# 14 (ADDL.) S.C.R. 1204 KETAN V. PAREKH v. SPECIAL DIRECTOR, DIRECTORATE OF ENFORCEMENT AND ANOTHER

- **Citation:** [2011] 14 S.C.R. 1204
- **Court:** Supreme Court of India
- **Decided:** 2011-11-29
- **Case number:** Civil Appeal No. 10301 of 2011
- **Bench:** G.S. Singhvi, Sudhansu Jyoti Mukhopadhaya
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/14-addl-s-c-r-1204-ketan-v-parekh-v-special-director-directorate-of-enforcement-27374
- **Pages:** 39

## Headnote

C
LIMITATION ACT, 1963: s.14 - Delay in filing appeal -
Condonation of - Imposition of penalty on the appellants for
contravening provisions of FEMA - Appellate tribunal directed
appellants to pay 50% of penalty as pre-condition of hearing
appeal - Writ petition filed before Delhi High Court, dismissed
D as non-maintainable - Appeal filed before Bombay High
Court uls.35 of FEMA against the order of the appellate
tribunal after delay of 1056 days - Bombay High court
declining condonation of delay in filing appeal - Plea of
appellant that Bombay High Court while computing period of
E limitation erred in not taking cognizance of s. 14 and in not
excluding the entire period during which writ petition remained
pending before Delhi High Court - Tenability of - Held: Not
tenable - Existence of good faith is a sine qua non for
invoking s. 14 of the Act - Appellants filed writ petition before
F
wrong forum and came to the forum having jurisdiction to
entertain the appeal after delay of 1056 days and sought
condonation of delay- Delay was rightly held not condonable
since there was no averment in the applications seeking
condonation that they had been prosecuting·remedy before
G a wrong forum, i.e. the Delhi High Court with due diligence
and in good faith - Not only this, the prayer made in the
applications was for condonation of 1056 days' delay and not
for exclusion of the time spent in prosecuting the writ petitions
before the Delhi High Court - This showed that the appellants
KETAN V. PAREKH v. SPECIAL DIRECTOR,
1205
DIRECTORATE OF ENFORCEMENT
were seeking to invoke s. 5 which cannot be pressed into A
service in view of the language of s.35 of the FEMA -
Moreover, appellants were well conversant with various
statutory provisions including FEMA because several civil
and criminal cases were pending against them and they had
engaged a group of eminent Advocates to present their cause
B
before the Delhi and the Bombay High Courts - There was
total absence of good faith, which is sine qua non for invoking
s.14 of the Act - Foreign Exchange Management Act, 1999
- Delay - Condonation of.
Foreign Exchange Management Act, 1999: s.19 - PreC
deposit of penalty -
Dispensation of -
Allegation of
contravention of provisions of the- Act - Appellate Tribunal
directed appellants to deposit 50% of the amount of penalty
as a pre-condition of hearing the appeal - On appeal, held:
The appellants miserably failed to make out a case, which
D
could justify an order by the Appellate Tribunal to relieve them
of the statutory obligation to deposit the amount of penalty -
The appellants had the exclusive knowledge of their financial
condition/status and it was their duty to candidly disclose all
their assets, movable and immovable including those in
E
respect of which orders of attachment may have been passed
by the judicial and quasi judicial forums - However, instead
of coming clean, they tried to paint a gloomy picture about
their financial position, which the Appellate Tribunal rightly
r~fused to accept - Appellants deliberately concealed the
F
facts relat!ng to their financial condition - Therefore, the
Appellate Tribunal did not commit any error by refusing to
entertain their prayer for total exemption.
The Special Director of Enforcement, Mumbai passed
G
an order imposing penalty on the appellants on the
ground of contravention of the provisions of the Foreign
Exchange Management Act, 1999. The appellants
challenged the said order by filing appeals under Section
19 of the Act. They also filed applications under Rule 10
H
1206 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A of the Foreign Exchange Management (Adjudication
Proceedings and Appeal) Rules, 2000 read with Section
19 (1) of the Act for dispensing with the requirement of
deposit of the amount of penalty. The Appellate Tribunal
passed order dated 2.8.2007 and directed the appellants
B to deposit 50% of the amount of penalty as a precondition of hearing the appeal. The appellants filed writ
pet

## Text

_Characters 0–39,919 of 75,531. This is a partial read: ask again with offset=39919 for what follows._

A
B
[2011] 14 (ADDL.) S.C.R. 1204
KETAN V. PAREKH
v.
SPECIAL DIRECTOR, DIRECTORATE OF
ENFORCEMENT AND ANOTHER.
(Civil Appeal No. 10301 of 2011)
NOVEMBER 29, 2011
[G.S. SINGHVI AND SUDHANSU JYOTI
MUKHOPADHAYA, JJ.]
