Juhi Sonthalia Vs Directorate of Enforcement (Appellate Tribunal under SAFEMA, New Delhi)
FEMA: Tribunal Allows ₹12.75 Lakh Pre-Deposit Against ₹15 Crore Penalty on Former Director
Summary: The Appellate Tribunal under SAFEMA, New Delhi, has permitted a former director to deposit ₹12.75 lakh against a penalty of ₹15 crore to satisfy the pre-deposit requirement for her FEMA appeal. The Tribunal considered her resignation in February 2011 and the absence of material showing that she was responsible for realising the company’s export proceeds.
In Mrs. Juhi Sonthalia v. Directorate of Enforcement, Kolkata, Appeal No. FPA-FE-31/KOL/2024, the order dated 4 November 2026 granted relief at the pre-deposit stage. It did not finally reduce the penalty or determine the appellant’s liability on merits.
Background: Export Dues of ₹280.38 Crore Remained Unrealised
The proceedings arose from the alleged non-realisation of 69 export bills relating to Enfield Gems and Jewellery Ltd. The outstanding export dues stood at ₹2,80,38,84,105 as on 28 April 2020.
According to the Enforcement Directorate, details of the outstanding bills and amounts were furnished to the noticees, but no explanation could be provided.
The adjudicating authority found contraventions of Regulations 8, 9 and 13 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000.
A penalty of ₹150 crore was imposed on the company, while penalties of ₹15 crore each were imposed on its directors, including the appellant. The aggregate penalty imposed on the noticees was ₹195 crore.
The appellant challenged the penalty and sought waiver of the pre-deposit condition under Section 19(1) of FEMA.
Appellant Claimed She Had No Operational Role
The appellant submitted that she had not participated in the company’s day-to-day business and was merely a dummy director.
Her counsel explained that she completed her education up to Class XII in 2006 and graduated in 2010. Following her marriage in February 2011, she resigned from the company’s directorship and moved to Bhilwara, Rajasthan.
The company’s operations, according to her, were managed by her father, who was its Managing Director. She maintained that she was neither involved in its business activities nor responsible for the collection of export proceeds.
On this basis, she disputed the imposition of a substantial personal penalty merely by reference to her position as a director.
Alternative Plea Based on Limited Tenure
The appellant also advanced an alternative argument concerning proportionality.
The alleged contravention extended up to 2020, whereas she had resigned on 4 February 2011. Her counsel submitted that, even if responsibility could be attributed to her, it had to be examined with reference to the period during which she held office.
A proportionate calculation was placed before the Tribunal, arriving at ₹12.75 lakh. The calculation referred to her tenure, her claimed non-operational role and the US dollar rates relevant to the transactions.
She requested that the pre-deposit requirement be determined after considering these circumstances, rather than insisting upon deposit of the entire ₹15 crore penalty.
Enforcement Directorate Opposed the Relief
The Enforcement Directorate opposed the application. It relied on the substantial outstanding export proceeds and the adjudicating authority’s findings under the export regulations.
The respondent argued that the appellant had remained a director and that her request for proportionate treatment based on tenure should not be accepted for granting exemption from pre-deposit.
It maintained that the penalties imposed on the company and its directors were justified and sought rejection of the application.
Tribunal Considered Resignation and Evidence of Responsibility
The Tribunal found that the appellant graduated in 2010, married shortly thereafter and resigned from the company in February 2011.
While examining the application, it observed that the period following her resignation could not be taken into consideration against her.
The Tribunal also noted that no material had been placed on record showing that she was in charge of realising the export proceeds. Her father, as Managing Director, was looking after the company’s affairs, including exports and recovery of their proceeds.
These circumstances supported consideration of her request for a substantially lower pre-deposit.
₹12.75 Lakh Deposit Directed Within Four Weeks
The Tribunal expressly confined its examination to a prima facie assessment. It stated that it could not undertake a deeper examination of the dispute at that stage.
Finding substance in the appellant’s proportionate calculation, it directed her to deposit ₹12.75 lakh within four weeks to satisfy the pre-deposit condition.
The application was disposed of accordingly, and the appeal was directed to be listed on 2 December 2026.
Significance of the Order
The order highlights the relevance of a director’s actual responsibilities, period of office and resignation date when considering relief from a substantial FEMA pre-deposit requirement.
