment and order has thus being challenged by the appellants in these four appeals. 2. We have heard both the sides and perused the : 4 : record. The relevant facts which gave rise to the adjudication were as follows :- (a) The appellant in FERA Appeal 8 of 2008 M/s.Telstar Travels Pvt.Ltd., were inter alia travel agents conducting a ticketing business. Their major business was the booking of tickets for crew members working in ships. A request for booking a ticket was usually received by the company from a local shipping agent. Till about 1993, the local shipping agent used to produce the Foreign Inward Remittance Certificate which was endorsed and forwarded to the Airline authority for issuing the tickets. Since 1993, however, the fares of airlines in India had become expensive and hence the shipping companies started booking the air tickets abroad. In such circumstances, the appellants deviced a modus operandi for purchasing air tickets abroad and supplying the same to their foreign clients. (b) The appellant in FERA 11 of 2008 Mr.Rajesh Desai who was the son of Mr.Arun M.Desai, the Managing Director of M/s.Telstar Travels Pvt.Ltd., entered into an agreement with a foreign travel agent by name M/s.Clyde Travel Ltd., of Glasgow. An account bearing A/c.No.10975 was opened in the name of the company registered in the British Virgin Islands Ltd., by name "M/s.Bountiful Ltd.," with Banque De Financement at Geneva, Switzerland. It was the case : 5 : of the authorities that the company M/s.Bountiful Ltd., was however, only a company on paper and the Geneva account of this Company was being operated by a person by name Mr. Shirish Shah, who was a Chartered Accountant operating from London and the said Mr.Shirish Shah was operating the account of M/s.Bountiful Ltd., only on instructions of Mr.Rajesh Shah. (c) That on receipt of a request for a ticket made by the local shipping agents of the Foreign Shipping Company, a PTA was sent to the airlines by M/s.Clyde Travels Ltd., who paid for the ticket. M/s.Clyde Travels however, was paid adhoc amounts from time to time from the account maintained by M/s.Bountiful Ltd., This was done on instructions given to the Chartered Accountant Mr.Shirish Shah by Mr.Rajesh Desai, purporting to act as an Executive Director of M/s.Telstar Private Limited. It was further the case of the FERA authorities that the foreign account was nothing but an account, illegally operated, maintained and run by M/s.Telstar Private Limited and operated on the instructions of the appellants. It was their contention that Mr.Arun Desai was the Managing Director of M/s.Telstar Pvt.Ltd., right from 1976 onwards. In his statement he had admitted that his two sons i.e. the appellant Sujeet Desai and Rajesh Desai were authorised by him to run the business of the company : 6 : and to operate the bank account of the company. That they were projecting themselves as Executive Directors of M/s.Telstar Private Limited. (d) In reply to the Show Cause Notice which was issued to them, the contention of the appellants was that M/s.Bountiful Ltd., was not a company on paper. That the Chartered Accountant Mr.Shirish Shah from London was a person known to M/s.Clyde Travels as well as Rajesh Desai. That under an agreement dated 1.8.1994, Telstar would inform Clyde about prospective passengers travelling from India to Overseas and back. In consideration of Telstar’s recommending such passengers to Clyde, Telstar was only entitled to be paid commission of about 3% on a quarterly basis alongwith a statement of ticket issued by Clyde. Clyde would normally sent invoices directly to the Indian clients but having regard to the voluminous nature of the invoices, quite often Clyde or its associate Bountiful Ltd., would forward the invoices to Telstar with a request for their onward transmission to their Indian clients. 3. We have perused the entire record. We find that there is a concurrent findings of fact to the effect that the Geneva bank account standing in the name of Bountiful Ltd., was being operated on the directions of one of the appellant Mr.Rajesh Desai acting on behalf of M/s.Telstar. This finding of fact is : 7 : based upon voluminous material collected at the stage of investigation. While arriving at the finding of guilt, reliance was placed on the statements of Mr.Arun Desai dated 24.8.1995, 25.8.1995 and 6.2.1996. These statements were obtained mainly to seek an explanation in relation to the documents seized vide panchanama dated 14.4.1995. Reliance was also placed on the statements of the appellant Rajesh Desai recorded on 24.8.1995 and 25.8.1995. The statement of Sujeet Desai was also recorded on 24.8.1995 and 25.8.1995. Out of the aforesaid statements, the statement made by Arun Desai was not retracted till the stage of giving the reply to the Show Cause Notice. It is the concurrent findings of the two lower authorities that these statements were not obtained under coercion. These statements recorded under Section 40 of FERA confirmed the correctness of the departments’ allegation. It is also the finding that these statements stood corroborated by other evidence such as statement of Ms.Anita Chotrani, Travel Coordinator of one of the Indian agent of foreign shipping company and the statement of Mr.Deepak Raut, Director of M/s.Arvan Shipping Private Limited which was also an Indian agent of an overseas shipping company. The other materials, held to be corraborative are documents seized from the office of M/s.Telstar and the residential premises of its Managing Director Shri Arun Desai in : 8 : the course of a search under Section 37 of FERA. Indian currency of Rs.7,46,000/- was also seized in the course of this search. The Appellate Tribunal has observed that amongst the documents seized, were the invoices of Bountiful Ltd., which contained directions of M/s.Telstar to credit the amount of bill to account no.10975 of M/s.Bountiful Ltd., of Geneva and documents which reveals that several air tickets were also billed in these Bountiful invoices and payments of these tickets have been directed to be credited to the aforesaid Geneva account. The Appellate Tribunal has also placed reliance upon an enquiry report dated 15.1.1997 given by an officer of the Indian High Commission at London reporting on enquiry that Mr.Livinston, Managing Director of Clyde Travels Limited did not know Mr.Shirish Shah. 4. Considering all the aforesaid material, we feel that there is no question of law involved in these appeals. On the facts, the case has been decided on the basis of voluminous material available and it is not possible to draw an inference that the findings are perverse. We find that a substantial deduction of penalties has been effected by the Appellate Tribunal. In our opinion, this is not a fit case for interference and hence the aforesaid appeals are summarily dismissed. : 9 : (R.S.Mohite,J) (F.I.Rebello,J) (R.S.Mohite,J) (F.I.Rebello,J) (R.S.Mohite,J) (F.I.Rebello,J)