Judgment Gauguly, J.: 1. This appeal under Section 54 of Foreign Exchange Regulation Act, 1973 has been filed by M/s. Shaw Wallace & Company Limited (hereinafter called the appellant) against the order dated 5.2.1992 of the Foreign Exchange Appellate Board (henceforth, the Board). Prior to the issuance of the order by the Board, an adjudication took place against the appellant under Foreign Exchange Regulation Ad, 1973 (hereinafter called FERA'73).. In the adjudication, the nuin cl1arge against the appellant was as follows : "Shaw Wallace & Co. Ltd., Calcutta were issued with a Memorandum bearing No. T-4/1/SU/85/SON dated 12.3.85 asking them to show cause why adjudication proceedings should not be held against them for contravention of Section 27(6) of Foreign Exchange Regulation Act, 1973 in respect of breach of the Condition (c) to the permit of the Central Government dated 4.4.77 and contravention of Section 26(2) of the said Act by non-compliance with the directions issued by the Reserve Bank of India by their letter dated 10.11.78, both read with Section 49 of the said Act." 2. In answering with the said charge, the appellant issued a reply and the adjudicating authority, after considering the reply and hearing the appellant, decided to impose a penalty of Rs. 100,000/- and another amount of Rs. 10,000/- on the appellant in view of two counts of charges as mentioned above. Apart from the aforesaid amount of penalty certain directions were also issued on the appellant. On appeal, the Hoard affirmed the order of adjudication by its order dated 5.2.1992 as mentioned above. 3. Nobody appeared for the respondent authorities at the time of hearing of the appeal before this Court. 4. The admitted facts of this case are that at the material time, the appellant, a Company incorporated under the Indian Companies Act, 1913 held 47, 445 ordinary shares of £ 1 each and this constituted the whole of the share capital of Shaw Wallace Overseas Limited (hereinafter called SWOL). It is an admitted position that SWOL is a Foreign Company and a subsidiary of the appellant. 5. In connection with SWOL, an application dated 3.8.76 was filed by the appellant seeking permission under Section 27 of the FERA 73 to continue association with SWOL and after the said application was made, permission was granted by under Secretary to the Government of India by order dated 4.4.77. 5. In connection with SWOL, an application dated 3.8.76 was filed by the appellant seeking permission under Section 27 of the FERA 73 to continue association with SWOL and after the said application was made, permission was granted by under Secretary to the Government of India by order dated 4.4.77. The said permission was granted on the following three conditions :- "(a) The annual balance sheet and profit & loss account of the subsidiary will be submitted to the Reserve Bank of India, Bombay. (b) You will comply with such requirements as the Reserve Bank of India may direct under the FERA 73. (c) The subsidiary would make no investment (this would not cover normal operating expenses) without the Reserve Bank of India's approval. " 6. There is also another letter dated 10.11.78 from the Joint Controller, Reserve Bank of India, Exchange Control Department to the appellant about SWOL. Since SWOL is a Company specified in explanation Section 1 to Section 26 of FERA 73, the appellant was directed to the following effect by the Joint Controller. The operative portion of the said direction is given below :- "M/s. Shaw Wallace Overseas Ltd., London (i) to declare and pay every year commencing from the year 1978, dividend at such rate so that the total amount distributed by way of dividends shall not be less than 10% (ten percent) to the relative year's distributable profits of the said Company, (ii) to repatriate to India through normal banking channels the dividends so declared and payable to you in respect of all the shareholdings in M/s. Shaw Wallace Overseas Ltd., London and produce to us documentary evidence in that behalf and (iii) to reconstitute the Board of Directors of Shaw Wallace Overseas Ltd., London as may be necessary to secure compliance with the (1), above." 7. The adjudication, in the instant case, is virtually arising out of alleged violation of the conditions namely, Condition (c) in the letter dated 4.4.97 stated above and also the violation of the condition relating to declaration of 10% dividend by SWOL from its distributable profits. 8. The learned Counsel appearing for the appellant submitted that in the instant case there is hardly any factual dispute, in the sense that it is not in dispute that SWOL made an investment of 3% in British Gas Stock but the learned Counsel virtually urged two points. 