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TMI Blog2023 (6) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Deepak Bhattacharjee, learned senior counsel representing Mr. Dishit Bhattacharjee, learned counsel for the Petitioner in W.P. No. 35702 of 2022 and Mr. Vedula Srinivas, learned senior counsel representing Mr. V. Aneesh, learned counsel for the Petitioners in W.P. No. 37659 of 2022. Mr. Anil Prasad Tiwari learned standing counsel for the Directorate of Enforcement (hereinafter referred to as 'ED') for the Respondents in both the writ petitions. 4. For the sake of convenience, the parties in W.P. No. 37659 of 2022 will be referred to as the Petitioners and Respondents. Facts of the case 5. M/s Telearc Technologies Pvt. Ltd. (formerly known as Teleonto Tecnologies Pvt. Ltd.) is the Petitioner No. 1 in W.P. No. 37659 of 2022 and is represented by its Managing Director who is Petitioner No. 2 in the said writ petition. 6. According to the Respondents, on receipt of credible information that M/s Teleonto Tecnologies Pvt. Ltd. was involved in fraud and misappropriation of funds, an investigation was initiated under the Foreign Exchange Management Act, 1999 (hereinafter referred to as 'the Act, 1999') on file bearing F.No. T- 3/10/HZO/2014. 7. After the completion of investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner in W.P. No. 35702 of 2022 acquired the shares worth Rs. 8,46,90,000/- from M/s Webford Baseline Ltd. at a price of Rs. 1/- on 12.10.2010 and on the same day he was appointed as a director in M/s Teleonto Tecnologies Pvt. Ltd. 10. It is further alleged that the said transfer of shares in favour of the Petitioner in W.P. No. 35702 of 2022 was done in lieu of a loan agreement/transfer of debt arrangement to a tune of Rs. 2,70,00,000/- Subsequently, the said shares held by the Petitioner in W.P. No. 35702 of 2022 were transferred to Petitioner No. 2 in W.P. No. 37659 of 2022. 11. Therefore, it is alleged that the Petitioner in W.P. No. 35702 of 2022 did not adhere to the pricing guidelines and has contravened Section 6(3)(b) of the Act, 1999 r/w Regulation 10(B) and Para 10 of Schedule I of the Regulations, 2000 to an extent of Rs. 2,70,00,000/- 12. Based on the said complaint, show cause notices dated 25.07.2019 were issued to the Petitioners. The Petitioners replied to the show cause notices on 09.08.2019 and 21.12.2020. Subsequently, personal hearing notices dated 30.12.2020 were issued to the Petitioners and oral hearings were conducted on 11.01.2021 and 13.01.2021. 13. Sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 05.09.2022 without providing and reasons or considering the contentions of forgery. Reliance was placed on JP Morgan India Private Ltd. v. Special Director, Directorate of Enforcement [WP(C) Nos.6239 and 6240 of 2020] to contend that Adjudicating Authority performs a quasi-judicial function and shall record reasons. vi. The impugned order is non-est and nullity as it is vitiated by fraud. Reliance was placed on A.V. Papayya Sastry Vs. Govt.of A.P. (2007) 4 SCC 221. vii. The Petitioner lodged a criminal complaint dated 06.09.2022 against the alleged forgery of documents and signatures. viii. The show cause notice dated 05.08.2022 is a fresh show cause notice and the same is contrary to Section 16(3) of the Act, 1999 as the same is not preceded by a complaint. ix. The impugned order violates principles of natural justice as the complaint dated 20.06.2019 and the impugned order dated 05.09.2022 were passed by the same rank officer i.e., the Deputy Director. 16. Contentions of the Petitioners in W.P. No. 37659 of 2022 i. The complaint dated 20.06.2019 was filed belatedly and in relation to the contraventions committed between 2009 to 2015. Therefore, the said complaint and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the case concerning the Petitioners involved only Rs. 4,87,83,548/- Therefore, the Deputy Director was empowered to pass the impugned order dated 05.09.2022. Findings of the Court:- 18. In principio, this Court will have to decide the maintainability of the present writ petitions. The Supreme Court has time and again reiterated that a writ petition is not maintainable when an efficacious alternative remedy is available. It is only in certain limited circumstances that a writ petition can be entertained, despite there being an alternative remedy. 