TMI Blog2013 (2) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... before forming an opinion that an inquiry is required to be held into the alleged contraventions by a noticee. Even the principles of natural justice and concept of fairness do not require the statute and the Rules to be so read. Any other interpretation may result in defeat of the very object of the Act. Concept of fairness is not a one way street. The principles of natural justice are not intended to operate as roadblocks to obstruct statutory inquiries. Duty of adequate disclosure is only an additional procedural safeguard in order to ensure the attainment of the fairness and it has its own limitations. The extent of its applicability depends upon the statutory framework.Thus at this stage, it cannot be stated that mere denial of the request for cross-examination has led to breach of principles of natural justice and thus, warranting an intercession by this court under Article 226 of the Constitution of India. - WP(C) 401/2013 & CM No. 802/2013 & WP(C) 402/2013 & CM No. 804/2013 - - - Dated:- 24-1-2013 - MR RAJIV SHAKDHER J. For the Petitioner: Mr. Rakesh Tikku, Sr. Advocate with Mr.Vijay Aggarwal, Mr. Mudit Jain, Mr. Ashish Dhingra and Mr. Hemant Chauhan, Advoctes For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecom Pvt. Ltd.). (in short Etisalat) 3.2 In so far as the petitioners were concerned alongwith five (5) other noticees, they were charged with contravention of the provisions of Section 42 of the FEMA. 3.3 In the complaint, it was alleged that Etisalat and the petitioners who alongwith other five (5) noticees were Directors in the said company at the relevant point in time had contravened the provisions of FEMA, resulting in violation to the tune of several thousand crores. The amount referred to in the complaint adds upto, approximately, Rs.7260 Crores. The complaint was accompanied by documents on which reliance is sought to be placed by the respondents, in the proceedings presently pending before the Special Director, DOE. The details of the documents on which reliance is sought to be placed, is set out in Annexure B, which accompanies the complaint. In all, there are sixteen (16) documents referred to in Annexure B, amongst which there are statements of three (3) persons made on various dates, the persons concerned are : Ahmed Shakir, Director Genex Exim Ventures Pvt. Ltd. (in short Genex) and Mr. Pratap Ghose, CFO of Etisalat, K. Vasudeva, Vice President (Finance), Etisala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Rule 4 of the Foreign Exchange Management (Adjudication, Proceedings and Appeal) Rule, 2000 (in short the Adjudication Rules), ought not to be held. The show cause notice further indicated that, in case a decision was reached that, adjudication proceedings were to be held then, the noticees would be required to appear either in person or through legal practitioner/chartered accountant duly authorized by them, to explain and provide such documents and evidence which may be useful or relevant to the subject matter of the proceedings in issue. The SCN adverted to the fact that DOE retained the right to issue a corrigendum or addendum on the basis of fresh evidence, if any, which they may receive in future. 3.7 In response to the aforementioned SCN, petitioners filed their preliminary reply dated 18.02.2012, after a gap of nearly seven (7) months. Pertinently, there is no averment to the effect that statements of persons supplied alongwith the complaint, could not be relied upon as they were not recorded in their presence. Furthermore, at this stage no request was made that the petitioners be granted an opportunity to cross-examine the persons whose statements had been supplie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n supplied with the complaint and whose names appeared in Annexure B was filed after a gap of more than two (2) months on 12.12.2012. 4.6 It is this application, which was, dismissed by the impugned order dated 03.01.2013. SUBMISSIONS OF COUNSELS 5. Mr. Tikku, learned senior counsel for the petitioner has assailed the impugned order on the following grounds:- (i) in passing the impugned order the adjudicating Officer had completely compromised the petitioner s right to cross-examine, which had resulted in breach of principles of natural justice; (ii) the provisions of Section 16 (1) of the FEMA, which mandate a grant of reasonable opportunity of being heard before imposing a penalty, encapsulated within it, the right to cross-examine any person on whose statement reliance is sought to be placed by the complainant. Mr. Tikku submitted that the adjudicating authority had wrongly construed the provisions of Rule 4(5) of the Adjudication Rules by holding that since the provisions of the Indian Evidence Act, 1872 (in short the Evidence Act) were not applicable to the proceedings, the right to cross-examination also stood excluded; (iii) The proceedings, which are conduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, the petitioners would have a further opportunity to submit documents and evidence, which may be relevant for the purposes of the proceedings conducted before the Adjudicating Authority. 6.1 It was Mr. Garg s submission that Rule 4(5) of the Adjudication Rules quite clearly indicated that the Adjudicating Authority was not bound to observe the provisions of the Evidence Act. 6.2 In support of his contentions, Mr. Garg placed reliance on the judgment of the Supreme Court in the case of Raj Kumar Shivhare Vs. Assistant Director, Directorate of Enforcement and Anr. (2010) 4 SCC 772, and A.K. Roy Vs. Union of India and Ors, (1982) 1 SCC 271. REASONS 7. Having heard the learned counsels for the parties and perused the documents placed on record, in my view, quite clearly the following emerges:- (i). pursuant to the complaint file against the petitioners under Section 16(3) of the FEMA on 01.07.2011, a copy of the same alongwith the documents, and statement of persons, relied upon were furnished to them; (ii). in respect of the complaint, a show cause notice was issued pursuant to which the petitioners filed a preliminary reply on 18.02.2012 nearly seven (7) months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances of the case, the nature of enquiry, the provisions of the statute and the rules as also the regulations governing the enquiry, the conduct of the person seeking to enforce the right of cross-examination i.e., as to whether such a right was demanded in the very first instance or not, and the prejudice, if any, caused to such a party by being denied the right of cross-examination on assessment of the entire material, which is placed before the authority conducting the enquiry. 