Madras High Court confirms Rs 28 crore penalty on Dinakaran

Chennai: The Madras high court on Friday confirmed the order of the Foreign Exchange Regulation Appellate Board (Ferab), imposing a penalty of Rs 28 crore on T.T.V. Dinakaran, a former AIADMK MP and nephew of AIADMK general secretary V.K. Sasikala, in connection with a Foreign Exchange Regulation Act (Fera) violation case registered in 1996.

Answering the four questions of law against Dinakaran and in favour of Revenue, a division bench comprising Chief Justice Sanjay Kishan Kaul and Justice R. Mahadevan dismissed the appeal filed by Dinakaran, challenging the order of the Ferab dated May 5, 2000.

According to Enforcement Directorate, the charge against Dinakaran was that he acquired foreign exchange, deposited the same in the current account of M/s Dipper Investments Ltd, a company incorporated in the British Virgin islands, with Barclays Bank, United Kingdom and transferred and made payments to two other companies. Thus, violating the provisions of Fera.

Answering the first question of law as to whether Dinakaran was a resident or non-resident of India since he claimed that he was a permanent resident of Singapore, the bench said it had noticed Mr Dinakaran claiming different status at different times claiming to be a citizen for elections & NRI in front of the Fera and a non-citizen for an investigation of the habeas corpus petition. The court upheld the view of the Ferab that he is a citizen.

Referring to the second question as to whether the appellate authority can exercise suo moto powers, the bench said the appellate authority has powers to suo moto modify the order passed by the adjudicating authority.

The court found no merit in the argument that the adjudicating authority was either biased or vitiated. AP Kala the adjudicating officer merely corresponded and monitored an investigation and the guilt of the appellant is culled out from the documents.

Referring to the fourth question of law as to whether the provisions of the Companies Act, which confers a separate legal entity to the company, absolutely dissolve the liability of the Director of a Company, the bench said in view of the clear finding given by the appellate authority that the various acts done in the name of the company could not be attributed to the company and that there was no evidence that these were done in the course of the company’s business, it was clear that the appellant was legally liable for those acts, the bench added.