Its scope remains limited. The ₹15 crore penalty was not finally set aside or reduced to ₹12.75 lakh. That amount represents the deposit permitted for pursuing the appeal, while the substantive challenge to liability remains pending.
FULL TEXT OF THE ORIGINAL ORDER OF APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI
This order would dispose of the application filed by the appellant seeking waiver of the condition of pre-deposit under Section 19(1) of the Foreign Exchange Management Act, 1999 (in short “the Act of 1999”). The penalty of Rs.15 crores has been imposed on the appellant for contravention of Regulations 8,9 and 13 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 (hereinafter referred to as the “Regulations of 2000”).
2. The respondent alleged non-realization of 69 export bills against the appellant and other noticees, which include M/s Enfield Gems and Jewellery Ltd. Those bills were found outstanding for a value equivalent to Rs.280.38 crores as on 28.04.2020. The details of the bills and the amount were given to the appellant and other noticees of which no explanation could be given and thus finding outstanding export dues of Rs.280,38,84,105/-, the penalty of Rs.150 crores was imposed on the company while the penalty of Rs.15 crores on each Director which includes the appellant making total penalty of a sum of Rs.195 crores.
3. The learned counsel for the appellant made reference to the brief facts of the case to show that the appellant was not involved in day-to-day business of the entity for fastening penalty. The appellant completed her studies upto 12th standard in the year 2006 and thereupon graduation in the year 2010. She got married in Feburuary, 2011 and resigned from the directorship of the company in February, 2011 and shifted to Bhilwara (Rajasthan). The appellant was otherwise a dummy Director in view of the fact that she never participated in the operation of the company, rather it was handled by her father being a Managing Director and, therefore, she was not aware about the business thus could not have been held responsible for the affairs of the company.
4. The learned counsel for the appellant in any case gave reasons to make the penalty amount to be proportionate in view of the fact that out of the total period of contravention expanded till the year 2020, the appellant could have been made responsible. If at all, it can be for the affairs of the company till 04.02.2011 when she resigned from the post of Director upon her marriage. If the penalty of Rs.15 crores on the appellant is taken in proportion to the period of her directorship, it would come to Rs.12.75 lakhs. The calculation for proportionate penalty amount on the appellant has been given not only in reference to the period of contravention, but the dummy directorship held by the appellant coupled with the rates of US Dollars involved in this case. The prayer of the appellant was to pass an order for pre-deposit after rationalizing the penalty on the appellant.
5. The application was opposed by the learned counsel for the respondent. It was submitted that the penalty of Rs.195 crores has been imposed on the noticees, finding contravention of Regulations 8,9 and 13 of the Regulations of 2000. The appellant remained Director of the company thus prayer for proportionate reduction amount till the tenure of the appellant should not be accepted for giving exemption for pre-deposit of the amount of penalty to satisfy the condition under Section 19 of the Act of 1999. Since non-realization of the export goods remained for a sum of Rs.280,38,84,105/-, the penalty of Rs.150 crores on the company and 15 crores on each director was rightly imposed. Thus, exemption from the deposit of the penalty amount may not be granted.
6. I have considered the rival submissions of the parties and perused the record.
7. The facts on record show that the total penalty of Rs.195 crores has been imposed by the respondent finding contravention of Regulations 8,9 and 13 of the Regulations of 2000. It is on account of non-realization of export dues. The penalty on the appellant has been challenged giving reference to the facts which involve even the status of the appellant in the company till the year 2011. In fact, the appellant graduated in the year 2010 and got married immediately thereupon in the year 2011. She resigned from the company in the month of February, 2011. The period, subsequent to the aforesaid, cannot be taken into consideration against the appellant having resigned from the post of Director. It is otherwise a fact that no material has been placed on record that the appellant was in-charge of the affairs to realize the export proceeds. Her father was a Managing Director and was looking after the affairs of the company, which includes the export of goods and realization of the proceeds thereof. In any case, the appellant has made a proportionate calculation regarding her liability. At this stage I cannot go further deep into the matter, rather touching upon a prima facie case in that regard. Finding substance in the proportionate calculation made by the appellant giving out the amount to be of Rs.12.75 lakhs, I dispose of this application with a direction to the appellant to deposit the aforesaid sum within a period of four weeks to satisfy the condition of pre-deposit. Application is disposed of accordingly.
8. Let the appeal be listed on 02.12.2026.
