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TMI Blog2022 (3) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign institutional investors in country's stock markets, the present Foreign Exchange Management Act, 1999 (for short "FEMA") has been enacted. Chapter II deals with regulation and management of foreign exchange [Section 3 to 9]. Chapter III deals with authorized person [Section 10 to 12]. Chapter IV deals with contravention and penalties [Section 13 to 15]. Section 13 provides if any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorization is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty upto thrice the sum involved in such contravention where such amount is quantifiable, or up to Rs. Two Lakhs where the amount is not quantifiable etc. Section 14 provides for enforcement of the orders of Adjudicating Authority. Section 14A provides for power to recover arrears of penalty. Section 15 provides for power to compound contravention. Chapter V deals with adjudication and appeal [Section 16 to 35]. Section 16(1) provides for appointment of Adjudicating Authority for adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice dated 08.04.2021 has been issued to the petitioners bringing to their notice that the said complaint has been filed in connection with the contravention of provisions of Sections 7(1)(a), 7(3) and 42 of the FEMA read with Regulation 16 of the Foreign Exchange Management (Export of Goods & Services) Regulations, 2000, committed by them. Besides, the noticees have also been given to understand that prima facie the aforesaid case of contravention of the provisions of FEMA and the Rules & Regulations made thereunder is to the extent of Rs. 3,88,62,188/- (Rupees Three Crores Eighty Eight Lacs Sixty Two Thousand One Hundred Eighty Eight Only). Therefore, the noticees were required to show cause in writing within 30 days of the receipt of the notice as to why adjudication proceedings as contemplated under Section 13 of the FEMA be not held against them in the manner as provided under Rule 4 of 2000 Rules and as to why penalty be not imposed against them under Section 13(1) of FEMA. 5. The Adjudicating Authority, in order to enable the noticees to show-cause, has not only served the copy of complaint along with the notice but also provided an opportunity of inspection of documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g reasons for doing so. 6. Shri Lahoti, learned counsel, referring to the 2000 Rules submits that the respondent/authority while taking recourse to Rule 4 issuing the impugned show-cause notice dated 08.04.2021, in fact, disclosed its mind to proceed against the petitioners for purported contravention of provisions of 2000 Rules without even awaiting the reply to the notice. As such, the outcome of the proceedings after filing of reply shall be a fait accompli. Hence, the impugned notice cannot withstand the test of judicial scrutiny. He invited attention of the Court to Rule 4 of 2000 Rules which provides for holding of inquiry. Under sub-rule (1), a notice is issued to the person requiring him to show-cause, within said period as is specified by notice but not less than 10 days from the date of service of notice, why an enquiry should not be held against him. The notice so issued must indicate the nature of the contravention alleged against the person. Sub-rule (3) provides that after consideration of the cause, if any, shown by said person, the Adjudicating Authority has to form an opinion if an enquiry is required to be held. Thereafter, for further enquiry, a notice is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel, submits that the enquiry contemplated under Rule 4 is of immense significance with serious consequences. Adherence to the procedure prescribed is sine qua non to the concepts of natural justice and rule of law. Learned counsel submits that if a particular act is to be done in the manner in which it is provided in the Statute, there is no other way to do the act other than the manner in which it is required to be done. He refers to the judgment of Hon'ble Supreme Court in the case of State of Uttar Pradesh Vs. Singhara Singh & Ors. reported in AIR 1964 SC 358. With the aforesaid submissions, learned counsel for the petitioner submits that the the impugned show-cause notice dated 08.04.2021 and the notice for personal hearing dated 28.06.2021 cannot be sustained. He also relies upon the judgment of the Hon'ble Supreme Court in the case of Natwar Singh Vs. Director of Enforcement And Another reported in (2010) 13 SCC 255. 