C
LIMITATION ACT, 1963: s.14 - Delay in filing appeal -
Condonation of - Imposition of penalty on the appellants for
contravening provisions of FEMA - Appellate tribunal directed
appellants to pay 50% of penalty as pre-condition of hearing
appeal - Writ petition filed before Delhi High Court, dismissed
D as non-maintainable - Appeal filed before Bombay High
Court uls.35 of FEMA against the order of the appellate
tribunal after delay of 1056 days - Bombay High court
declining condonation of delay in filing appeal - Plea of
appellant that Bombay High Court while computing period of
E limitation erred in not taking cognizance of s. 14 and in not
excluding the entire period during which writ petition remained
pending before Delhi High Court - Tenability of - Held: Not
tenable - Existence of good faith is a sine qua non for
invoking s. 14 of the Act - Appellants filed writ petition before
F
wrong forum and came to the forum having jurisdiction to
entertain the appeal after delay of 1056 days and sought
condonation of delay- Delay was rightly held not condonable
since there was no averment in the applications seeking
condonation that they had been prosecuting·remedy before
G a wrong forum, i.e. the Delhi High Court with due diligence
and in good faith - Not only this, the prayer made in the
applications was for condonation of 1056 days' delay and not
for exclusion of the time spent in prosecuting the writ petitions
before the Delhi High Court - This showed that the appellants
KETAN V. PAREKH v. SPECIAL DIRECTOR,
1205
DIRECTORATE OF ENFORCEMENT
were seeking to invoke s. 5 which cannot be pressed into A
service in view of the language of s.35 of the FEMA -
Moreover, appellants were well conversant with various
statutory provisions including FEMA because several civil
and criminal cases were pending against them and they had
engaged a group of eminent Advocates to present their cause
B
before the Delhi and the Bombay High Courts - There was
total absence of good faith, which is sine qua non for invoking
s.14 of the Act - Foreign Exchange Management Act, 1999
- Delay - Condonation of.
Foreign Exchange Management Act, 1999: s.19 - PreC
deposit of penalty -
Dispensation of -
Allegation of
contravention of provisions of the- Act - Appellate Tribunal
directed appellants to deposit 50% of the amount of penalty
as a pre-condition of hearing the appeal - On appeal, held:
The appellants miserably failed to make out a case, which
D
could justify an order by the Appellate Tribunal to relieve them
of the statutory obligation to deposit the amount of penalty -
The appellants had the exclusive knowledge of their financial
condition/status and it was their duty to candidly disclose all
their assets, movable and immovable including those in
E
respect of which orders of attachment may have been passed
by the judicial and quasi judicial forums - However, instead
of coming clean, they tried to paint a gloomy picture about
their financial position, which the Appellate Tribunal rightly
r~fused to accept - Appellants deliberately concealed the
F
facts relat!ng to their financial condition - Therefore, the
Appellate Tribunal did not commit any error by refusing to
entertain their prayer for total exemption.
The Special Director of Enforcement, Mumbai passed
G
an order imposing penalty on the appellants on the
ground of contravention of the provisions of the Foreign
Exchange Management Act, 1999. The appellants
challenged the said order by filing appeals under Section
19 of the Act. They also filed applications under Rule 10
H
1206 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A of the Foreign Exchange Management (Adjudication
Proceedings and Appeal) Rules, 2000 read with Section
19 (1) of the Act for dispensing with the requirement of
deposit of the amount of penalty. The Appellate Tribunal
passed order dated 2.8.2007 and directed the appellants
B to deposit 50% of the amount of penalty as a precondition of hearing the appeal. The appellants filed writ
petitions in Delhi High Court which was dismissed on the
ground of non-maintainability. The appellants filed
appeals under Section 35 of the Act before the Bombay
c High Court. They also filed applications for condonation
of 1056 days' delay. The Bombay High Court dismissed
the applications for condonation of delay on the ground
that it did not have the power to entertain an appeal filed
beyond 120 days and even though in terms of the liberty
D given by the Delhi High Court, the appellants could have
filed appeals within 30 days, but they failed to do so and,
therefore, delay in filing the appeals could not be
condoned.
In the instant appeal, it was contended for the
E appellants that while dismissing the applications for
condonation of delay, the High Court did not take
cognizance of Section 14 of the Limitation Act, 1963; that
in terms of Section 14, entire period during which the writ
petitions filed by the appellants remajned pending before
F the Delhi High Court was liable to· be excluded while
computing the period of limitation and if that was done,
the appeals filed under Section 35 would have not been
barred by time.
