Gama Ltd. issued purchase orders and paid advance for import of steel used in its manufacturing. In the meantime, as new Managing Director took charge of the Company, the finance and procurement teams were busy in briefi

The facts of the given situation are similar to the case of 'Suborno Bose (Appellant) v. Enforcement Directorate and Anr. (Respondents)' decided by Supreme Court. In the given case, it was held that the goods had arrived in India, but the Company failed to submit Bill of Entry and did not take delivery of the goods due to which the import formalities were not completed for want of submission of Bill of Entry. Thus, though the goods for which foreign exchange was remitted had reached the destination of the users, but the same were not released and as such kept in bonded warehouse. That resulted in contravention of Sec 10(6) of Foreign Exchange Management Act, 1999 (FEMA) read with Sec 46 and 47 thereof. The Supreme Court while hearing the appeal in the matter held that contravention in Section 10(6) of the Foreign Exchange Management Act, 1999 (FEMA) is a continuing actionable offence. The Company and the persons managing the affairs of the Company remain liable to take corrective measures in right earnest. Considering the admitted fact that the Managing Director (MD) took over the management of the Company and was fully alive to the default committed by the Company, yet failed to take corrective steps in right earnest. MD now cannot be heard to contend that no liability could be fastened on him individually. Indeed, FEMA regulations provides for the period within which the foreign exchange ought to be surrendered if the Company was not wanting to take delivery of the goods imported. That does not mean that the contravention ceased to exist beyond the specified period. On the other hand, after the specified period had expired, it would be a case of deemed contravention until rectified. Applying the above decision, it can be concluded that transaction under question is a deemed contravention of Sec 10 (6) of FEMA read with Sec 46 and 47 thereof and MD cannot escape penalty as imposed the adjudicating authority.