DIRECTOR ENFORCEMENT DIRECTORATE MINISTRY OF FINANCE DIRECTOR ENFORCEMENT DIRECTORATE MINISTRY OF FINANCE Vs. K O KRISHNASWAMY:NAGARAJA OVERSEAS TRADERS

JUDGEMENT

(1.) BY this judgment we shall dispose of Civil Appeals Nos. 2595 and 2596 of 1969 in each one of which the Director, Enforcement Directorate, Ministry of Finance, Department of Revenue, Government of India (hereinafter referred to as the 'Director') challenges an order of the Mysore High Court dated the 4th of June, 1969, allowing two petitions preferred by the respondents for the issuance of writs under Article 226 of the Constitution of India.

(2.) THE facts giving rise to the two appeals may be briefly stated. THE Government of India promulgated an Export Promotion Scheme under which exporters of textile goods and handicrafts were issued licences for import of raw materials on the basis of their export performance. THE scheme envisaged the issuance of import licences solely on the basis of the declared value of the exported goods. Since exporters were able to earn a handsome profit (ranging in some cases between 200 and 300 per cent of the face value) by sale of such import licences, the Scheme brought into existence a mushroom growth of textile exporters and parties acting benami on behalf of established exporters. Most of the exporters had abroad their own branches or representatives who acted as consignees of the goods exported from India. THE easy-profit motive led numerous exporters to prepare invoices showing the value of exported goods far above the market or contractual price thereof in order to obtain import licences for the inflated amounts. Getting scent of the practice the Enforcement Directorate carried out a surprise search of the premises of one of the leading textile exporters of Madras State in March, 1965. THE documents seized as a result thereof and the statement of the exporter confirmed the information earlier received by the Directorate. In consequence notices were issued to almost all the textile and handicrafts exporters in the State of Madras calling upon them to explain the reasons for not realising the entire amount shown in the invoices submitted by them as the price of the goods exported to various parties outside India. Two of such exporters were M/s. K. O. Krishnaswamy (the respondent in Civil Appeal No. 2959 of 1969) and M/s. Nagaraja Overseas Traders (respondent in Civil Appeal No. 2596 of 1969) and the proceedings held against them under Section 19 (2) of the Foreign Exchange Regulation Act, 1947, (hereinafter referred to as the 'Act') by the Director revealed that in between them they had exported 53 consignments of textile goods and handicrafts to Singapore and other places as per details given below : <FRM>JUDGEMENT_280_1_1980Html1.htm</FRM>

(3.) IN the result the appeals fail and are dismissed but with no order as to costs.Appeals dismissed.