TMI Blog2018 (6) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... revention of Money-Laundering Act, 2002, do not require the reasons to be recorded in writing. If we are to read into the provision, such a requirement, the same in our considered opinion would lead to disastrous results, where notices under various enactments which provide for enquiry on the basis of a subjective satisfaction of the adjudicating Authority or the enquiry officer or the Disciplinary Authority would take a stand that those Authorities should also record their reasons for forming an opinion and communicate the same. - W.A.No.476 of 2017 C.M.P.No.7203 of 2017 - - - Dated:- 5-6-2018 - K. K. Sasidharan And R. Subramanian, JJ. For the Appellant : Mr.P.R.Raman, Senior Counsel for Mr.C.Seethapathy For the Respondents : Mr.G.Rajagopal Additional Solicitor General Assisted by Mrs.G.Hema, Special Public Prosecutor JUDGMENT R. Subramanian, J. 1. This intra-Court appeal has been filed by the petitioner in W.P.No.1748 of 2017 challenging the dismissal of the said Writ Petition by the learned Single Judge on 02.03.2017. The facts that led to the filing of the Writ Petition are as follows:- 2. The 2nd respondent in the appeal issued a show cause notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed accountants, the contraventions alleged to have been committed indicating the provisions of the Act or the Rules in respect of which, the contravention is alleged to have taken place. Therefore, according to the respondents, the requirement of communication of the reasons for arriving at a prima facie conclusion to proceed with further enquiry contemplated under sub-Rule 3 of Rule 4 cannot be read into the provisions. 6. The learned Single Judge who heard the Writ Petition along with other cases, after elaborate discussions of the rival contentions with reference to the provisions of the Rules, concluded that such a requirement of communication of the reasons which forms the basis of the opinion are not mandatory. The learned Single Judge also took note of the fact that the adjudicating Authority had furnished the petitioners a copy of his proceedings dated 04.11.2016, wherein, he had, after considering the explanation offered by the petitioners concluded that the contents of the complaint and the reply necessitate an in-depth examination and that an enquiry should be held in this case. The learned Single Judge was of the opinion that this would satisfy the requirements of Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in Shashank Vyankatesh Manohar Vs. Union of India and another referred to supra Mr.P.R.Raman, would contend that non-furnishing of the reasons would jeopardise the appellant and would have the effect of vitiating the further proceedings in the enquiry. The learned counsel would draw our attention to the following observations of the Bombay High Court made in Shashank Vyankatesh Manohar Vs. Union of India and another cited supra. In view of such serious consequences which would be inflicted upon the noticee against whom the adjudication order may be passed under Section 13 of the Act, the safe-guards provided by sub-rules (1), (2) and (3) of Rule 4 of the Adjudication Rules must be presented with dire penal consequences of being imprisoned for six months, apart from other liabilities and adverse consequences. Merely because the imprisonment would be in a civil prison and not in a criminal prison, would be no consolation to the person who was not responsible for contravention of FEMA. 11. The learned Senior Counsel would also point out that the judgment of the Bombay High Court in Shashank Vyankatesh Manohar Vs. Union of India and another cited supra was followed by another D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicating Authority has said that he is of the opinion that the allegations made in the complaint need in-depth examination, in the light of the reply to the show cause notice. 15. The sum and substance of the contentions of Mr.G.Rajagopal, learned Additional Solicitor General of India is that the mandatory requirement of recording reasons and communication of such reasons to the noticee cannot be read into the provisions of sub-Rule 3 of Rule 4 of the Rules relating to adjudication proceedings. He would also contend that if such requirement is read into the Rules, there is always a possibility of a noticee contending that the adjudicating Authority had reached a pre-conclusion regarding the merits of the matter. He would also submit that the Division Bench of the Bombay High Court had in fact observed that the communication of the reasons will not give a cause of action to the noticee to challenge them. He would also point out that the explanation of the noticee runs to several pages and contains several minute details which will have to be definitely examined by the adjudicating Authority. Inviting, our attention to sub-Rule 4 of Rule 4 which reads as follows: (4) On the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Authority to issue a show cause notice for the purposes of adjudicating as to whether any person has committed any contravention of the provisions of the Foreign Exchange Management Act. Sub-Rule 2 of Rule 4 requires the show cause notice issued under sub-Rule 1, to indicate the nature of contravention alleged to have been committed by him. Sub-Rule 3 of Rule 4 provides that if after considering the cause shown by the noticee, the adjudicating Authority is of the opinion that an enquiry should be held, he shall issue a notice fixing the date for appearance of that person either personally or through legal practitioner or a chartered accountant, duly authorised by him. 19. On a plain reading of the provisions, as already stated, we are unable to cull out a requirement of recording of reasons and communication of such reasons to the noticee, even at the stage of consideration of the reply to the show cause notice. Sub-Rule 4 of Rule 4 imposes an obligation on the adjudicating Authority to explain to the noticee or to his legal practitioner or to his chartered accountant, the contraventions alleged to have been committed with reference to the provisions of the Act, of the Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disciplinary authority to hold or not an enquiry, upon receipt of a reply to a charge memo in a disciplinary proceeding. Therefore, I do not think that there is any scope for expanding Rule 4 (3) to mean that the forming of the opinion as required in Rule 4 (3) has to be reflected by an order in writing containing reasons. The interpretation given by the Division Bench of the Bombay High Court in its expression 'opinion' appears to be very elastic. 23. This Court had in fact disagreed with the interpretation of the Division Bench of the Bombay High Court in Shashank Vyankatesh Manohar Vs. Union of India and another cited supra. Mr.P.R.Raman, learned Senior Counsel appearing for the appellant would draw our attention to the judgment of the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. Vs. Income-Tax Officer and Others reported in (259) ITR 19, wherein, the provisions of Section 148 of the Income Tax Act were considered and the Hon'ble Supreme Court held that while reopening an assessment under Sections 147 and 148 of the Income Tax Act, the Assessee whose assessment is sought to be reopened is entitled to seek from the Assessing Officer, the reasons reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocuments or evidence and the summoning and enforcing of the attendance of any person. 5. Passing of the orders. 26. We find ourselves in complete agreement with the views of the learned Single Judge in Ramakrishna Settu Vs. The Special Director, Directorate of Enforcement, Southern Region, Sastri Bhavan, Chennai -600006 case cited supra. We are unable to persuade ourselves to agree with the decisions of the Bombay High Court inasmuch as they read into the provision, the requirement which is not contemplated under the Rules. We are therefore of the view that the adjudicating Authority is not under any statutory obligation to communicate his reasons for forming an opinion to conduct an enquiry under sub-Rule 3 of Rule 4 of Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000. We may draw an analogy with the provisions of the Prevention of Money-Laundering Act, 2002. Section 5(1) of the said Act as amended by the Amendment Act, 2012 reads as follows: (1) Where the Director or any other officer not below the rank of Deputy Director authorised by the Director for the purpose of this section, has reason to believe (the reason for such belief to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