G
H
Dismissing the appeals, the Court
HELD: 1. Section 14 of the Limitation Act cannot be
relied upon for exclusion of the period during which the
writ petitions filed by the appellants remained pending
before the Delhi High Court. In the applications filed by
KETAN V. PAREKH v. SPECIAL DIRECTOR,
1207
DIRECTORATE OF ENFORCEMENT
them before the Bombay High Court, the appellants had
A
sought condonation of 1056 days' delay by stating that
after receiving copy of the order passed by the Appellate
Tribunal, they had filed writ petitions before the Delhi High
Court, which were disposed of on 26.7.2010 and,
thereafter, they filed appeals before the Bombay High B
Court under Section 35 of the Act. A careful reading of
the averments in applications for condonation of delay
showed that there was not even a whisper in the
applications filed by the appellants that they had been
prosecuting remedy before a wrong forum, i.e. the Delhi c
High Court with due diligence and in good faith. Not only
this, the prayer made in the applications was for
condonation of 1056 days' delay and not for exclusion
of the time spent in prosecuting the writ petitions before
the Delhi High Court. This showed that the appellants 0
were seeking. to invoke Section 5 of the Limitatio~ Act
which cannot be pressed into service in view of the
language of Section 35 of the Act and interpretation of
similar provisions by this Court. There is another reason
why the benefit of Section 14 of the Limitation Act cannot E
be extended to the appellants. All of them were well
conversant with various statutory provisions including
FEMA. One of them was declared a notified person under
Section 3(2) of the Special Court (Trial of Offences relating
to Transactions in Securities) Act, 1992 and several civil
· and criminal cases were pending against them. The very
F
fact that they had engaged a group of eminent Advocates
to present their cause before the Delhi and the Bombay
High Courts showed that they had the assistance of legal
experts and this seemed to the reason why they invoked
the jurisdiction of the Delhi High Court and not of the G
Bombay High Court despite the fact that they were
residents of Bombay and had been contesting other
matters including the proceedings pending before the
Special Court at Bombay. It also appears that the
appellants were sure that keeping in view their past H
1208 SUPREME COURT REPORTS [2011) 14 (ADDL.) S.C.R.
A conduct, the Bombay High Court may not interfere with
the order of the Appellate Tribunal. Therefore, they took
a chance before the Delhi High Court and succeeded in
persuading Single Judge of the Court to entertain their
prayer for stay of further proceedings before the Appellate
B Tribunal. The promptness with which the counsel
appearing for appellant made a statement before the Delhi
High Court on 7 .11.2007 that the writ petition may be
converted into an appeal and considered on merits is a
clear indication of the appellant's unwillingness to avail
c remedy before the Bombay High Court which had the
exclusive jurisdiction to entertain an appeal under
Section 35 of the Act. It is not possible to believe that as
on 7.11.2007, the appellants and their Advocates were not
aware of the judgment of this Court whereby dismissal
0 of the writ petition by the Delhi High Court the ground of
lack of territorial jurisdiction was confirmed and. it was
observed that the parties cannot be allowed to indulge
in forum shopping. After having made a prayer that the
writ petitions filed by them be treated as appeals under
E Section 35, two of the appellants filed applications for
recall of that order. No doubt, the Single Judge accepted
their prayer and the Division Bench confirmed the order
of the Single Judge but the manner in which the
appellants prosecuted the writ petitions before the Delhi
High Court leaves no room for doubt that they had done
F so with the sole object of delaying compliance of the
direction given by the Appellate Tribunal and, by no
. stretch of imagination, it can be said that they were bona
fide prosecuting remedy before a wrong forum. Rather,
there was total absence of good faith, which is sine qua
G non for invoking Section 14 of the Limitation Act. [Paras
21, 22, 23) [1236-C-E; 1238-D-H; 1239-A-H; 1240-A]
Union of India v. Popular Construction Co. (2001) 8 SCC
470: 2001 (3) Suppl. SCR 619: 2001 (3) Suppl. SCR 619;
H Singh Enterprises v. CCE (2008) 3 SCC 70: 2007 (13) SCR
KETAN V. PAREKH v. SPECIAL DIRECTOR,
1209
DIRECTORATE OF ENFORCEMENT
952; Commissioner of Customs, Central Excise v. Punjab
A
Fibres Ltd. (2008) 3 SCC 73: 2008 (2) SCR 861;
Commissioner of Customs and Central Excise v. Hongo
India Private Limited (2009) 5 SCC 791; Chhattisgarh State
Electricity Board v. Central Electricity Regulatory Commission
and Ors. (2010) 5 SCC 23: 2010 (4) SCR 680; Hukumdev
B
Narain Yadav v. La/it Narain Mishra (1974) 2 SCC 133: 1974
(3) SCR 31; Vidyacharan Shukla v. Khubchand Baghel AIR
1964 SC 1099: 1964 SCR 129; Hukumdev Narain Yadav v.
La/it Narain Mishra (1974) 2 SCC 133: 1974 (3 ) SCR 31 :;
Mangu Ram v. MCD (1976) 1 SCC 392: 1976 (2) SCR 260;
C
Patel Naranbhai Marghabhai v. Dhu/abhai Galbabhai (1992)
4 sec 264: 1992 ( 3 ) SCR 384 - relied on.
State of Goa v. Western Builders (2006) 6 SCC 239:
2006 (3 ) Suppl. SCR 288; Consolidated Engineering
Enterprises v. Principal Secretary, Irrigation Department and D
Ors. (2008) 7 SCC 169: 2008 (5) SCR 1108; Coal India
Limited and Anr. v. UJial Transport Agency and Ors. (2011)
1 SCC 117; Ambica Industries v. Commissioner of Central
.
/
Excise (2007) 6 SCC 769: 2007 (7) SCR 685 - referred to.
E
2. The issue deserves to be considered from another
angle. By taking advantage of the liberty given by the
Single Judge of the Delhi High Court, the appellants
invoked the jurisdiction of the Bombay High Court under
Section 35 of the Act. However, while doing so, they
F
violated the time limit specified in brder dated 26.7.2010.
Indeed, it is not even the case of the appellants that they
had filed appeals under Section 35 of the Act within 30
days computed from 26.7.2010. Therefore, the Division
Bench of the Bombay High Court rightly observed that G
even though the issue relating to jurisdiction of the Delhi
High Court to grant time to the appellants to file appeals
is highly debatable, the time specified in the order passed
by the Delhi High Court cannot be extended. [Para 24]
[1240-B•D]
H
1210 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A
3. As regards the plea of financial crisis, the
appellants miserably failed to make out a case, which
could justify an order by the Appellate Tribunal to relieve
them of the statutory obligation to deposit the amount of
penalty. The appellants have the exclusive knowledge of
s their financial condition/status and it was their duty to
candidly disclose all their assets, movable and
immovable including those in respect of which orders of
attachment may have been passed by the judicial and
quasi judicial forums. However, instead of coming clean,
c they tried to paint a gloomy picture about their financial
position, which the Appellate Tribunal rightly refused to
accept. If what was stated in the applications filed by the
appellants and affidavit dated 10.10.2008 is correct, then
the appellants must be in a state of begging which not
0
even a man of ordinary prudence will be prepared to
accept. It is clear that the appellants deliberately
concealed the facts relating to their financial condition.
