NEW DELHI, July 28: While the ITC camp is jubilant over its "victory" over its estranged US partners Suresh and Devang Chitalia in a New Jersey court earlier this month, sources say the matter may have little bearing on the $ 180 million foreign exchange violation case slapped on ITC in 1996. Since much of the Enforcement Directorate's FERA case was based on initial evidence provided by the Chitalias, the ITC camp is arguing that the court judgment weakens the ED's case considerably.Earlier this month, a US district judge, Katherine S Hayden, confirmed earlier strictures passed by a US court against the Chitalias - the case pertains to a suit by ITC claiming that the Chitalias owed it $ 15.94 million. Following ITC's suit against the Chitalias, the Chitalias had filed a counter-suit saying that ITC owed them $ 55 million.ED sources, however, point out that Judge Hayden's order - which, in turn, confirms an earlier order by Judge Hedges on March 26 - actually dismisses a $ 13.5 million Chitalias'claim on ITC on technical grounds. Essentially, since the Chitalias refused to disclose various relevant documents and accounting books despite the court orders directing them to do so.ED officials, however, say that judge Katharine S Hayden had given a ruling only on the "discovery laws" under which the Chitalias should have supplied copies of all evidence and documents given to the ED, to the ITC as well as the US court. A perusal of the two-page order shows that judge Hayden feels the earlier recommendation exacted "appropriate sanction" against the Chitalias.It states that the Chitalias had tried to explain some of their "indiscretions" but in the end they admitted "that certain material may not have been provided in the most expeditious manner." Following the order, US district judge, Ronald J. Hedge passed another order stating that the hearings in the ITC-Chitalia case would continue on September 28 and that a list of witnesses and exhibits should conclude before September.This, ED sourcessay, was a clear indication that the case was far from concluded and that no verdict had been passed in favor of ITC. It is to be recalled that ITC, along with its subsidiary, ITC Global Holdings Pvt. Ltd, Singapore had filed a suit in the US against Suresh and Devang Chitalia for the recovery of $ 15.94 million as dues. The Chitalias had filed a counter-claim of around $ 55 million against the company out of which $ 41 million have already been dismissed by the US court.Since October 1996, when the ITC-ED face-off began, the tobacco major has received 20 show-cause notices for violations totalling $ 180 million. Among others, the ITC Chairman, M L Chugh had been arrested and remained in judicial custody for over a month. The final show-cause notice against the company was filed in June this year. The main charge of the ED against ITC is for under-invoicing lead tobacco exports from its International Leaf Tobacco Division (ILTD) and then acquiring, retaining and utilising these funds abroad between1990-1996. Suresh and Devang Chitalia had provided the ED documents which proved to be the mainstay of the charges.