7.3 It would be trite to say that principles of natural justice, simply put, only mean fair play in action. The recognized principles enunciated by courts, in this behalf, are that, the party against whom action is taken should be noticed and heard. Hearing to the party should be granted by a dis-interested and unbiased adjudicator. Bias itself has several refinements including the principle of likelihood of bias. Similarly, hearing in every case does not necessarily mean the right to demand oral hearing (see Union of India and Anr. Vs. Jesus Sales Corporation, (1996) 4 SCC 69). 7.4 In this particular case, respondents have substantially adhered to the principles of natural just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the Evidence Act. 7.7 As contended by Mr. Garg, before me, even at this stage, the petitioners would be at liberty to file documents or evidence in consonance with the provisions of Rule 4(5) of the Adjudication Rules to the extent they are relevant to the enquiry at hand. Therefore, the contention of the learned counsel for the petitioners that the denial of cross-examination would axiomatically lead to the conclusion that a breach of principles of natural justice has occurred, cannot be accepted. The appellate or a superior court (i.e., a writ court) should have the benefit of the final order to come to a conclusion that denial of cross-examination was prejudicial to the interest of the party seeking cross-examination. 8. To put the matter in perspective, I may refer to the following cases in which the Supreme Court has held that denial of cross-examination did not result in breach of the principles of natural justice. The first in the line of cases is the judgment of the Supreme Court in the case of M/s. Kanungo and Company Vs. Collector of Customs and Others, (1973) 2 SCC 438. In this case, the appellant before the Supreme Court, was charged with the offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proached the Supreme Court against an order of dismissal passed by the State Bank of India, which had been affirmed by the High Court. The order of dismissal was passed after an investigation was carried out, which inter alia involved recording of statements of persons involved in the impugned transaction. The appellant was charged with having indulged in financial irregularity. One of the main arguments, advanced on behalf of the appellant, was that, the material relied upon against him had been gathered in his absence, which included statement of witnesses, which were neither recorded in his presence nor, was he allowed to cross-examine the witnesses. The Supreme Court, while repelling this contention made on behalf of the appellant, made the following observations in paragraphs 29 to 34, which shed great clarity on the issue raised in the matter before me. ".....29. We are of the opinion that Mr. Garg is right that the rules of natural justice as we have set out hereinbefore implied an opportunity to the delinquent officer to give evidence in respect of the charges or to deny the charges against him. Secondly, he submitted that even if the rules had no statutory force and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had done exactly that deed. If the serpent had planted the evidence, or if he had beguiled Adam into eating it under the misapprehension that it came from another, non-forbidden tree, then Adam had not sinned and should not have been expelled from Eden. Only if the accused admits the charge, or, faced with the accusation, cannot explain his behaviour convincingly in any other way, are we logically entitled to conclude that he did indeed do it. 31. Wade in his Administrative Law', 5th Edition at pages 472-475 has observed that it is not possible to lay down rigid rules as to when the principles of natural justice are to apply: nor as to their scope and extent. Everything depends on the subject-matter, the application of principles of natural justice, resting as it does upon statutory implication, must always be in conformity with the scheme of the Act and with the subject-matter of the case. In the application of the concept of fair play there must be real flexibility. There must also have been some real prejudice to the complainant; there is no such thing as a merely technical infringement of natural justice. The requirements of natural justice must depend on the facts and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in that investigation. He gave his explanation but he did not dispute any of the facts nor did he ask for any opportunity to call any evidence to rebut these facts. He did ask for a personal hearing, as we have mentioned hereinbefore and he was given such opportunity or personal hearing His explanations were duly recorded. He does not allege that his version has been improperly recorded nor did he question the veracity of the witnesses or the entries or the letters or documents shown to him upon which the charges were framed and upon which he was found guilty. Indeed it may be mentioned that he was really consulted at every stage of preliminary investigation upon which the charges were based and upon which proposed action against him has been taken, In that view of the matter, we are of the opinion, that it cannot be said that in conducting the enquiry or framing of the charges or arriving at the decision, the authorities concerned have acted in violation of the principles of natural justice merely because the evidence was not recorded in his presence or that the materials, the gist of which was communicated to him, were not gathered in his presence. As we have set out hereinbefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doubt, been given the power of summoning and enforcing the attendance of any witness and examining him on oath, but the Act does not contain any provision which makes it mandatory for the witness to be examined, if such a witness could be produced. Rule 12(6) has to be read harmoniously with the other provisions of the Act and the Rules. As we have already noticed, Rule 12 (7) gives the Tribunal the power to act upon the affidavit of the applicant where the defendant denies his liability to pay the claims. Rule 12(6), if paraphrased, would read as follows: 1. The Tribunal may, at any time for sufficient reason order that any particular fact or facts may be proved by affidavit. on such conditions as the Tribunal thinks reasonable; 2. The Tribunal may at any time for sufficient reason order that the affidavit of any witness may be read at the hearing, on such conditions as the Tribunal thinks reasonable. 