2024 (2) TMI 1561 - HC - FEMA

Adjudication proceedings quashed for denying crucial documents, fresh opportunity granted under natural justice principles

Xiaomi Technology India Private Limited Versus The Adjudicating Authority Special Director (Sr.) Directorate Of Enforcement, Chennai, The Assistant Director Directorate Of Enforcement Bengaluru, The Joint Director Directorate Of Enforcement Bangalore

The Madras HC disposed of appeals under Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000, where the appellant challenged ... Proceedings under FEMA Act - as argued appellant was not supplied with four crucial documents, violating the principles of natural justice - Ld' Single Judge concluded that the principles of natural justice are violated as four documents relied on were not submitted to the appellant - HELD THAT:- In view of the fact that the learned Single Judge has observed that the principles of natural justice are violated in view of the fact that the documents were not supplied to the appellant, though was given an opportunity to inspect and directed to give an opportunity to the appellant to file its explanation in view of the four documents supplied later on, naturally the opinion to be formed would be based on the explanation given by the appellant upon the supply of all the documents. As such, instead of further opinion to be formed by the officer, the adjudicating authority would form a fresh opinion based on the explanation submitted by the appellant upon receipt of the four additional documents. The said opinion shall be uninfluenced by the earlier opinion formed. The earlier opinion would be non-est. WP dismissed. The Madras High Court addressed appeals arising under the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000, where the appellant challenged proceedings initiated against them. The appellant was not supplied with four crucial documents, violating the principles of natural justice as held by the Single Judge, who directed that the appellant be given an opportunity to submit fresh explanations after receipt of these documents.The Court emphasized that 'there cannot be two opinions on record' and that the earlier opinion formed by the adjudicating authority must be set aside to avoid frustrating the appellant's opportunity for a fresh explanation. The adjudicating authority is required to form 'a fresh opinion based on the explanation submitted by the appellant upon receipt of the four additional documents,' which 'shall be uninfluenced by the earlier opinion formed,' rendering the earlier opinion 'non-est.'The writ appeals were disposed of with no order as to costs, affirming the necessity of adherence to natural justice by ensuring the appellant's right to a fair hearing with full disclosure of documents before an adjudicatory opinion is finalized.