TMI Blog2023 (6) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... which filed the complaint also passed the impugned order. Therefore, the principle of no one can be a judge in his own case is violated. Whether the impugned order was passed in violation of principles of natural justice on account of the complainant and Adjudicating Authority being officers of the same rank/designation? - The maxim nemo judex in causa sua states that a person who has interest either personal or pecuniary in an outcome of a particular lis, he/she shall not act as an adjudicator in the said lis. In other words, a person authorized to decide a dispute between the parties shall refuse decide such dispute, if he/she is connected to any of the party to such dispute either professionally, personally or monetarily. The connection should give rise to strong probable apprehension of bias in favour of one party. Whether the maxim nemo judex in causa sua is violated in the present case merely because the complainant and the Adjudicating Authority happen to be the same ranked officials/authority ? - Merely because an officer is also the complainant, he/she will not be barred from performing other duties as prescribed under a statute. Bias cannot be presumed and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue of quantum of penalty. This Court being bound by the decision in M/S COMMERCIAL STEEL LIMITED [ 2021 (9) TMI 480 - SUPREME COURT] holds that the said issues cannot be decided by this Court in view of an efficacious alternative remedy available under Section 17(2) of the Act, 1999. Present writ petitions are liable to be dismissed and are accordingly dismissed. Liberty is granted to the Petitioners in both the writ petitions to raise all their grounds in appeal under Section 17(2) of the Act, 1999, if any preferred. - WRIT PETITION NOs.35702 AND 37659 OF 2022 - - - Dated:- 17-4-2023 - HON BLE SRI JUSTICE K. LAKSHMAN For Petitioners in W.P. No.35702 of 2022 : Mr. Deepak Bhattacahrjee Ld. Senior Counsel representing Mr. Dishit Bhattacharjee Ld. Counsel For Petitioners in W.P. No. 37659 of 2022 : Mr. Vedula Srinivas, Ld. Senior Counsel representing Mr. V.Aneesh, Ld. counsel For Respondents in both : Mr. Anil Prasad Tiwari, writ petitions Lr. Standing counsel for Enforcement Directorate COMMON ORDER: The present writ petitions arise out of a common set of facts and involve similar issues. Therefore, they are being decided vide the following com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e I to Regulation 5(1) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 (hereinafter referred to as Regulations, 2000 ). ii. Petitioner No. 1 failed to report to the Reserve Bank of India, the issuance of shares worth Rs. 85,45,184/- to foreign companies. Therefore, it contravened Section 6(3)(b) of the Act, 1999 r/w Para 9(1)(B) of Schedule I to Regulation 5(1) of the Regulations, 2000. iii. Petitioner No. 1 failed to file a report titled Annual Return on Foreign Liabilities and Assets before the Reserved Bank of India. Therefore, it contravened Section 6(3)(b) of the Act, 1999 r/w Para 9(2) of Schedule I to Regulation 5(1) of the Regulations, 2000. iv. As Petitioner No. 2 was the Managing Director of Petitioner No. 1 and was responsible for the contraventions by Petitioner No. 1, he is liable under Section 42(1) of the Act, 1999. v. The complaint stated that the Petitioners are liable to be penalized under Section 13(1) of the Act, 1999. 9. At this stage, it is relevant to note the contraventions as alleged to have been committed by the Petitioner in W.P. No. 35702 of 2022. The compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. Contentions of the Petitioner in W.P. No. 35702 of 2022 i. The Petitioner never entered into the alleged transaction acquiring shares worth Rs. 8,46,90,000/- from M/s Webford Baseline Ltd. The letter dated 22.12.2018 based on which it is alleged that the Petitioner had purchased shares worth Rs. 8,46,90,000/- for Rs. 1/- is forged and was never addressed by the Petitioner. ii. As the letter dated 22.12.2018 is forged, the same cannot be relied upon by the Deputy Director of Enforcement to lodge a complaint under Section 16(3) of the Act, 1999. iii. The show cause notice dated 24.06.2019 was never received by the Petitioner as the same was addressed to Plot No. 15A, 5th floor, Sai Pruthvi Enclave, Manteera Residency, Kondapur, Hyderabad 500084. However, the Petitioner is a resident of B74, The Summit, DLF Phase V, Gurgaon 122003. Therefore, the Petitioner was not aware of the proceedings before the Adjudicating Authority until 15.07.2022. iv. Vide replies 26.07.2022, 11.08.2022 and 04.09.2022 to the show cause notices dated 05.08.2022 and 30.08.2022, the Petitioner informed the Adjudicating Authority about the fraudulent documents relied upon in the complain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- Therefore, the order should have been passed by the Additional Director of Enforcement instead of a Deputy Director. v. Relying on Section 13 of the Act, 1999, it was contended that the penalty is unjustified and thrice the sum involved in contravention can only be levied when the amount is quantifiable. In the present case, as the penalty was imposed on delay in reporting the receipt of foreign direct investment, the amount in contravention cannot be quantified. Therefore, only an amount of Rs. 2,00,000/- could have been levied as penalty. 