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Maars Software International Ltd. & Anr. v. Union of India & Ors.

Civil Appeal · 2019 INSC 550Decided 22 Apr 2019
Civil Appeal Nos. 4023-4025 of 2019
Justice Abhay Manohar Sapre · Justice Dinesh Maheshwari

Background

A Chennai-based software export company and its Managing Director faced enforcement proceedings under FEMA for allegedly failing to realize and repatriate export proceeds from overseas customers. The Special Director (Enforcement) imposed penalties of Rs. 4 crore and Rs. 1 crore respectively. The Appellate Tribunal set aside the penalties, but the Madras High Court, on appeal by the Union of India, reversed the Tribunal and restored the penalties, also dismissing the company's separate writ petition seeking a refund of the pre-deposit.

Decision Breakdown

The Supreme Court found that the High Court had proceeded on a factually incorrect assumption, that the company had placed no material on record to show what steps it took to realize and repatriate its export proceeds, whereas the Tribunal's own order showed the company had in fact filed such supporting material (Annexures A-15 to A-38), which the Tribunal had considered. Because the High Court failed to engage with this evidence, the Supreme Court set aside the High Court's judgment and sent the case back to the High Court to decide the appeals afresh on the merits, expressly without giving any opinion on who should ultimately win.

Lesson Learnt

An appellate court's decision can be overturned if it is based on a factual error about what evidence was actually placed on record: courts must engage with the real evidence before them rather than assume a party produced nothing.

Official source (sci.gov.in)View Judgment (PDF)

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