Limitation under FEMA upheld, but denial of a fair opportunity to produce evidence required remand for fresh adjudication.

Proceedings under the repealed foreign exchange regime were not time-barred under section 49(3) of the Foreign Exchange Management Act, 1999 because the show-cause notice was issued within the prescribed two-year period, so the initiation remained valid. However, the adjudication was vitiated because the appellant was not given a reasonable opportunity to obtain and place material documents before the authority; the notice had gone to an outdated address, time was sought, and the later material was never examined. The adverse orders were therefore set aside and the matter remanded for fresh adjudication after proper hearing.

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Issues: (i) Whether the adjudicating authority's action was barred by section 49(3) of the Foreign Exchange Management Act, 1999 as the show-cause notice under the repealed regime was issued beyond the permissible period; (ii) Whether the appellant was denied a reasonable opportunity to produce material documents and defend the proceedings, warranting interference and remand.

Issue (i): Whether the adjudicating authority's action was barred by section 49(3) of the Foreign Exchange Management Act, 1999 as the show-cause notice under the repealed regime was issued beyond the permissible period.

Analysis: The relevant contravention was noticed through the show-cause notice dated 16-5-2002. Since the Foreign Exchange Management Act, 1999 came into force on 1-6-2000, the two-year outer limit under section 49(3) expired on 31-5-2002. The notice having been issued before that date, the initiation could not be treated as time-barred or without jurisdiction under the repealed Act.

Conclusion: The challenge based on section 49(3) failed and the proceedings were not barred on limitation grounds.

Issue (ii): Whether the appellant was denied a reasonable opportunity to produce material documents and defend the proceedings, warranting interference and remand.

Analysis: The material showed that the earlier notice was sent to an outdated address, the appellant appeared only after the later notice, sought time, and attempted to procure documents from banks and carriers. The adjudication order was nevertheless passed before those documents could be collected and considered. As the subsequent material was not examined by either the adjudicating authority or the appellate tribunal, the appellant was found to have been deprived of an effective opportunity of defence.

Conclusion: The denial of reasonable opportunity vitiated the adjudication, and the impugned orders were liable to be set aside with remand for fresh hearing.

Final Conclusion: The appeal succeeded, the adverse orders were set aside, and the matter was sent back for fresh adjudication after affording the appellant a proper opportunity to place its evidence.

Ratio Decidendi: A proceeding is not barred under section 49(3) of the Foreign Exchange Management Act, 1999 if the show-cause notice under the repealed regime is issued within the prescribed two-year period, but an adjudication carried out without affording a reasonable opportunity to produce relevant evidence cannot stand and must be remanded.

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