8. The learned Counsel appearing for the appellant submitted that in the instant case there is hardly any factual dispute, in the sense that it is not in dispute that SWOL made an investment of 3% in British Gas Stock but the learned Counsel virtually urged two points. The first contention is that it is an admitted position that in the investment there is no question of any Foreign Exchange going out of this country. In fact, there is no outflow o(Foreign Exchange even from the appellant. It is an investment by a Company in United Kingdom to another Company in United Kingdom. Therefore, the provision of Section 27 of FERA 73 is not applicable. In this connection, the learned Counsel relied on a letter dated 28.9.81 of the Central Government in order to show that no permission is required in a situation where no outflow of Foreign Exchange is involved. In support of this contention, the learned. Counsel for the appellant has relied on the decision of the Division. Bench of Calcutta High Court in the case of (1) The Director. Enforcement Directorate and Others v. Saroj Kumar Bhotika & Anr. reported in AIR 1978 Calcutta 65. 9. The learned Counsel for the appellant has drawn the attention of this Court to Paragraph 35 in Saroj Kumar Bhotika (supra). The learned Counsel submitted that the purpose of FERA ,'73 is to prevent leakage of Foreign Exchange and the conservation of Foreign Exchange resources and proper utilization therof. 10. Relying on those observations, the learned Counsel urged that .in the instant case as the question of outflow of Foreign Exchange is not involved no permission is required from the RBI for the investment in question. So there is no violation by the appellant and there cannot be any imposition of penalty on the appellant. 11. The other contention which has been urged in the instant case is that the investment has been made by a Foreign Company in another Foreign Company and in such transactions Section 27 is not attracted and this will be clear from sub-section (7) of Section 27 of FERA 73 as admittedly SWOL is not an Indian Company. 12. It is contended that restriction arising out of Section 27 cannot be applied to control investment by a Foreign Company. 12. It is contended that restriction arising out of Section 27 cannot be applied to control investment by a Foreign Company. The learned Counsel further submits that Condition (c) of the letter dated 4.4.77 is violative of Section 27 and in support of this contention the learned Counsel has again relied on an observation in Paragraph 66 in Saroj Kumar Bhotika (supra). The learned Counsel particularly relied on an observation in Saroj Kumar Bhotika (supra), to the effect that there is no estoppel against something which is legally unenforceable. Since in the instant case, the restrictions in Clause 'C' of the letter dated 4.4.77 is legally an unenforceable, there is no violation of law if Clause 'C' of the letter dated 4.4.77 is breached. The learned Counsel contended that the appellant was asked to apply for permission by the letter dated 21.6.76 from the RBI so it had applied for permission from the RBI and permission was also granted by the RBI but Condition (c) is clearly legally unenforceable in law: The appellant, it was contended, could not bargain with the RBI on those conditions. But, the learned Counsel points out that this does not mean that Condition (c) would become legally enforceable. 13. In so far as the other allegation against the appellant is concerned, namely, the violation arising out of non-compliance with the condition in the letter of the RBI dated 10.11.78 to the extent that SWOL has not declared 10% dividend from its distributable profits, the stand of the appellant is that the said condition has not at all been violated by the SWOL. 14. In other words, the learned Counsel contended that the condition is for declaration of not less than 10% dividend from the distributable profits of the relative year. But, the question of complying with the said conditions would arise if there is any distributable profit. In the instant case the learned Counsel has drawn the attention of this Court to the stand taken by the appellant in the reply to the show cause notice. In the reply to the show cause notice it has been explained that there is no distributable profit for the purpose of declaration of dividend. In the instant case the learned Counsel has drawn the attention of this Court to the stand taken by the appellant in the reply to the show cause notice. In the reply to the show cause notice it has been explained that there is no distributable profit for the purpose of declaration of dividend. The particulars given in this connection are set out below :- For the financial ( Loss ) Profit ( Loss) Profit Cumulative loss Years ended before taxation after taxation 31.12.77 £ (16,055) (17,502) - 31.12.78 £ (29,170) (29,184) (46,616) 31.12.79 £ 4,637 2,187 (44,429) 31.12.80 £ 5,516 2,607 (45,822) 31.12.81 £ 5,314 1,981 (39,641) 31.12.82 £ 6,034 2,648 (36,993) 30.6.84 £ 26,626 27,669 (64,662) 15. The learned Counsel submitted that in the adjudication order the adjudicating authority has accepted the very same figures which have been disclosed in the reply to the show cause notice but the adjudicating authority has made a confusion between profit after taxation and distributable profit. In other words, the learned Counsel submitted that there has been some profit of SWOL for the years in question but taking into account the overall picture of accumulated loss there is no distributable profit. The learned Counsel further submitted that the adjudicating authority made an error in law by not properly appreciating the concept of distributable profit. 