Therefore, the Appellate Tribunal did not commit any error
by refusing to entertain their prayer for total exemption.
E [Para 26] [1240-F-H; 1241-A-B]
Benara Values Ltd. v. Commissioner of Central Excise
(2006) 13 sec 347: 2006 (9) Suppl. SCR 341; Siliguri
Municipality v. Amalendu Das (1984) 2 SCC 436: 1984 (2)
SCR 344; Samarias Trading Co. (P) Ltd. v. S. Samuel (1984)
F 4 SCC 666: 1985 (2) SCR 24; Commissioner of Central
Excise v. Dunlop India Ltd. (1985) 1 SCC 260: 1985 (2) SCR
190; lndu Nissan Oxo Chemicals Industries Ltd. v. Union of
India (2007) 13 sec 487: 2007 (13) SCR 173 - relied on
G
H
Case Law Reference:
2006 (3 ) Suppl. SCR 288Referred to.
2008 (5) SCR 1108
Referred to.
2011 (1) sec 111
Referred to.
Para 8
Para 8
Para 8
KETAN V. PAREKH v. SPECIAL DIRECTOR,
1211
DIRECTORATE OF ENFORCEMENT
2001 (3) Suppl. SCR 619 Relied on.
_ Para 11
A
-
2007 (13) SCR 952
Relied on.
Para 11
2008 (2) SCR 861
Relied on.
Para 11
(2009) s sec 191
Relied on.
Para 11
B
2010 (4) SCR 680
Relied on.
Para 11
1974 (3) SCR 31
Relied on.
Para 12
1964 SCR 129
Relied on.
Para 13 c
1974 (3) SCR 31
Relied on.
Para 13
1976 (2) SCR 260
Relied on.
Para 13
1992 (3) SCR 384
Relied on.
Para 13
2007 (7) SCR 685
Referred to.
Para 23 .D
2006 (9 ) Suppl. SCR 341 Relied on.
Para 27
1984 (2) SCR 344
Relied on.
Para 27
1985 (2) SCR 24
Relied on.
Para 27
E
1985 (2) SCR 190
Relied on.
Para 27
2007 (13) SCR 173
Relied on.
Para 27
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
F
10301 of 2011.
From the Judgment & Order dated 18.02.2011 of the High
Court of Bombay in FEMA Appeal (ST) No. 22247 of 2010.
WITH
G
C.A. Nos. 10302 & 10303 of 2011.
Ranjit Kumar, Manik Dogra, Bharat Arora, Navin Chawla,
Amit Mahajal for the Appellant.
H
1212 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A
A.K. Panda, P .K. Dey, B. Krishna Prasad for the
B
Respondents.
The Judgment of the Court was delivered by
G.S. SINGHVI, J. 1. Leave granted.
2. In these appeals prayer has been made for setting
aside the order of the Division Bench of the Bombay High Court
whereby the applications filed by the appellants for condonation
of delay in filing appeals under Section 35 of the Foreign
c Exchange Management Act, 1999 (for short, 'the Act') were
dismissed along with the appeals filed against order dated
2.8.2007 passed by the Appellate Tribunal for Foreign
Exchange (for short, 'the Appellate Tribunal').
0
Background facts
3. On an information received from the Reserve Bank of
India that M/s. Classic Credit Ltd. and M/s. Panther Fincap and
Management Services Ltd. had taken loan of 25 lakh shares
each of DSQ Industries Ltd. on 1.3.2011 from M/s. Greenfield
E Investment Ltd, Mauritius and the Indus Ind Bank Ltd with whom
M/s. Greenfield Investment Ltd. was maintaining NRE Account
had informed that records did not indicate any such transaction,
the Directorate of Enforcement, Mumbai conducted enquiries
from different sources including Securities and Exchange
F
Board of India, Shri Ketan Parekh, Mis. Integrated Enterprises
(I) Ltd., Chennai and lndsec Securities and Finance Ltd.
Thereafter, show cause notice dated 23.9.2004 was issued to
M/s. Greenfield Investments Ltd., Mauritius, Shri Pravin
Guwalewala, Mauritius, Smt. Neena Guwalewala, Mauritius,
G Shri A. K. Sen, Mauritius, M/s. Classic Credit Ltd., Mumbai, M/
s. Panther Fincap and Management Services Ltd., Mumbai,
Shri Ketan Parekh, Shri Kartik K. Parekh, Shri Kirit Kumar N.
