RAMAN NARULA Vs. DIRECTOR OF ENFORCEMENT

JUDGEMENT

(1.) RAMAN Narula has filed Crl. Appeal No. 149 of 2008 under Section 35 of the Foreign Exchange Management Act, 1999 ('FEMA') against the order dated 11th December 2007 passed by the Foreign Exchange Appellate Tribunal ('AT') in Appeal No. 294 of 2005 filed by him. Crl. A. 186 of 2008 has been preferred by Club Med India Branch Office Crl. A. Nos.149 of 2008 & 186 of 2008 Page 1 of 15 (hereafter 'Club Med India'), against the same impugned order of the AT which was common to its Appeal No. 297 of 2005.

(2.) THE background to these appeals is that Club Mediterranee Hong Kong Ltd. (hereinafter 'Club Med Hong Kong') was part of a group of companiesthat runs and maintains beach resorts in the name and style of Club Med Resorts at various places in South -East Asian countries like Malaysia, Thailand, Australia, Indonesia, Mauritius and Maldives. Club Med Hong Kong wanted to open a branch office in India to attract Indian tourists to the Club Med resorts. The branch was named Club Med India. On 25th June 1994, Club Med Hong Kong appointed Mr. Raman Narula as its Sales and Marketing Manager. On 3rdNovember 1994, it submitted an application to the Reserve Bank of India ('RBI') for permission to open a branch office in India. On 22nd November 1994, the RBI granted Club Med Hong Kong permission to open its branch office. Among the activities that the RBI permitted Club Med India to carry out were:(i) To open offices in India to promote tourism in India and to provide services to the tourists (marketing of services) i.e. reservation of accommodation, booking of passage etc. and (ii) To support Club Med for technical and financial collaborations with prospective Indian partners for management and development of resorts in India.On 11th January 1995, the RBI granted approval to Club Med India, subject to the conditions stipulated therein, to collect foreign exchange or travellers'cheques to Indian travellers for reservation of Club Med resorts abroad.

(3.) IT has been stated by both the Appellants that Club Med India never made profits and practically no business was carried out in the financial year 1994 -95.Club Med India was finally wound -up in the year 1998. According to Mr. Narula, he had no control over the functioning of Club Med India. He had no knowledge of its books of accounts. The accounts of Club Med India were under the direct control and supervision of Club Med Hong Kong. The case of Mr. Narula is that the task entrusted to him was to obtain sanction from the RBI for launching Club Med India and to promote the sales of the hotel resorts bookings in India after the branch became operational.