7. Per contra, Shri Newaskar, learned Astt. Solicitor General, appearing for respondent/Union of India, submits that the instant case is of contravention of provisions of FEMA and the rules and regulations made thereunder, to the tune of Rs. 3,88, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , by no stretch of imagination, complaint of prejudice or violation of principle of natural justice can be made by the petitioner. Further, notice was received by the petitioner, on his own saying, on 22.05.2021. Instead of filing reply within 30 days, as was granted, reply was filed on 17.06.2021 (Annexure P- 16) after undue delay. During this period, petitioner never approached the Adjudicating Authority for inspection of the original/said relied documents either in person or through authorized representative as was disclosed in the show-cause notice itself. Learned counsel further submits that in the obtaining facts and circumstances, the Adjudicating Authority, after consideration of reply and the material available, formed his opinion to proceed with the enquiry by issuing notice dated 28.06.2021 for personal hearing. As such, no fault can be found in issuance of impugned notice dated 28.06.2021. Petitioners shall be given full opportunity before the Adjudicating Authority as contemplated under sub-rule (4) to (8). It is further submitted that as contemplated under subsection (6) of Section 16, the Adjudicating Authority is required to deal with and dispose of the complaint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory forum of appeal on the question of law that should not be abdicated and given a go-by, by a litigant for invoking the forum of judicial review of the High Court under writ jurisdiction. In the instant case, even at the time of issuance of show cause notice dated 08.04.2021, petitioners were extended the opportunity of inspecting the document based whereupon the complaint has been made but the petitioners deliberately avoided the same. Hence, under such circumstances (supra), no interference is warranted and the writ petition deserves to be dismissed. 8. Heard. 9. It is settled law that the Court exercising extra-ordinary, constitutional jurisdiction under Article 226 of the Constitution of India generally does not countenance to the challenge made to show-cause notice issued to the petitioner unless of course show cause notice issued is without jurisdiction [coram non judice] or for want of provisions of law enabling issuance of notice. Otherwise, the petitioner is required to submit to the jurisdiction of the Authority issuing notice to show-cause on facts. Besides, the legal premise of the show-cause notice; a jurisdictional fact can also be urged by the noticee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of opinion based on material on record as discussed above under sub-rule 3 of Rule 4 of 2000 Rules, neither can be faulted with for non-application of mind nor criticised for want of compliance of principles of natural justice. As a matter of fact, fair procedure and the principles of natural justice are in-built into the rules which have been adhered to at both the stages of issuance of notices. For the lapse on the part of the petitioners in the matter of inspection of documents and filing reply to the show-cause notice in the context of the complaint supplied to the petitioner, the impugned show-cause notice dated 08.04.2021 and the notice for personal hearing dated 28.06.2021 cannot be assailed. In terms of sub-rule 4 of Rule 4 of 2000 Rules, after appearance of the petitioners in response to the notice for personal hearing, the Adjudicating Authority is required to explain to them or their representative as provided for the contravention alleged to have been committed by them. Thereafter, under sub-rule 5, the Adjudicating Authority shall then give an opportunity to the petitioners to produce such documents or evidence as they may consider relevant to the enquiry and if ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... always include, no doubt, a fair opportunity to those who are parties in the controversy for correcting or contradicting anything prejudicial to their view. (Emphasis Supplied) As a matter of fact, the aforesaid quoted portion of the cited judgment, in conformity with the procedure laid down, clearly spells out that on the date fixed for personal hearing, the Adjudicating Authority shall explain the contravention, alleged to have been committed by such person, which also includes inspection of documents likely to be used against him. Whereas in the instant case, the Authority, consciously has afforded an opportunity of inspection of documents even at the stage of show cause, reflected from paragraph 4 of the show-cause notice, though not availed by the petitioner. In view of the foregoing discussion on facts and law, we are of the view that no indulgence is warranted in the matter of issuance of impugned show-cause notice dated 08.04.2021 and the notice for personal hearing dated 28.06.2021. 11. The Adjudicating Authority is yet to hold an enquiry and thereafter take a decision to initiate proceedings for imposition of penalty under Section 13 of the FEMA. Thereafter, the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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