TMI Blog2010 (10) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... S. Y-68 TO Y-70 OF 2009 - - - Dated:- 12-10-2010 - V.C. Daga and R.M. Savant, JJ. S/Shri Rui Rodrigues, with R.V. Desai, Sr. Counsel, with M.S. Bhardwaj, for the Respondent. [Judgment per : R.M. Savant, J.]. The above appeals are directed against the Judgment and Order dated 12-6-2009 passed by the Appellate Tribunal for Foreign Exchange, New Delhi. By the said order, the appeals filed by the Appellants above named came to be dismissed and the penalty imposed against each of the appellants came to be confirmed. 2. Since a preliminary issue as regards the maintainability of the above appeals in this Court on the ground of territorial jurisdiction was raised by the respondents, the parties were heard on the said issue. Factual matrix 3. The factual matrix involved for adjudication of the said issue in the above appeals can be stated thus :- The appellant in Appeal No. 71/09 i.e. M/s. Mandlia Developers (P) Ltd. (for short the Company ) is a company incorporated at Bangalore. The Company has its registered office at Bangalore. The authorised capital of the said Company is Rs. 20 lakhs divided into 20,000 equity shares of Rs. 100 each. One Mrs. Pushpaben Rawal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nter alia on the grounds mentioned in the Memorandum of Appeal. Along with the said appeals, the appellants also filed applications for waiver of pre-deposit of the penalty amount. By an order dated 28-10-2002, the Tribunal was pleased to waive the pre-deposit of the amount of penalty The appellant also filed written submissions before the Tribunal on 15-3-2004. The said appeals were decided by the Tribunal by the impugned order dated 12-6-2009 by which order the Tribunal rejected the appeals and confirmed the penalty levied on each of the appellants above named. Being aggrieved by the said order dated 12-6-2009, passed by the Tribunal that the appellants have filed the instant appeals in this Court. 5. In the above appeals a preliminary objection has been taken by the Respondents i.e. the Department as regards the maintainability of the above appeals in this Court on the ground that this Court does not have territorial jurisdiction to entertain the above appeals. The said objection has been taken on the touchstone of Section 35 of the Foreign Exchange Management Act, 1999 (for brevities sake refers to as the FEMA) and especially the Explanation thereto, the said Explanation is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that such a resolution was passed, the administrative office if situated elsewhere vis-a-vis the registered office, it will be for all practical purposes treated as a branch office and, therefore, the provisions of Section 209(2) read with Sections 209A and 228 of the Companies Act will be applicable. That the appellant has not produced an iota of evidence to demonstrate that it has carried on any type of business in Mumbai, save and except making a vague averment in para 19 of the appeal that it has an address in Mumbai. The expression ordinarily carries on business would mean regularly or habitually not casually. It obviously cannot mean always . The plain and popular meaning of the word ordinarily means usually, normally and exceptionally as contrasted with extraordinarily. In terms of Explanation (a) to Section 35 of the FEMA, since the registered office of the Company is in Bangalore and since the business was carried out in Bangalore, the instant appeals would not lie in this Court and would lie in the High Court of Karnataka. The respondents in support of their said submission have relied upon the judgment of the Apex Court in the case of Stridewell Leathers (P) Ltd. and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties. 10. Since a preliminary issue of jurisdiction of this Court to entertain the above appeals has been raised on behalf of the Respondents, it would be apposite to advert to the relevant statutory provisions. In so far as FERA was concerned the relevant provision governing territorial jurisdiction is Section 54 and the same was reproduced herein under :- Section-54 Appeal to High Court. An appeal shall lie to the High Court only on questions of law from any decision or order of the Appellate Board under sub-section (3) or sub-section (4) of Section 52 : Provided that the High Court shall not entertain any appeal under this section it it is filed after the expiry of sixty days of the date of communication of the decision or order of the Appellate Board, unless the High Court is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time. Explanation In this section and in Section 55, High Court means- (i) the High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain; and (ii) where the Central Government is the aggrieved party, the Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Courts in Bangalore were to have exclusive jurisdiction. The agreement entered into with Jagpaul Singh Gill at Bombay for the sale of fully paid up equity shares of the said two directors of the said Company was therefore in respect of a company which had its business activities centered around in Bangalore. Under the said agreement for purchase of shares, the said Jagpaul Singh Gill was to purchase the entire share holding of the said two directors of the company. Therefore, the said agreement for the sale of shares which is the basis on which action against the appellants in Appeal Nos. 70, 71 and 72 has been taken under the FEMA, though entered into at Bombay, would have no bearing on the issue of jurisdiction of this Court. What is to be seen is as to the fact as to where the company ordinarily carries on its business. The facts mentioned above viz. that the registered office of the company is at Bangalore; that the company was to develop a property in Bangalore, is unequivocally a pointer to the fact that the company ordinarily carries on its business in Bangalore. Though it is sought to be contended on behalf of the appellants by relying upon the fact that by the resoluti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oadways Limited (supra), the Apex Court has held that where the company has its principal office at one place and the subordinate office at another place and the cause of action arises at the place where the subordinate office is located, the suit would have to be filed only in the court within whose jurisdiction the company/corporation has its subordinate office and not in court within whose jurisdiction it has its principal office. The next judgment on which the reliance was placed by the learned counsel for the appellants is the case of Jindal Vijayanagar Steel Ltd (Supra). The facts in the said case were that the agreement under which dispute arose was approved, reviewed and discussed by Board of Directors of the appellant in Bombay. At the time of filing of the petition under Section 9 of the Arbitration and Conciliation Act, 1996, the appellant was having its corporate office at Bombay from where it was carrying on its business. The appellant s entire senior management and Directors was stationed at Bombay and during pendency of the said appeal, the appellant had shifted its registered office at Bombay. In the said context, the Apex Court has held that this Court would have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nataka would have jurisdiction. The submission of the learned counsel for the appellants that the Company is not doing any business now, and in view of the fact that the Directors are residing in Mumbai, therefore the appeals filed in this Court are maintainable on the application of the doctrine of forum conveniens. The said submission does not commend to us. Assuming that the Company is not doing any business now, the question will have to be considered as on the date of the alleged contravention and not as of today. On the date of the contravention, the company was having its whole business interests in Bangalore, its registered office was at Bangalore and, therefore, in our view, it would have to be held that in terms of Section 35 of the FEMA, the appeals would lie before the High Court of Karnataka. 16. In that view of the matter, we have to uphold the preliminary objection of the respondents by holding that the appeals filed in this Court are not maintainable and the appellants would have to file the appeals in the High Court of Karnataka. The above appeals are accordingly disposed of with liberty to the appellants to file appeals before the High Court of Karnataka. No o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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