17. Contentions of the Respondents:- i. The present writ petitions are not maintainable as the Petitioners have an effective alternative remedy under Section 17(2) of the Act, 1999. Reliance was placed on Nivedita Sharma v. Cellular operators of India 2011 (14) SCC 337. ii. Principles of natural justice were followed and the Petitioners were issued show cause notices and they have submitted their replies and participated in the oral hearing. iii. The notification dated 27.09.2018 issued by the Government of India duly authorizes the Adjudicating Authority to conduct enquiry under Section 16(3) of the Act, 1999. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that case before the Adjudicating Authority involved a sum of more than Rs. 10,00,00,000/- Therefore, the impugned order was passed without jurisdiction by the Deputy Director of Enforcement and the same was supposed to be passed by the Additional Director of Enforcement. 23. From the above discussion, the following issues fall for consideration before this Court: 1. Whether the impugned order was passed in violation of principles of natural justice on account of the complainant and Adjudicating Authority being officers of the same rank/designation? 2. Whether the Deputy Director of Enforcement had jurisdiction to pass the impugned order in light of the contention that the case before the Adjudicating Authority involved an amount more than Rs. 10,00,00,000/-? Issue No.1:- 24. From the contentions of the Petitioners, it appears that they challenge the impugned order alleging violation of the maxim nemo judex in causa sua . The said maxim codifies the fundamental principle of fairness and justice i.e., no one can be a judge in his own case. 25. The maxim nemo judex in causa sua states that a person who has interest either personal or pecuniary in an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the members of the Assessment Sub-Committee. This question has been answered against the appellants and forms the subject-matter of the third and fourth grounds on which the High Court rested its decision. Nemo judex in causa sua, that is, no man shall be a judge in his own cause, is a principle firmly established in law. Justice should not only be done but should manifestly be seen to be done. It is on this principle that the proceedings in courts of law are open to the public except in those cases where for special reason the law requires or authorizes a hearing in camera. Justice can never be seen to be done if a man acts as a judge in his own cause or is himself interested in its outcome. This principle applies not only to judicial proceedings but also to quasi-judicial and administrative proceedings. The position in law has been succinctly stated in Halsbury's Laws of England, Fourth Edn., Vol. 1, para 68, as follows: Disqualification for financial interest. There is a presumption that any direct financial interest, however small, in the matter in dispute disqualifies a person from adjudicating. Membership of a company, association or other organisation whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xim nemo judex in causa sua . 29. The question now would be whether the maxim nemo judex in causa sua is violated in the present case merely because the complainant and the Adjudicating Authority happen to be the same ranked officials/authority. 30. As stated above, the complaint dated 20.06.2019 was filed by Mrs. Sowmya Nuthalapati, Deputy Director of Enforcement, whereas the impugned order dated 05.09.2022 was passed by Mr. Rahul Singhania, Deputy Director of Enforcement. According to this Court, merely because the Adjudicating Authority and the authority lodging complaint have the same rank, the impugned order is not vitiated by violation of principles of natural justice. 31. In Hyderabad Vanaspathi Ltd. v. A.P. SEB (1998) 4 SCC 470 ., the Supreme Court dealt with a scenario where action was taken and compensation was sought to be recovered for pilferage of electricity by the Board under Clause 39 of the standard form contract therein. The Appellants therein contended violation of the principle nemo judex in causa sua on the ground that the authority which launches prosecution under the Electricity Act, 1910 cannot decide and levy compensation for loss. The Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de to Sections 120, 124, 131(1), 132(8), 132(9), 133-A, 133-B and Section 142. It is pointed out that the High Court having expressly found that there were no mala fides attributed should not have interfered with what was a question of jurisdiction and discharge of statutory duties. The decision of the High Court, according to the appellants apart from their running contrary to the scheme of the Act, would amount to a limitation on the powers conferred statutorily on the assessing officer. The appellants contend that there is no structural bias in the sections of the Act and that in any event the appellants have not impugned any provision of the Act as being constitutionally invalid on the ground that it opposed the basic principles of natural justice. 