2024 (3) TMI 1459 - HC - FEMA

Adjudicating authority must provide withheld documents and form fresh uninfluenced opinion under Rule 4(3) FEMA Rules 2000

Sameer BS Rao Chief Financial Officer Xiamoni Technology India Private Limited Versus The Adjudicating Authority Special Director (Sr) Directorate Of Enforcement, Chennai, The Assistant Director Directorate Of Enforcement Bangalore, The Joint Director Directorate Of Enforcement Bangalore

The HC disposed of a writ appeal challenging adjudication proceedings under Foreign Exchange Management Rules, 2000. The appellant contested the ... Proceedings under FEMA Act - as argued appellant was not supplied with four crucial documents, violating the principles of natural justice - 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. The Madras High Court addressed a writ appeal arising from adjudication proceedings under the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000. The appellant challenged the formation of an opinion by the adjudicating authority under Rule 4(3), contending that four documents relied upon were not supplied, violating principles of natural justice.The Single Judge found a breach of natural justice, directing that the appellant be given the four documents and an opportunity to submit a fresh explanation. The Single Judge allowed the authority to form a 'further opinion,' prompting dispute over whether two opinions could coexist.The High Court clarified that the earlier opinion must be set aside as 'non-est,' emphasizing that 'the adjudicating authority would form a fresh opinion based on the explanation submitted by the appellant upon receipt of the four additional documents.' This fresh opinion must be 'uninfluenced by the earlier opinion formed,' ensuring adherence to natural justice.The writ appeal was disposed of accordingly, with no order as to costs.