TMI Blog2015 (2) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... in fact be set aside and the ED should be permitted to serve a separate SCN on him. However, even before this Court it was repeatedly asserted that as far as the ED was concerned, it had served the SCN on the Appellant through FIL. Therefore the Court is constrained to observe that the fundamental requirement of the Adjudication Proceedings and Appeal Rules, 1974 (“APAR”) (1974 Rules) and in particular Rule 10 (reproduced herein below) has not been satisfied in the present case. In terms of Rule 10(b), service of notice had to be on either the address of his place of residence or his last known place of residence or the place where he carries on, or last carried on, business or personally works or last worked for gain. There can be no doubt that as on 28th May 2002, i.e., the date of the SCN, it had to be served either at the place of residence of the Appellant or the last known place of his work. As on that date, his address was not the address of FIL. - Even after coming to know that as on the date of the issuance of the SCN, the Appellant was no longer a director of FIL and therefore the notice issued to him at the address of FIL could not obviously be treated to have been se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant was a part-time non-executive director of Flex Industries Ltd. ( FIL ) from 10th November 1990 till 31st October 2001. By a letter dated 31st October 2001 addressed to the Board of Directors of the FIL, the Appellant resigned. An intimation under Form No. 32 to that effect was filed by the FIL with the Registrar of Companies ( ROC ) on 13th November 2011. This Form No. 32 with the acknowledgment of the ROC has been enclosed as Annexure A to the appeal. 3. On 28th May 2002, the ED issued a Memorandum/Show Cause Notice (SCN) to FIL and its Directors in relation to the non-realisation of the export proceeds to the value of ₹ 1,10,96,544.22. These exports are stated to have taken place during the period 1996-99. The SCN was addressed to FIL and its Directors, including the Appellant, at the address of the company, A-107-109, Sector-IV, NOIDA (UP) . 4. The case of the Appellant is that he never received the said SCN and was never informed by the FIL of its receipt. The Appellant has placed on record, copies of two letters sent on behalf of the FIL to the ED in response to the said SCN. The first is dated 19th May 2004 with the subject matter stating In the case of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the SCN in which the AO was passed and became aware of the proceedings and impugned order after passing of the same only on or about December 2, 2004 when he received from the FIL a copy of the said AO. In para 3 of the Memorandum of Appeal, it was specifically averred as under: 3. The Appellant was not served SCN or any other notice by the Special Director, Enforcement Directorate, the Respondent herein, before or after the passing of the impugned order. On or about 2nd December 2004 the Company informed the Appellant about the impugned order. The Appellant came to know about the proceedings, the SCN and the impugned order only when the Company informed the Appellant about the impugned order and therefore, could not appear or authorize any person to represent him. Further the Appellant had resigned as Director of the Company on about 31st October 2001, much before the commencement of the proceedings or issue of SCN to the Company and therefore, even otherwise the Appellant could not have known about the proceedings or the SCN. 11. On the merits of the case, it was averred by the Appellant that he was not at the time of the alleged contravention nor at any other time t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceed against Mr. Amar Singh, is given in the counter-affidavit where it is stated that the ED had recorded the statement of one Mr. Pradeep Verma, Assistant General Manager (Commercial) who had informed the ED that Mr. Amar Singh was actually not connected with the day-to-day functioning of the company and that Shri Amar Singh had resigned on 7.11.01 . The ED in its reply stated that Mr. Verma had named the Directors of FIL who according to him were conducting the day-to-day business of the FIL. This included the Appellant. 17. It may be noticed at this stage that the statement of Mr. Verma was recorded by the ED on 8th March 2002, 18th March 2002, 20th May 2002 and 28th March 2002. By that time, the Appellant had already ceased to be a Director of FIL. It is strange that the said fact was not disclosed by Mr. Verma to the ED when his statement was recorded. 18. In the Memorandum of Appeal filed in this Court in para 3(a), the Appellant has specifically averred that he ceased to be a Director of FIL since 31st October 2001 and has enclosed the copy of the Form 32 filed with the ROC in that behalf. In reply to para 3 (a), it is stated by the ED that the Appellant had admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itten report thereof should be witnessed by two persons. 22. In terms of Rule 10(b), service of notice had to be on either the address of his place of residence or his last known place of residence or the place where he carries on, or last carried on, business or personally works or last worked for gain. There can be no doubt that as on 28th May 2002, i.e., the date of the SCN, it had to be served either at the place of residence of the Appellant or the last known place of his work. As on that date, his address was not the address of FIL. 23. Even after coming to know that as on the date of the issuance of the SCN, the Appellant was no longer a director of FIL and therefore the notice issued to him at the address of FIL could not obviously be treated to have been served upon him, the ED was not prepared to say that the AO qua him must be set aside on that ground. 24. The AT failed to deal with the central point in the appeal filed by the Appellant. It has also failed to note his submissions in that regard. 25. It is contended by Ms. Behura that the ED went by the statement of Mr. Pradeep Verma to conclude that the Appellant was in charge of the day-to-day affairs of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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