Parekh and Shri Navinchandra Parekh for taking action against
them for contravention of the provisions of the Act. After hearing
H the noticees, the Special Director of Enforcement, Mumbai (for
KETAN V. PAREKH v. SPECIAL DIRECTOR,
1213
DIRECTORATE OF ENFORCEMENT [G.S. SINGHVI, J.]
short, 'the Special Director') passed order dated 30.1.2006
A
and, whereby he held that some of the noticees had violated
Sections 3(d) and 6(3)(e) of the Act and imposed penalty of
Rs.40 crores on M/s. Classic Credit Ltd.; Rs.40 crores on M/
s. Panther Fincap and Management Services Ltd.; Rs.75
crores on M/s. Greenfield Investments Ltd.; Rs.80 crores on Shri
B
Shri Ketan Parekh; Rs.12 crores on Shri Kartik K. Parekh;
Rs.60 crores on Shri Pravin Guwalewala and Rs.20 crores on
Shri AK. Sen with a direction that they shall deposit the amount
within 45 days from the date of receipt of the order.
4. The appellants challenged the aforesaid order by filing
C
appeals under Section 19 of the Act. They also filed
applications under Rule 10 of the Foreign Exchange
Management (Adjudication Proceedings and Appeal) Rules,
2000 read with Section 19 (1) of the Act for dispensing with
the requirement of deposit of the amount of penalty. In
D
paragraphs 4 to 8 of the application filed by him, Shri Ketan
.· V. Parekh made the following averments:
"4. The applicant submits that no case is made out against
the applicant as Section 3 (d) of the Act is only attracted
E
in case of a transaction in a foreign currency/foreign
security. The appellants case does not attract the provision
of Section 3 (d) of the Act.
5. That impugned order passed by Special Director is
liable to be set aside in view of the grounds of appeal and
F
the applicant has every hope of succeeding in the matter.
As such the applicant has a very good prima facie case
on merits and is likely to succeed in the appeal.
6. That the applicant is suffering from a grave financial
G
hardship since all his assets including, properties, movable
and immovable have been attached by an order of Ld.
Debt Recovery Tribunal on 11th April, 2001 (a copy of the ·
order dated 11th April, 2001 is annexed herewith and
marked as Annexure B-1 ). Moreover the applicant/
H
A
8
c
D
E
F
G
H
1214 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
appellant is a notified person and all his assets including,
properties, movable and immovable have been attached
by the Government of India pursuant to the Notification
dated 6th October, 2001. A copy of the Notification dated
6th October, 2001 is attached herewith and marked as
Annexure 8-2.
7. That the appellant is further suffering due to another
order of attachment passed by the Dy. Cl'!°, Central Cir 40
under Section 2818 of the Income Tax Act dated 7th April,
2003 whereby accounts of the appellant have been
attached. A copy of the order dated 07.04.2003 is attached
herewith and marked as Annexure-83.
8. That by order dated 12th December, 2003 passed by
SE81, the applicant has also been prohibited from carrying
out its business activity at buying selling or dealing in
securities in any manner directly or indirectly and have also
been debarred from associating with the Securities market
for the period of Fourteen years. A copy of the SE81 order
dated 12th December, 2003 is annexed herewith and
marked as Annexure-84."
In paragraphs 4 to 10 of his application, Kartik Parekh
averred as under:
"4. The applicant submits that no case is made out against
the applicant as Section 3 (d) of the Act is only attracted
in case of a transaction in a foreign currency/foreign
security. The appellants case does not attract the provision
of Section 3 (d) of the Act.
5. The applicant submits that the appellant was at a same
footing as Mr. Kirit Kumar Parekh and Mr. Naveen
Chandra Parekh. While the respondent has exonerated
Mr. Kirit Kumar Parekh and Mr. Naveen Chandra Parekh
from all offences, he has perversely held the applicant/
appellant liable for the offences under the Act.
KETAN V. PAREKH v. SPECIAL DIRECTOR,
1215
DIRECTORATE OF ENFORCEMENT [G.S. SINGHVI, J.]
6. In any event, Mr. Ketan Parekh in his letter to the
A
adjudicating authority has admitted that the control and
management of the company fully vested in him a11d that
the applicant is not responsible for the day to day activities
of the company and· hence cannot be held liable for the
alleged contravention of provisions of the Act. In any event,
8
even for the sake of argument it is admitted that the
appellant was an executive director of CCL and Panther,
unless it can be proven beyond any scope of doubt that
the appellant was managing the day to day operations of
the aforesaid companies, he cannot be held liable for any c
offence committed by the Company. The impugned order
will be set aside on this ground itself.
7. That impugned order passed by Special Director is
liable to be set aside in view of the grounds of appeal and
the applicant has every hope of succeeding in the matter.
D
As :such the applicant has a very good prima facie case
on merits and is likely to succeed in the appeal.
8. That the applicant company is suffering from grave
financial hardship since the assets of the applicanU
E
appellant have been attached pursuant to the order of the
Hon'ble Debt Recovery Tribunal, Mumbai dated, 11th April,
2001 confirmed on 25th September, 2001 ( a copy of the
order dated 11th April,· 2001 confirmed on 25th
September, 2001 is annexed herewith and marked as
F
Annexure 8-1).
9. That by order dated 12th December, 2003 passed by
SE81, the appellant has been prohibited from carrying out
its business activity of buying, selling or dealing in
securities in any manner directly or indirectly and have also G
been debarred from associating with the Securities market
for the period of fourteen years. (A copy of the SE81 order
dated 12th December, 2003 is annexed herewith and
marked as Annexure-84."
