Court allows cross-examination of witnesses in appeal, sets time limits

The appeal was allowed, permitting the appellants to cross-examine three witnesses. The court directed the adjudicating authority to schedule cross-examination dates within one month, to be completed within 10 working days. Cross-examination was limited to permissible questions by law. The request to cross-examine Shri Rajeshwar Singh was denied. The appeal was disposed of with these directions.

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Issues Involved
1. Impugned order dated 24.01.2013 dismissing writ petitions.
2. Alleged contravention of FEMA provisions by M/s Swan Telecom Pvt. Ltd.
3. Issuance of shares without FIPB approval.
4. Over-valuation of shares.
5. Right to cross-examine witnesses.
6. Principles of natural justice.

Issue-wise Detailed Analysis

1. Impugned Order Dismissing Writ Petitions
The appellants challenged the order dated 24.01.2013 by the learned Single Judge, which dismissed their writ petitions. The learned Single Judge observed that the appellants were attempting to derail the adjudication proceedings by filing multiple applications at various stages.

2. Alleged Contravention of FEMA Provisions by M/s Swan Telecom Pvt. Ltd.
A complaint was filed on 01.07.2011 under Section 16(3) of FEMA for alleged contravention of Section 6(3)(b) of FEMA and related regulations by M/s Swan Telecom Pvt. Ltd. The complaint alleged that the company issued shares to M/s Etisalat Mauritius and M/s Genex Exim Ventures Pvt. Ltd. without FIPB approval, violating the provisions of FEMA and related regulations.

3. Issuance of Shares Without FIPB Approval
The complaint stated that M/s Swan Telecom Pvt. Ltd. issued 5.27% equity shares to M/s Genex Exim Ventures Pvt. Ltd. and 44.73% equity shares to M/s Etisalat Mauritius without obtaining FIPB approval, thereby contravening the provisions of Para 3 of Schedule I of Regulation 5(1) of FEMA.

4. Over-valuation of Shares
It was alleged that M/s Swan Telecom Pvt. Ltd. indulged in over-valuation of its shares issued to M/s Etisalat Mauritius to remain within the stipulated threshold of 49% equity prescribed for the automatic route, violating the provisions of Para 3 of Schedule I of Regulation 5(1) of FEMA.

5. Right to Cross-examine Witnesses
The appellants contended that the principles of natural justice entitle them to cross-examine the witnesses whose statements were relied upon in the complaint. They argued that cross-examination is integral to fair adjudication and cited several judgments to support their claim.

The legal position regarding the right to cross-examine was discussed extensively. The appellants relied on the judgments of the Kerala High Court in Central Govt. represented by Directorate, Enforcement Directorate, Foreign Exchange Regulation Act, New Delhi vs. Fr. Alfred Iames Fernandez and the Single Bench of the Delhi High Court in Mehar Singh v. Appellate Board Foreign Exchange, among others, to argue that they are entitled to cross-examine the witnesses.

The respondents argued that there is no procedure prescribed under the Rules of 2000 for permitting cross-examination and cited the Supreme Court judgment in Raj Kumar Shivhare vs. Assistant Director, Directorate of Enforcement and Another, which held that FEMA is a complete Code in itself.

6. Principles of Natural Justice
The court examined various judgments to determine the applicability of the principles of natural justice in the context of cross-examination. The judgments cited include State of Kerala vs. K.T. Shaduli Grocery Dealer Etc, Khem Chand vs. Union of India and others, and Ayaaubkhan Noorkhan Pathan vs. State of Maharashtra, which emphasized that cross-examination is an integral part of the principles of natural justice.

The court concluded that the appellants should be allowed to cross-examine the three witnesses whose statements were heavily relied upon in the complaint. The respondents failed to show any prejudice that would be caused by allowing cross-examination.

Conclusion
The appeal was allowed to the extent that the appellants were permitted to cross-examine the three witnesses: Shri Ahmad Shakir, Shri Pratap Ghose, and Shri K. Vasudeva. The adjudicating authority was directed to fix appropriate dates for cross-examination within one month, and the process should be concluded within 10 working days from commencement. The cross-examination would be confined to questions permissible by law.

The request to cross-examine Shri Rajeshwar Singh, Assistant Director, was denied as it was deemed without merit. The appeal was disposed of with these directions.

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