16. In this connection, the learned Counsel for the appellant has drawn the attention of the Court to the concept of profits available for distribution under Companies Act, 1980. The concept of profits available for distribution as• elaborated under Section 39 (2) of Companies Act, 1980 is set out below :- "(2) For the purposes of this part of this Act, but subject to Section 41 (1) below, a Company's profits available for distribution are its accumulated, realised profits, so far as not previously utilized by distribution or capitalization, less its accumulated, realised losses so far as not previously written off in a reduction or reorganization of capital duly made." 17. Profits available for dividend would mean 'the profits which the directors consider, should be distributed after making provision for past losses, for reserve or for other purposes' (Ramaiya, Companies Act, 14th Edition, p. 1501). 18. It is thus clear that profits and distributable profits are two different concepts. Profits available for dividend would mean 'the profits which the directors consider, should be distributed after making provision for past losses, for reserve or for other purposes' (Ramaiya, Companies Act, 14th Edition, p. 1501). 18. It is thus clear that profits and distributable profits are two different concepts. This aspect relating to distributable profit has not been taken into account by the adjudicating authority as has been rightly pointed out by the learned Counsel for the appellant. 19. This Court, on consideration of aforesaid contentions of the learned Counsel for the appellant, finds that so far as the charge against the appellant for non-declaration of dividend to the extent of at least 10% out of the distributable profits of SWOL is concerned, no violation can be said to have been committed by the appellant. SWOL being a Foreign Company, the appellant has very little to do with its distribution, of profit. Apart from that, since there is no distributable profit as is understood and accepted by all concerned there is no, question of declaration of dividend out of that. The learned Counsel for the appellant is right in pointing out that the concept of profit and concept of distributable profit are two different things. The concept of distributable profit will have to take into account the figure of the accumulated Joss and, thereafter, if profit survives that will only be distributable profit. Since there is no finding either by the adjudicating authority or by the said Board that after taking into account the accumulated loss of SWOL, there survives any profit for distribution, the finding by the adjudicating authority which has been affirmed by the appellant authority that the appellant is guilty of violation of non-declaration of dividend out of distributable profit is a finding which is totally based on no evidence. Such a finding cannot be the basis for fastening any penalty on the appellant. Therefore, the finding of the authorities that there is any violation on the part of the appellant in the matter of non-declaration of dividend by the appellant out of distributable profit of SWOL is quashed. So far as the other findings is concerned the same also cannot be sustained, inasmuch as the Condition (c) in the letter dated 4.4.77 cannot be upheld ignoring the provisions of sub-section (7) of Section 27 of FERA 73. So far as the other findings is concerned the same also cannot be sustained, inasmuch as the Condition (c) in the letter dated 4.4.77 cannot be upheld ignoring the provisions of sub-section (7) of Section 27 of FERA 73. The learned Counsel for the appellant is right in submitting that if a condition is legally unenforceable the said condition cannot be implemented and the appellant cannot be made liable for violation of such a condition. Actually, the admitted position is that there is no outflow of Foreign Exchange in the event of SWOL investing in British Gas Stock. In such investment, the permission of RBI is not required. However, considering the aspect both these angles this Court finds there is no violation of the appellant in this aspect. For the reasons aforesaid, this Court finds the order of adjudication cannot be sustained and should not have been upheld by the appellate Board. The Court, therefore, allows the appeal and both the orders of the adjudicating authority and the order of appellate Board are, therefore, quashed. There will be no order as to costs. . Ray, J.: I agree. S. K. G.