23. In other words, the Tribunal has the power to require any particular fact to be proved by affidavit, or it may order the affidavit of any witness may be read at the hearing. While passing such an order, it must record sufficient reasons for the same. The proviso to Rule 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph 12:- 12 There was no question about the incident. The only question was of identity. The names had been specifically mentioned in the complaint and, not to leave anything to chance, the Committee obtained photographs of the four delinquents and mixed them up with 20 other photographs of students. The girls by and large identified these four students from the photographs. On the other hand, if as the appellants say, they were in their own Hostel at the time it would not have been difficult for them to produce necessary evidence apart from saying that they were innocent and they had not gone to the girls Hostel at all late at night. There was no evidence in that behalf. The Committee on a careful consideration of the material before them came to the conclusion that the three appellants and Upendra had taken part in the night raid on the girls Hostel. The report was confidentially sent to the Principal. The very reasons for which the girls were not examined in the presence of the appellants, prevailed on the authorities not to give a copy of the report to them. It would have been unwise to do so. Taking all the circumstances into account it is not possible to say that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, the conduct of the party claiming the right to cross-examine and the prejudice caused to him. The prejudice in fact is required to have a tenor of a real prejudice not just a technical infringement of principles of natural justice. 10. As indicated by me, hereinabove, that such stage has not been reached and therefore, one would be slow to interdict the proceedings before the Adjudicating Authority, on the ground raised presently before me. In this regard, I may refer to a judgment of the Supreme Court in the case of State Bank of India Vs. Allied Chemical Laboratories and Anr. (2006) 9 SCC 252, wherein the High Court under Article 226 of the Constitution of India had interfered with the final decree passed by the Debt Recovery Tribunal (DRT) in favour of the appellant bank (SBI) under the RDB Act, on the grounds of violation of principles of natural justice, in as much as the respondents/debtors had been denied the right to cross-examine the witnesses, whose affidavits had been entertained by the DRT. The Supreme Court strenuously differed with the approach adopted by the High Court as, in its opinion the appropriate remedy to which the respondents/debtors ought to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Kerala General Sales Tax Act, 1963. In other words, in order to establish the veracity of information appearing in the respondent-assessee s book, he had necessarily to demolish the information appearing in the books of third party. The Supreme Court thus, while analyzing the rule of audi alteram partem made the following crucial observations: ".....It is, therefore, not possible to say that in every case the rule of audi alteram partem requires that a particular specified procedure is to be followed. It may be that in a given case the rule of audi alteram parem may import a requirement that witnesses whose statements are sought to be relied upon by the authority holding the inquiry should be permitted to be cross-examined by the party affected while in some other case it may not. The procedure required to be adopted for giving an opportunity to a person to be heard must necessarily depend on facts and circumstances of each case. (emphasis supplied) 13. In Alfred James Fernandes case proceedings were taken out against the respondent under the Foreign Exchange Regulation Act, 1973. The Supreme Court was dealing with an order passed in appeal by the Foreign Exchange Regulation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntextual background, that the Supreme Court remanded the matter to the Scrutiny Committee to cure the defect by giving due opportunity to the appellant for cross-examination. 14.1 As is clear there was a final order passed by the Scrutiny Committee, which discernibly pointed to a palpable prejudice caused to the appellant before the Supreme Court. The facts obtaining in the said case are clearly distinguishable when compared to the circumstances obtaining in the present case. 15. A similar situation obtains in S.C. Ghirotra's case where a final order of dismissal was passed qua the appellant employee based on materials available with the respondent-bank. The Supreme Court reversed the judgment of the Division Bench of the High Court on the ground that no opportunity was given to cross-examine the makers of such reports and certificates which formed the evidence to prove the charge of dismissal. 16. Lastly, in Natwar Singh case the Supreme Court was dealing with the situation wherein the appellant before it had assailed the order of the adjudicating authority on the ground that he had not been provided with all the documents which were in the possession of the adjudicating aut ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