H
1216 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A
10. In view of the submissions made above it is respectfully
submitted that the applicanUappellant is not in a position
to deposit the penalty amount of Rs.12,00,00,000 (Rupees
Twelve Crores) imposed in the impugned order. The
appellanUapplicant has absolu~ly no means to pay the
B
penalty amount as pre-deposit and such pre-deposit would
cause undue hardship to the applicanUappellant."
c
D
E
F
G
H
In the application filed on behalf of M/s. Panther Fincap
and Management Services Limited, the following averments
were made:
"4. The applicant submits that no case is made out against
the applicant as Section 3 (d) of the Act is only attracted
in case of a transaction in a foreign currency/foreign
security. The appellants case does not attract the provision
of Section 3 (d) of the Act.
5. That impugned order passed by Special Director is
liable to be set aside in view of the grounds of appeal and
the applicant has every hope of succeeding in the matter.
As such the applicant has a very good prima facie case
on merits and is likely to succeed in the appeal.
6. That the applicant is suffering from a grave financial
hardship since the accounts of the Company have also
been attached by the Income Tax Department under
Section 2818 of the Income Tax Act by order dated 7th
April, 2003 passed by Dy. CIT, Central Cir. 40, Mumbai.
Further even the Bank accounts and properties of the
promoter and managing director of the Company has also
been attached under Section 281 B of the Income Tax Act
by order dated 7th April, 2003 passed by Dy. CIT, Central
Cir. 40, Mumbai ( a copy of the order dated 7th April, 2003
is annexed herewith and marked as Annexure 8-1).
7. That by order dated 12th December, 2003 passed by
SEBI, the appellant company as well as its promoter have
KETAN V. PAREKH v. SPECIAL DIRECTOR,
1217
DIRECTORATE OF ENFORCEMENT [G.S. SINGHVI, J.]
been prohibited from carrying out its business activity of A
buying, selling or dealing in securities in any manner
directly or indirectly and have also been debarred from
associating with the Securities market for the period of
fourteen years. (A copy of the SEBI order dated 12th
December, 2003 is annexed herewith and marked as
B
An nexu re-82.
8. In view of the submissions made above it is respectfully
submitted that the applicant/appellant is not in a position
to deposit the penalty amount of Rs.40,00,00,000 (Rupees
C
Forty Crores) imposed in the impugned order. The
appellant/applicant has absolutely no means to pay the
penalty amount as pre-deposit and such pre-deposit would
cause undue hardship to the applicant/appellant."
5. After hearing the counsel for the parties, the Appellate
D
Tribunal passed order dated 2.8.2007 and directed the
appellants to deposit 50% of the amount of penalty with a
stipulation that if they fail to do so, the appeals will be
dismissed. The relevant portion of that order is extracted below:
E
"Without discussing the merits of these appeals, we are
F
of the view that the adjudication order is not ex facie bad
when the price of the borrowed DSQ shares has not been
discharged but is required to be paid by the appellants
which normally can be at the place where creditor, i.e. GIL,
resides or is engaged in business, i.e. Mauritius.
Therefore, allegations of contravention of Section 3(d)
cannot be termed as ex facie bad, hence the appellants
have no prima facie case. They have many questions to
answer. After deciding one factor included in "undue
hardship'', we proceed to look to the financial position of G
the appellants. It is the burden on the appellants to
disclose correct financial position which in these appeals
the appellants have totally failed to disclose. The
appellants are not candid enough to bring out their
H
1218 SUPREME COURT REPORTS [2011] 14 {ADDL.) S.C.R.
A
correct financial status. Merely because Directorate of
Enforcement has not come out forcefully against the
ground of financial disability, this Tribunal cannot believe
that appellants, who were roaring in crores at one time,
are not in a position to make pre-deposit of the penalty,
B
especially when this Tribunal is simultaneously dutybound to, as provided in Second Proviso of Section 19
(1) FEM Act, 1999, to ensure recovery of penalty.
However, we are conscious that this Tribunal may not
unwittingly pass an order whereby injustice can possibly
c
be caused."
(emphasis supplied)
6. Shri Ketan Parekh challenged the aforesaid order in
Writ Petition No.8385 of 2007 filed in the Delhi High Court on
D 13.11.2007. The other two appellants, namely, Kartik K. Parekh
and Panthar Fincap and Management Services Ltd. filed Writ
Petition Nos. 8231 and 8232 of 2007 on 5.11.2007 and prayed
for quashing the order of the Appellate Tribunal. After taking
cognizance of the judgment of th rs Court in Raj Kumar Shivhare
· E v. Assistant Director, Directorate of Enforcement (2010) 4
SCC 772, the learned Single Judge dismissed the writ petitions
vide order dated 26. 7.2010, the relevant portions of which are
extracted below:
F
G
H
"1. There is a categorical pronouncement on 12th April
2010 by the Supreme Court in Raj Kumar Shivhare v.
Assistant Director, Directorate of Enforcement (2010) 4
sec 772 that even an order passed by the Appellate
Tribunal in an application seeking dispensation of the predeposit of the penalty would be appealable under Section
35 of the Foreign Exchange Management Act 1999
CFEMA') and that the remedy under Article 226 of the
Constitution is not available against such order.
2. In that view of the matter, the present petitions cannot
be entertained by this Court. It is, however, open to the
KETAN V. PAREKH v. SPECIAL DIRECTOR,
1219
DIRECTORATE OF ENFORCEMENT [G.S. SINGHVI, J.]
