High Court rejects Modis' petition in foreign exchange case

The Delhi High Court has dismissed a petition filed by Modi Rubber and its two directors V K Modi and B K Modi challenging the order of a tribunal referring a case of alleged foreign exchange irregularities to the authorities for fresh consideration.

The Delhi High Court has dismissed a petition filed by Modi Rubber and its two directors V K Modi and B K Modi challenging the order of a tribunal referring a case of alleged foreign exchange irregularities to the authorities for fresh consideration.

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The Appellate Tribunal Foreign Exchange (ATFE) had, while setting aside the Enforcement Directorate order of slapping a fine Rs one crore on the company and Rs 5 lakh each on directors, directed the authorities to reconsider the case.

The company and its directors approached the High Court contending that the tribunal cannot refer the matter back to the department and it should decide their appeal on merit.

Rejecting their petition, Justice Kailash Gambhir of the High Court held that the ATFE was right and it could remand back a matter for a proper and effective decision.

"Power to remand is an important postulate to any authority exercising appellate jurisdiction and such power of the appellate authority is a necessary commitment of the powers of the appellate authority to do complete justice," he said.

The court also rejected their contention that their cases should be governed by the old act FERA and not by FEMA. FERA was repealed and FEMA was brought in.

"... (The) argument of the appellants that the appeal would be governed by the old act is misplaced," said the court, observing that Section 49(1) of FEMA clearly states that all FERA cases would be transferred to the new tribunal.

In 2004, the authorities had slapped a penalty on the company and two directors -- V K Modi and B K Modi -- after their alleged failure in furnishing proof of foreign exchange, and copies of the bill of entries.