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Ramakrishna Setty Versus Special Director, Directorate of Enforcement, Southern Region, Chennai

2014 (8) TMI 1105 - MADRAS HIGH COURT

Complaint filed under Section 16(3) FEMA - Writ of mandamus to forbear the respondent from proceeding further with the adjudication in pursuance of a show cause notice, without complying with a particular Rule - Held that:- The scheme of Section 4 actually provides opportunities at the every stage to the noticee. The forming of an opinion at the stage of show cause notice and receipt of reply, as provided in sub-rule (3) of Rule 4, is almost akin to the forming of an opinion by a disciplinary au .....

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f Rule 4(3) had already been passed. The enquiry had actually come, at the time when the petitioner moved this Court, to the stage of Rule 4(8). Therefore, it is not possible now to put the clock back or rewind the proceedings back to the stage of Rule 4(3). - After all, the requirement of Rule 4(3) even if the interpretation given by the Division Bench of the Bombay High Court [2013 (8) TMI 435 - BOMBAY HIGH COURT] is taken to be correct, should be seen only as part of the principles of nat .....

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urther with the adjudication in pursuance of a show cause notice, without complying with a particular Rule. 2. Heard Mr.S.Ramachandran, learned counsel for the petitioner and Mr.M.Dhandapani, learned Standing Counsel for the respondent. 3. The petitioner was issued with a show cause notice dated 14.02.2011, by the respondent, on the basis of a complaint filed under Section 16(3) of the Foreign Exchange Management Act, 1999. The petitioner filed his reply to the show cause notice, on 27.12.2012. .....

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liable to form an opinion and record the reasons for such opinion, before initiating the enquiry, after the issue of a show cause notice and the receipt of the reply. A Division Bench of the Bombay High Court interpreted Rule 4(3), in Shachank Vyankatesh Manohar vs. Union of India, 2013 (5) ALL MR 551 to mean that after the issue of show cause notice and the receipt of objections, the adjudicating authority is required to apply his mind to the objections by recording his reasons for forming an .....

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ve submissions. Before taking up the said legal issue for consideration, it would be useful to have on record certain dates and events which are as follows:- 1. The show cause notice was issued on 14.02.2011. The petitioner did not submit his reply. 2. A call notice was issued on 14.12.2012 for a personal hearing. The petitioner appeared through advocate and sought adjournment to the month of March 2013. 3. A call notice dated 16.01.2013 was issued, listing the case for hearing on 23.03.2013. Th .....

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challenged by the petitioner in W.P.No.18096 of 2013. But the writ petition was dismissed on 30.08.2013. The petitioner filed a writ appeal in W.A.No.2034 of 2013. 8. Since there was no stay in the writ appeal, a fresh call notice was issued on 23.04.2014 fixing the date of hearing on 20.05.2014. The hearing was later adjourned to 29.05.2014. The petitioner sought adjournment and the hearing got postponed to 30.06.2014. Since an adjournment was sought once again on 30.06.2014, a fresh notice wa .....

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ers. 7. In the meantime, the above writ petition came up for hearing on 04.08.2014. On the said day, the counsel for the respondent took notice. Since he took notice, the respondent has not so far passed any order on the proceeding. 8. Keeping the above consequences and events in mind, let us have a look at Rule 4 of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000, which reads as follows:- "4. Holding of inquiry.- (1) For the purpose of adjudicating under s .....

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him. (3) After considering the cause, if any, shown by such person, the Adjudicating Authority is of the opinion that an inquiry should be held, he shall issue a notice fixing a date for the appearance of that person either personally or through his legal practitioner or a chartered accountant duly authorised by him. (4) On the date fixed, the Adjudicating Authority shall explain to the person proceeded against or his legal practitioner or the chartered accountant, as the case may be, the contr .....

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may be adjourned to future date and in taking such evidence the Adjudicating Authority shall not be bound to observe the provisions of the Indian Evidence Act, 1872 (1 of 1872). (6) While holding an inquiry under this rule the Adjudicating Authority shall have the power to summon and enforce attendance of any person acquainted with the facts and circumstances of the case to give evidence or to produce any document which in the 1 opinion of the Adjudicating Authority may be useful for or relevant .....

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iting, impose such penalty as he thinks fit, in accordance with provisions of Sec. 13 of the Act. (9) Every order made under sub-rule (8) of the rule 4 shall specify the provisions of the Act or of the rules, regulations, notifications, direction or orders or any condition subject to which an authorisation is issued by the Reserve Bank of India in respect of which contravention has taken place and shall contain 2[***] reasons for such decisions. (10) Every order made under sub-rule (8) shall be .....

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to (12) of Rule 4 would show that the enquiry by the respondent, comprises of five stages, which are as follows:- 1. The issue of show cause notice of a duration of not less than ten days, calling upon the person to show cause as to why an enquiry should not be held, for any contravention. 2. The issue of a notice fixing the date for the appearance of the person, if after considering the cause shown by the person to the show cause notice, the adjudicating authority is of the opinion that an enq .....

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