Petitioners to avail of the appropriate remedy in terms of A
· para 45 of the above judgment of the Supreme Court.
3. The petitions are dismissed."
7. Thereafter, the appellants filed appeals under Section
35 of the Act before the Bombay High Court. They also filed
B
applications for condonation of 1056 days' delay. The Division
Bench of the Bombay High Court dismissed the applications
for condonation of delay by observing that it does not have the
power to entertain an appeal filed beyond 120 days and even
though in terms of the liberty given by the Delhi High Court, the
C
appellants could have filed appeals within 30 days, but they
failed to do so and, therefore, delay in filing the appeals cannot
be condoned.
Arguments
D
8. Shri Ranjit Kumar, learned senior counsel appearing for
the appellants argued that the impugned order is liable to be
set aside because while dismissing the applications for
condonation of delay, the Division Bench of the High Court did
not take cognizance of Section 14 of the Limitation Act, 1963.
E
Learned senior counsel submitted that in terms of that section,
entire period during which the writ petitions filed by the
appellants remained pending before the Delhi High Court is
liable to be excluded while computing the period of limitation
and if that is done, the appeals filed under Section 35 cannot
F
J;>e treated as barred by time. Learned senior counsel referred
to Section 29(2) of the Limitation Act and the judgments of this
Court in State of Goa v. Western Builders (2006) 6 SCC 239,
Consolidated Engineering Enterprises v. Principal Secretary,
Irrigation Department and others (2008) 7 SCC 169, Coal G
India Limited and another v. Ujjal Transport Agency and
others (2011) 1 sec 117 and argued that even though the
period of limitation prescribed unde; Section 35 of the Act is
different from the period specified in Article 137 of the Schedule
appended to the Limitation A-::t, in the absence of express
H
1220 SUPREME COURT REPORTS (2011] 14 (ADDL.) S.C.R.
A exclusion of Section 14 of the Limitation Act, the appellants are
entitled to seek exclusion of the time spent by them in bona fide
prosecution of remedy before a wrong forum. Shri Ranjit Kumar
submitted that at the time of filing writ petitions before the Delhi
High Court, all the High Courts were entertaining such petitions
B and granting relief to the aggrieved parties and it is only after
the judgment in Raj Kumar Shivhare v. Assistant Director,
Directorate of Enforcement (supra) that the High Courts cannot
entertain writ petition because of the availability of the statutory
remedy of appeal under Section 35 of the Act. Learned senior
c counsel further submitted that if the period between 7.11.2007,
i.e. the date on which the writ petitions were filed before the
Delhi High Court and 26.7.2010, i.e. the date on which the same
were dismissed is excluded, the appeals filed before the
Bombay High Court on 27.8.2010 cannot be treated as barred
0
by time. Learned senior counsel then argued that financial
condition of the appellant is extremely precarious and the
Appellate Tribunal committed serious error by directing them
to deposit 50% of the penalty imposed by the Special Director
as a condition for hearing the appeals. He also referred to
E affidavit dated 10.10.2008 filed by appellant Ketan V. Parekh
before the Appellate Tribunal to show that he was declared a
notified person in terms of Section 3(2) of the Special Court
· (Trial of Offences relating to Transactions in Securities) Act,
1992 and all his moveable and immovable properties including
bank accounts have been attached and he has been prohibited
F from operating the same.
9. Shri A. K. Panda, learned senior counsel appearing for
the respondents supported the impugned order and argued that
the Division Bench of the Bombay High Court did not commit
G any error by declining the appellants' prayer for condonation of
delay because the appeals were filed beyond the maximum
period prescribed under Section 35 and the provisions of the
Limitation Act cannot be invoked for condonation of delay or
for exclusion of the time during which the writ petitions filed by
H the appellants remained pending before the Delhi High Court.
KETAN V. PAREKH v. SPECIAL DIRECTOR,
1221
DIRECTORATE OF ENFORCEMENT [G.S. SINGHVI, J.]
Shri Panda emphasized that even before the judgment of this
A
Court in Raj Kumar Shivhare v. Assistant Director, Directorate
of Enforcement (supra}, the legal position was crystal clear and
in terms of Section 35 of the Act an appeal could be filed
against any decision or order of the Appellate Tribunal within
60 days from the date of communication of the decision or
B
order and in terms of proviso to that section, the High Court
can extend the period by another 60 days and no more.
Learned senior counsel then submitted that the appellants
cannot invoke Section 14 of the Limitation Act because their
action of filing the writ petitions before the Delhi High Court was c
not bona fide. He pointed out that vide order dated 7 .11.2007,
the learned Single Judge of the Delhi High Court had accepted
the request made by counsel appearing for the appellants and
treated the writ petition filed by Kartik K. Parekh as an appeal
and similar order appears to have been passed in the case of 0
M/s. Panther Fincap and Management Services Limited but
those orders were subsequently recalled at the instance of the
two appellants. Shri Panda submitted that the Appellate Tribunal
did not commit any error by directing the appellants to deposit
50% of the penalty imposed by the Special Director because
they had been found guilty of clandestine monetary transactions
E
and did not disclose their true financial position.
