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2018 (6) TMI 389

ule 4 of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 in writing and also communicate the same to the noticee if required by the noticee before proceeding with an enquiry? - Held 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. - Whenever a statute requires a particular thing to be done in a particular manner, it is a trite position of law that it should be done in that manner alone and not otherwise. The provisions of sub-Rule 3 of Rule 4 in contra distinction to the provisions of the Section 5(1) of the Prevention 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 adjudicatin .....

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djudication Proceedings and Appeal) Rules, 2000 is erroneous. All that is required by the said Rule is that the adjudicating Authority viz., the 2nd respondent should form an opinion on the explanation of the noticee and if the Authority concludes that despite the explanation offered, a further enquiry should be undertaken, he shall issue a notice fixing the date for appearance of the noticee. The Rule, according to the respondents, does not in its terms require recording of reasons which are the foundation for the formation of the opinion regarding further proceedings and communication of the same to the noticee. 5. It was also contended that sub-Rule 4 of Rule 4 makes it obligatory on the part of the adjudicating Authority to explain to the noticee or his legal practitioner or his chartered 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 .....

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oticee should be furnished with a copy of the reasons, so as to enable him to know the basis on which the Authority has decided to proceed with the enquiry. 9. This according to him, would prevent arbitrary decisions on the part of the adjudicating Authority in proceeding with an enquiry. The learned Senior Counsel would however concede that those reasons cannot be a subject matter of challenge. He would also rely upon the judgments of the Division Bench of the Bombay High Court in Shashank Vyankatesh Manohar Vs. Union of India and another in W.P.No.5305 of 2013 dated 7th August 2013 and in Lalit Kumar Modi Vs. Special Director, Directorate of Enforcement in W.P.No.1703 of 2013 dated 6th February 2014. 10. Relying heavily upon the observations of the Bombay High Court 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 c .....

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as observed as follows: This forming of opinion need not be a detailed consideration of all the submissions but must show application of mind to the objections raised by the noticee. In case the objections are such as would require detailed consideration, the authority concerned can dispose of the objections by stating that the same would require detailed consideration, which would be done at the disposal of the notice by the final order. 14. Relying upon the above observations of the Division Bench of the Bombay High Court, Mr.G.Rajagopal, learned Additional Solicitor General of India would submit that the proceedings dated 04.11.2016, a copy of which had been duly served on the appellant would satisfy the requirements of law inasmuch as the adjudicating 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 R .....

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ankatesh Manohar Vs. Union of India and another cited supra had read into the Rules, the requirement of such recording of reasons and communication of it to the noticee. We are unable to persuade ourselves to agree with the conclusions of the Division Bench of the Bombay High Court. It is not seen from the report as to whether the provisions of sub-Rule 4 of Rule 4 were considered by the Bombay High Court. 18. As rightly pointed out by the learned Additional Solicitor General of India, such a requirement does not appear on a plain reading of the Rules. We have already extracted sub-Rule 3 of Rule 4 of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000. Sub-Rule 1 of Rule 4 requires the adjudicating 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 .....

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ken note of the judgment of this Court in Ramakrishna Settu Vs. The Special Director, Directorate of Enforcement, Southern Region, Sastri Bhavan, Chennai -600006 rendered in W.P.No.20592 of 2014 dated 25.08.2014, wherein, this Court has set out the scope of the enquiry to be conducted by the adjudicating Authority under the provisions of the Foreign Exchange Management Act, 1999. This Court had in the said judgment observed as follows: 10. Therefore, 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 under sub-rule (3) or Rule 4, is almost akin to the forming of an opinion by a 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 i .....

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e of show caue 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 enquiry should be held. 3. The explanation of the adjudicating authority in person, either to the noticee or to his authorised representative, the contravention committed by the noticee with reference to the provisions of the Act or the Rules or the Regulations. 4. Giving an opportunity to the noticee to produce such documents 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 contemplat .....

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