6. In our view, this appeal must be allowed. The several sections which have been cited by the appellants would show that the assessing officer has, either directly or by virtue of his appointment or authorisation by a superior authority under the Act, been given the power of gathering information for the purposes of assessment. The mode of gathering such information may vary from the mere issuance of a notice under Section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. There is nothing inherently unconstitutional in permitting the assessing officer to gather the information and to assess the value of the information himself. The issue as to the constitutional validity of a provision which permitted an examining board not only to hold an inquiry but also to take action against doctors was raised before the Supreme Court of the United States in Harold Withrow v. Duane Larkin [43 L Ed 2d 712 : 421 US 35 (1975)]. In negating the challenge the Court said: (US p. 47) The contention that the combination of investigative and adjudicative functions necessarily creates an unconstitutional risk of bias in administrative adjudication has a much more difficult burden of persuasion to carry. It must overcome a presumption of honesty and integrity in those serving as adjudicators; and it must convince that, under a realistic appraisal of psychological tendencies and human weakness, conferring investigative and adjudicative powers on the same individual poses such a risk of actual bias or prejudgment that the practice must be forbidden if the guarantee of due process is to be adequately implemented. 9. It is true that there may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erely because an officer of a corporation is named to be the authority, does not by itself bring into operation the doctrine no man can be a judge in his own cause . Of course, in individual cases bias may be shown against a particular officer but in the absence of any proof of personal bias or connection merely because officers of a particular corporation are named as the authority does not mean that those officers would be biased. As has been held by the Constitution Bench, a Managing Director is a high- ranking officer. He is not personally interested in the transaction. There is no question of any bias or conflict between his interest and his duty. In Gullapalli Nageswara Rao case [1959 Supp (1) SCR 319 : AIR 1959 SC 308] the Secretary who had framed the Scheme then proceeded to hear the objections and advise the Chief Minister. It is because of the personal involvement of the Secretary that the majority took the view. Even then two Judges held that it did not follow that he was an improper person to hear the objections. **** 13. In the case of Accountant and Secretarial Services (P) Ltd. v. Union of India [(1988) 4 SCC 324] the appointment of an officer of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion of bias will have to be decided on the facts of each case [see Vipin Kumar Jain [Union of India v. Vipan Kumar Jain, (2005) 9 SCC 579]]. 12.1. At this stage, it is required to be noted and as observed hereinabove, the NDPS Act is a special Act with a special purpose and with special provisions including Section 68 which provides that no officer acting in exercise of powers vested in him under any provision of the NDPS Act or any rule or order made thereunder shall be compelled to say from where he got any information as to the commission of any offence. Therefore, considering the NDPS Act being a special Act with special procedure to be followed under Chapter V, and as observed hereinabove, there is no specific bar against conducting the investigation by the informant himself and in view of the safeguard provided under the Act itself, namely, Section 58, we are of the opinion that there cannot be any general proposition of law to be laid down that in every case where the informant is the investigator, the trial is vitiated and the accused is entitled to acquittal . 12.2. Similarly, even with respect to offences under the IPC, as observed hereinabove, there is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid decisions, this Court laid down any general proposition of law that in each and every case where the informant is the investigator there is a bias caused to the accused and the entire prosecution case is to be disbelieved and the accused is entitled to acquittal. 13.2. (II) In a case where the informant himself is the investigator, by that itself cannot be said that the investigation is vitiated on the ground of bias or the like factor. The question of bias or prejudice would depend upon the facts and circumstances of each case. Therefore, merely because the informant is the investigator, by that itself the investigation would not suffer the vice of unfairness or bias and therefore on the sole ground that informant is the investigator, the accused is not entitled to acquittal. The matter has to be decided on a case-to-case basis. A contrary decision of this Court in Mohan Lal v. State of Punjab [Mohan Lal v. State of Punjab, (2018) 17 SCC 627 : (2019) 4 SCC (Cri) 215] and any other decision taking a contrary view that the informant cannot be the investigator and in such a case the accused is entitled to acquittal are not good law and they are specifically over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng rupees twenty five crores. (4) Additional Director of Enforcement Cases involving amount upto rupees twenty five crores but not less than ten crores. (5) Joint Director of Enforcement Cases involving amount upto rupees ten crores but not less than five cores. (6) Deputy Director of Enforcement Cases involving amount upto rupees five crores and not less than two crores (7) Assistant Director of Enforcement Cases involved of amount not exceeding rupees two crores. 40. It is clear from the above table that a case involving an amount between Rs. 10,00,00,000/- and Rs. 25,00,00,000/- can only be decided by an Additional Director of Enforcement. Further, cases involving an amount between Rs. 2,00,00,000/- and Rs. 5,00,00,000/- have to be decided by the Deputy Director of Enforcement. 41. In the present case, the amounts involved are as follows: i. Delay in reporting foreign direct investment to the tune of Rs. 1,32,38,364/- ii. Issuance of shares w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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