The relevant provisions :
10. Section 35 of the Act as also Sections 5, 14 and 29(1)
F
and (2) of the Limitation Act, which have bearing on the
decision of the issue raised in the appeals, read as under -
"3.5. Appeal to High Court - Any person aggrieved by any
decision or order of the Appellate Tribunal may file an
appeal to the High Court within sixty days from the date of G
communication of the decision or order of the Appellate
Tribunal to him on any question of law arising out of such
order:
Provided that the High Court may, if it is satisfied that the
H
1222 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A
appellant was prevented by sufficient cause from filing the
appeal within the said period, allow it to be filed within a
further period not exceeding sixty days.
B
c
D
E
F
G
H
Explanation.-ln this section "High Court" means-
(a) the High Court within the jurisdiction of which the
aggrieved party ordinarily resides or carries on business
or personally works for gain; and
(b) where the Central Government is the aggrieved party,
the High Court within the jurisdiction of which the
respondent. or in a case where there are more than one
respondent, any of the respondents, ordinarily resides or
carries on business or personally works for gain."
5. Extension of prescribed period in certain cases - Any
appeal or any application, other than an application under
any of the provisions of Order XXI of the Code of Civil
Procedure, 1908 (5 of 1908), may be admitted after the
prescribed period, if the appellant or the applicant satisfies
the court that he had sufficient cause for not preferring the
appeal or making the application within such period.
Explanation - The fact that the appellant or the applicant
was misled by any order, practice or judgment of the High
Court in ascertaining or computing the prescribed period
may be sufficient cause within the meaning of this section.
14. Exclusion of time of ~roceeding bo.na fide in court
without jurisdiction - (1) In computing the period of limitation
for any suit the time during which the plaintiff has been
prosecuting with due diligence another civil proceeding,
whether in a court of first instance or of the appeal or
revision, against the defendant shall be excluded, where
the proceeding relates to the same matter in issue and is
prosecuted in good faith in a court which, from defect of
jurisdiction or other cause of a like nature, is unable to
entertain it.
KETAN V. PAREKH v. SPECIAL DIRECTOR,
1223
DIRECTORATE OF ENFORCEMENT [G.S, SINGHVI, J.]
(2) In computing the period of limitation for any application,
A
the time during which the applicant has been prosecuting
with due diligence another civil proceeding, whether in a
court of f[rst instance or of appeal or revision, against the
s,ame party for the same relief shall be excluded, where
, such proceeding is prosecuted in good faith in a court of B
first instance or of appeal or revision, against the same
party for the same relief shall be excluded, where such
proceeding is prosecuted in good faith in a court which,
from defect of jurisdiction or other cause of a like nature,
is unable to entertain it.
c
(3) Notwithstanding anything contained in rule 2 of Order
XXlll of the Code of Civil Procedure, 1908 (5 of 1908), the
provisions of sub-section (1) shall apply in relation to a fresh
suit instituted on permission granted by the court under rule
1 of that Order, where such permission is granted on the
D
ground that the first suit must fail by reason of a defect in
the jurisdiction of the court of other cause of a like nature.
Explanation - For the purpose of this section, -
E
(a) In excluding the time during which a former civil
proceeding was pending, the day on which that proceeding
was instituted and the day on which it ended shall both be
counted;
(b) a plaintiff or an applicant resisting an appeal shall be
F
deemed to be prosecuting a proceeding;
(c) Misjoinder of parties or of causes of action shall be
deemed to be a cause of a like nature with defect of
jurisdiction.
G
29. Savings - (1) Nothing in this Act shall affect section 25
of the Indian Contract Act, 1872. ( 9 of 1872).
(2) Where any special or local law prescribes for any suit,
.H
1224 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A
appeal or appiication a period of limitation different from
the period prescribed by the Schedule, the provisions of
section 3 shall apply as if such period were the period
prescribed by the Schedule and for the purpose of
determining any period of limitation prescribed for any suit,
B
appeal or application by any special or local law, the
provisions contained in sections 4 to 24 (inclusive) shall
apply only in so far as, and to the extent to which, they are
not expressly excluded by such special or local law."
11. The question whether the High Court can entertain an
C
appeal under Section 35 of the Act beyond 120 days does not
require much debate and has to be answered against the
appellants in view of the law laid down in Union of India v.
Popular Construction Co. (2001) 8 SCC 4 70, Singh
Enterprises v. CCE (2008) 3 SCC 70, Commissioner of
D
Customs, Central Excise v. Punjab Fibres Ltd. (2008) 3 SCC
73, Consolidated Engineering Enterprises v. Principal
Secretary, Irrigation Department and others (supra),
Commissioner of Customs and Central Excise v. Hongo
India Private Limited (2009) 5 SCC 791 and Chhattisgarh
E State Electricity Board v. Central Electricity Regulatory
Commission and others (2010) 5 SCC 23.
12. In Hukumdev Narain Yadav v. La/it Narain Mishra
(1974) 2 SCC 133, this Court interpreted Section 29(2) of the
F
Limitation Act in the context of the provisions of the
Representation of the People Act, 1951. It was argued that the
words "expressly excluded" appearing in Section 29(2) would
mean that there must be an explicit mention in the special or
local law to the specific provisions of the Limitation Act of which
G the operation is to be excluded. While rejecting the argument,
the three-Judge Bench observed:
H
" ... what we have to see is whether the scheme of the
special law, that is in this case the Act, and the nature of
the remedy provided therein are such that the legislature
KETAN V. PAREKH v. SPECIAL DIRECTOR,
1225
DIRECTORATE OF ENFORCEMENT [G.S.