2010 (1) TMI 1269 - HC - FEMA

Court grants Writ of Prohibition, halts proceedings under old regulations

The court granted the petitioners a Writ of Prohibition, prohibiting the respondents from proceeding with adjudication under various foreign exchange ... - Issues involved: The petitioners seek a Writ of Prohibition or a Writ in the nature of Prohibition and/or direction under Article 226 of the Constitution of India to prohibit the respondents from proceeding with adjudication u/s Foreign Exchange Regulation Act, 1947, Foreign Exchange Regulation Act, 1973, and Foreign Exchange Management Act, 1999 for alleged acts and omissions in the years 1958, 1966, and 1970.Factual Background: The petitioners faced adjudication proceedings under various foreign exchange regulations for alleged acts in the years 1958, 1966, and 1970. Show-cause notices were issued in 1973-74, but no action was taken for over 27 years until the proceedings were revived after the repeal of FERA in 2001.Contentions: The petitioners argued that the long delay of 28 years deprived them of the ability to defend themselves effectively. They claimed that the reopening of proceedings after such a long period violated their right to equality before the law and cited concerns about the right to a speedy trial as per legal precedents.Consideration: The court noted that the proceedings sought to adjudicate upon matters from 1958, 1966, and 1970 based on show-cause notices issued in 1973-74. Despite the long delay and lack of action by the respondents, the court considered whether the proceedings had become stale and arbitrary. Legal precedents were cited where delays in adjudication led to quashing of proceedings due to lack of justification for the delay.Judgment: The court found that the delay of over 27 years without any fault of the petitioners rendered the reopening of proceedings unjust and arbitrary. It was observed that the Department cannot be allowed to reopen old matters after such a long period, as it would cause serious prejudice to the petitioners. The court allowed the petition, emphasizing that the Department cannot commence adjudication proceedings decades after the original show-cause notice. The rule was made absolute in favor of the petitioners with no order as to costs.