19. In Assistant Commissioner of State Tax v. Commercial Steel Limited 2021 SCC OnLine SC 884., a full bench of the Supreme Court held that a writ petition, in presence of an alternative remedy, is maintainable only in exceptional cases. The relevant paragraph is extracted below: The existence of an alternate remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution. But a writ petition can be entertained in exceptional circumstances where there is: (i) a breach of fundamental rights; (ii) a violation of the principles of natural justice; (iii) an excess of jurisdiction; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Pinochet [1999] UKHL 52., decided by the House of Lords held as follows: The fundamental principle is that a man may not be a judge in his own cause. This principle, as developed by the courts, has two very similar but not identical implications. First it may be applied literally: if a judge is in fact a party to the litigation or has a financial or proprietary interest in its outcome then he is indeed sitting as a judge in his own cause. In that case, the mere fact that he is a party to the action or has a financial or proprietary interest in its outcome is sufficient to cause his automatic disqualification. The second application of the principle is where a judge is not a party to the suit and does not have a financial interest in its outcome, but in some other way his conduct or behaviour may give rise to a suspicion that he is not impartial, for example because of his friendship with a party. This second type of case is not strictly speaking an application of the principle that a man must not be judge in his own cause, since the judge will not normally be himself benefiting, but providing a benefit for another by failing to be impartial. 27. The Supreme Court in J. Mohapat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on who is competent or authorized to adjudicate or if a quorum cannot be formed without him or if no other competent tribunal can be constituted. In such cases the principle of natural justice would have to give way to necessity for otherwise there would be no means of deciding the matter and the machinery of justice or administration would break down. Thus, in The Judges v. Attorney- General for Saskatchewan [(1937) 53 TLR 464 : 1937 WN 109] the Judges of the Court of Appeal were held competent to decide the question whether Judges of the Court of Appeal, of the Court of King's Bench and of the District Courts of the Province of Saskatchewan were subject to taxation under the Income Tax Act, 1932, of Saskatchewan on the ground that they were bound to act ex necessitate. The doctrine of necessity applies not only to judicial matters but also to quasi- judicial and administrative matters. The High Court, however, wrongly applied this doctrine to the author-members of the Assessment Sub- Committee. It is true, the members of this Sub-Committee were appointed by a Government Resolution and some of them were appointed by virtue of the official position they were holding, such as, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e consumers may be represented by an advocate and the formula for making provisional assessment is fixed in the clause itself. An argument has been advanced that the Board has recently deleted the provision enabling the consumer to be represented by a power-of-attorney agent. It is contended that the consumer is thereby deprived of the assistance of an expert which may be required in technical matters. We do not agree. When the consumer is represented by a lawyer, he can certainly get such assistance as may be needed from a technical expert. It is stated by the Board's learned counsel that the provision was deleted as there was frequent misuse of the same. Whatever may be the reason for deleting the provision, the existing part of the clause enables the consumer to be represented by an advocate. That is sufficient safeguard for the consumer. 32. In Union of India v. Vipan Kumar Jain (2005) 9 SCC 579., dealt with a case where the assessment by the Assessing Officer was challenged on the ground of bias alleging that the same officer conducted search under the Income Tax Act, 1961. The Court rejected the allegation of bias held that bias cannot be presumed where the statute grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wered to appoint the assessing officer as an authorised officer under Section 132 without any foundation for such conclusion being laid in any manner whatsoever by the writ petitioners. 7. Apart from the absence of any challenge to the provisions of the Act relating to the jurisdiction of the assessing officer to carry out the search under Section 132, subject to his being appointed as an authorised officer thereunder, we are of the view that there is no question of imputing or presuming a bias where action is followed under the section. The assessing officer is required to assess the income on the basis of facts as found. Such finding may be through any of the provisions referred to above. The only limitation on his drawing a conclusion from the facts as found is the requirement of allowing the assessee an opportunity of explaining the material. Even though it could be said that in a sense since the assessing officer was acting on behalf of the Revenue, in discharging the functions as an assessing officer, he was a party to the dispute, nevertheless there is no presumption of bias in such a situation. As said in H.C. Narayanappa v. State of Mysore [AIR 1960 SC 1073 : (1960) 3 SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenge to the provision itself when the language of the Act clearly allows for an ostensible violation of the principles of natural justice including the principle that a person cannot be a judge in his own cause. In Union of India v. Tulsiram Patel [(1985) 3 SCC 398 : 1985 SCC (L&S) 672] in recognition of this principle this Court held: (SCC p. 479, para 101) "101. Not only, therefore, can the principles of natural justice be modified but in exceptional cases they can even be excluded. There are well-defined exceptions to the nemo judex in causa sua rule as also to the audi alteram partem rule. The nemo judex in causa sua rule is subject to the doctrine of necessity and yields to it as pointed out by this Court in J. Mohapatra & Co. v. State of Orissa [(1984) 4 SCC 103] ." 33. The Supreme Court in Delhi Financial Corpn. v. Rajiv Anand (2004) 11 SCC 625., held that bias cannot be attributed to an authority/officer merely because he is authorized to adjudicate a dispute under law. Unless personal bias is attributed or shown, authority of an officer appointed under a statute cannot be questioned on the ground that he has interest in the outcome of the case. The relevant paragrap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer. 14. Thus, the authorities disclose that mere appointment of an officer of the corporation does not by itself bring into play the doctrine that "no man can be a judge in his own cause". For that doctrine to come into play it must be shown that the officer concerned has a personal bias or a personal interest or has personally acted in the matter concerned and/or has already taken a decision one way or the other which he may be interested in supporting. This being the law it will have to be held that the decision of the Delhi High Court is erroneous and cannot be sustained and the view taken by the Punjab and Haryana High Court is correct. It will, therefore, have to be held that Managing Director of a financial corporation can be appointed as an authority under Section 32-G of the Act. 34. A Constitution Bench of the Supreme Court in Mukesh Singh v. State (NCT of Delhi) (2020) 10 SCC 120., held that merely because an officer is an informant/complainant that does not make his/her investigation tainted by bias. The question of bias will depend on facts and circumstances of each case. The relevant paragraphs are extracted below: 12. Therefore, as such, there is no reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as rightly observed by this Court in Bhaskar Ramappa Madar [Bhaskar Ramappa Madar v. State of Karnataka, (2009) 11 SCC 690: (2010) 1 SCC (Cri) 133], the matter has to be decided on a case-to-case basis without any universal generalisation. 12.3. As rightly held by this Court in V. Jayapaul [State v. V. Jayapaul, (2004) 5 SCC 223 : 2004 SCC (Cri) 1607], there is no bar against the informant police officer to investigate the case. As rightly observed, if at all, such investigation could only be assailed on the ground of bias or real likelihood of bias on the part of the investigating officer the question of bias would depend on the facts and circumstances of each case and therefore it is not proper to lay down a broad and unqualified proposition that in every case where the police officer who registered the case by lodging the first information, conducts the investigation that itself had caused prejudice to the accused and thereby it vitiates the entire prosecution case and the accused is entitled to acquittal. 13. From the above discussion and for the reasons stated above, we conclude and answer the reference as under: 13.1. (I) That the observations of this Court in Bhagwan S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as stated above, though of the same rank, both the officers i.e., one who filed the complaint and one who passed the impugned order were different. Therefore, the maxim 'nemo judex in causa sua' does not apply in cases where the designation/rank of the authority is the same but members heading them are different. Therefore, Issue No.1 is decided by holding that the impugned order was not passed in violation of principles of natural justice. Issue No.2:- 38. It was contended by the Petitioner in W.P. No. 37659 of 2022 that the Deputy Director of Enforcement did not have jurisdiction to pass the impugned order as the case involved an amount of more than Rs. 10,00,00,000/- and the impugned order could have been only passed by the Additional Director of Enforcement. The said contention cannot be accepted. 39. It is relevant to note that in Supersession of notification number S.O. 2564 (E), dated the 30th September, 2014 - 27.09.2018 - Ministry of Finance fixed the monetary limits for the authorized officers to conduct inquiry and levy penalty under Section 13 of the Act, 1999. The following table specifies the monetary limits: Sl.No. Designation of Officers Monetary limit (1) ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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