TTV Dhinakaran Case: Madras HC Dismisses ED’s Appeal Against Order

The Madras High Court has recently dismissed an appeal filed by the Enforcement Directorate, against order of a single judge, quashing the insolvency notice issued in the year 2001 to the Amma Makkal Munnetra Kazhagam leader TTV Dhinakaran for not having paid the penalty amount of ₹28 crore in a Foreign Exchange Regulation Act violation case.

Dismissing the appeal filed in the year 2005 by the ED, a division bench comprising Justices R Subramanian and R Kalaimathi granted liberty to the ED to proceed afresh against Dhinakaran to declare him as an insolvent.

The ED imposed a penalty of Rs 28 lakh on Dhinakaran in connection with a FERA violation case. Since he failed to pay the penalty amount, the ED had on March 1, 2001 issued notice under section 9 (2) of the Presidency Towns Insolvency Act, 1909.

Challenging this, Dinakaran filed a petition and a single judge set aside the insolvency notice. Aggrieved, the ED filed the present appeal.

According to Rajnish Pathiyil, a special public prosecutor for the ED, the bench has held that the ED was entitled to initiate proceedings against Dhinakaran under the PTI Act of 1909 and the penalty which was due was a ‘debt’ within the meaning of the Act.

Rajnish added, the bench upheld the order of a single judge since the earlier insolvency notice was issued when the appeal against the penalty imposition was pending before the high court and the order had not attained finality and hence at that time the issuance of notice was premature.