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Bombay HC: DRI should avoid taking coercive action against foreign directors

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Bombay High Court Law Insider

Mitali Palnitkar

Published On: January 14, 2022 at 15:51 IST

On January 13, 2022, the Bombay High Court stated that the Directorate of Revenue Intelligence (DRI) shall avoid taking coercive actions. This was in relation to DRI issuing Summons to Foreign Director of ZT Systems India.

The DRI is investigating various companies who might possibly evade the Customs duty by undervaluing the goods they import and ZT Systems India is one of them.

The Foreign Director of the company was asked to appear for questioning before the Investigators. Following which, the company filed a Writ Petition in Bombay High Court and challenged the Summons issued. The Foreign Director had shown the willingness to make a video submission to the investigators.

Abhishek A Rastogi (partner at Khaitan & Co) arguing for the company stated, “The intention of the Parliament and the government has been very clear to issue summons only under exceptional circumstances, and this must be followed, especially when such summons are issued to top management and foreign directors.”

He also stated, “Any coercive measure to recover money after the issuance of summons but without fair process of adjudication will always be a subject matter of dispute before the Courts.”

The Court accepted four weeks’ time to file a reply by the Lawyers representing DRI and the government.

Few legal experts opined that other Foreign Directors of Multinational Companies, summoned by the DRI for similar reasons may be benefited by the Court’s directions.