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1/9 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 14th DAY OF NOVEMBER 2017
BEFORE
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
WRIT PETITION No.4061/2014 (T-RES)
BETWEEN:
M/s Embio Limited (Formerly M/s Emmellen Biotech Pharmaceuticals Ltd., which amalgamated with M/s Karnataka Malladi Biotics Limited, vide Order of the Bombay High Court in C.P.No.1 and 2 of 2009 with C.A.No.1561 and 1562 of 2008 dated 24.3.2009)
501, Sentinel, Hiranandani Gardens, Powai, Mumbai – 400 076. Represented by its Company Secretary Sri Chirag Vora, S/o late Sri Arvind C Vora, Aged 30 years, Residing at 301/02, Paras Darshan, Modi Patel Road, Bhayander (West), Thane – 401 101.
…PETITIONER (By Sri.Nischal Dev., Adv.)
AND:
Director General of Foreign Trade, Ministry of Commerce & Industry, Department of Commerce, ECA-1, Udyog Bhavan, New Delhi -110 001.
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Addl. Director General of Foreign Trade, Ministry of Commerce & Industry, Department of Commerce, ECA-1, Udyog Bhavan, New Delhi -110 001.
Joint Director General Foreign Trade, 6th Floor, C & E wings, Kendriya Sadan, Koramangala 2nd Block, Bangalore – 560 034.
…RESPONDENTS (By Sri.C.Shashikantha, CGC)
This Writ Petition is filed under Articles 226 & 227 of the Constitution of India praying to quash the order in Appeal dated 25.5.2006 vide Annexure-A issued by Respondent No.2 confirming the penalty of Rs.23,38,882/- imposed on the petitioner in Order- in-Original dated 16.7.2004 vide Annexure –G.
This Writ Petition coming on for Preliminary Hearing this day, the Court made the following:-
ORDER
Mr.Nischal Dev., Adv. for Petitioner Mr.C.Shashikantha, CGC for Respondents
The petitioner - company, M/s Embio Limited (EL) has filed this petition in this Court on 27.1.2014 assailing the order passed by the respondent – Additional Director General of Foreign Trade (ADGFT) on 25.5.2006 imposing a fiscal penalty of
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Rs.23,38,882/- on M/s Karnataka Malladi Biotics Limited (KMBL), which stood merged under a scheme of amalgamation sanctioned by the High Court of Bombay in Company Petition No.1 of 2009 on 24.3.2009 and the said KMBL stood merged with M/s Emmellen Biotech Pharmaceuticals Limited (EBPL) and further changed its name to Embio Limited (EL), the present petitioner.
The case has an erstwhile history of litigation in this Court where the earlier writ petition filed by the earlier Company challenging the very same order of the ADGFT in W.P.No.2437/2007 (KMBL vs. DGFT & OTHERS) came to be allowed by a learned Single Judge of this Court on 7.1.2010. However, the respondent – DGFT preferred a Writ Appeal in W.A.No.1229/2010 (DGFT vs. KMBL) and during the course of the said Writ Appeal filed by the Department, the writ petitioner, KMBL withdrew its original writ petition in WP
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2437/2007 itself. Para-4 of the said Division Bench order dated 13.12.2013 is quoted below for ready reference:
“4. In the light of the statements made in memo, the instant appeal stands disposed of, reserving liberty to the respondent to withdraw the WP No.2437/2007 and permitting the respondent to file a fresh writ petition on the same cause of action, within a period of one week from the date of receipt of a copy of this judgment.
It is needless to clarify that, all the grounds urged by the parties are left open. “
The petitioner – company, EL thereafter has now filed the present writ petition in this Court on 27.1.2014 again challenging the very same order once again.
Mr.Nischal Dev, learned Counsel for the petitioner has submitted before the Court that even though the Board for Industrial and Financial Reconstruction (BIFR) had sanctioned a Revival
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Scheme for the said company which had turned sick and the BIFR sanctioned a Scheme on 3.6.2003 in Case No.138/1999 for KMBL, thereafter the said merger with the present petitioner – Company, EL has taken place. He submitted that the said impugned order imposing fiscal ‘penalty’ deserves to be quashed and the petitioner has even filed I.A.No.1/2016 seeking impleadment of Ministry of Finance, Department of Revenue of the Union of India, for seeking a direction against the said Department of Revenue for considering the case of petitioner – Company for waiver of the said fiscal penalty imposed upon the erstwhile company, KMBL.
These submissions are opposed by Mr.C.Shashikantha, learned Counsel for the Union of India, who submitted that the scheme of BIFR gave specific waivers in the Scheme sanctioned for KMBL in
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which only specific taxes and duties which were chargeable and had been brought to the notice of the BIFR vide Para-E of the said sanctioned Scheme by BIFR, under which, the Central Government dues to the extent of Rs.4.05 Lakh as ‘interest’ dues of the Income-tax Department and ‘Customs Duty’ amounting to Rs.33.30 lakh on account of non-fulfilment of export obligations and Rs.44.40 lakh towards ‘interest’ accrued upto 31st May 2002 were waived by the BIFR. He submitted that the impugned fiscal penalty of Rs.23,38.882/- was never waived by the BIFR. He also submitted that after merger of the erstwhile sick company KBPL with the present EL, presumably, a financially sound company, the present amalgamated company cannot get the same benefit of waiver etc., and the fiscal penalty in question is on account of the exemption from customs duty given to that company on the undertaking that they would meet certain export obligations, which admittedly during the relevant
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period, that company failed to meet and therefore the said fiscal penalty is nothing but compensatory custom duty payable to the Department and there is no justification for waiver of the said penalty or quashing of the same by this Court. He also submitted that with the withdrawal of the Writ Petition by KMBL, this petitioner- company cannot revive the same cause again.
Having heard the learned Counsel for the parties, this Court is of the opinion that there is no merit in the present writ petition and the fiscal penalty in question is not liable to be quashed by this Court. Not only the relevant present financial position of the amalgamated company EL is before this Court nor it appears to have been examined by any competent authority in the respondent – department or the respondent - DGFT himself. The waiver of interest and penalty at the time when the BIFR Scheme was
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sanctioned in favour of the erstwhile company KMBL, the present impugned fiscal penalty was not even asked to be waived. Though the impugned order was passed on 25.5.2006 and the BIFR Scheme was sanctioned by BIFR on 3.6.2003, after the said Scheme became operational, the present petitioner-company has not availed any remedy before the Authorities concerned under the Act to press for such waiver on merits. It is not even explained before the Court how the present petitioner which stepped into the shoes of KMBL after its merger with EL, the present petitioner EL can revive the cause after KMBL had withdrawn the challenge by withdrawal of the writ petition before the Division Bench of this Court without reserving any such liberty to reagitate the issue. The impugned order, Annexure–A, dated 25.5.2006 cannot be said to be without jurisdiction or passed in breach of principles of natural justice and therefore, the said order does not require any
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interference by this Court in exercise of its extra- ordinary jurisdiction under Article 226 of the Constitution of India. The present petition is thus found to be devoid of merits and is liable to be dismissed. Writ Petition is dismissed. No order as to costs.
Sd/- JUDGE