Reasonable-time enforcement and fair disclosure in adjudication: delay and non-supply of relied upon documents vitiated proceedings.

Where no statutory limitation is prescribed, enforcement proceedings must still begin within a reasonable time, judged on the facts. Applying the principle in Citibank, the tribunal held that a decade-long delay between the 1992 transaction and the 2002 show-cause notice was not justified by intermittent statements or later call letters, and the proceedings were vitiated. It also held that adjudication cannot stand where relied upon documents are not supplied and the noticee is denied an effective hearing, including meaningful defence and cross-examination. On the facts, non-disclosure was established, so the adjudication was unsustainable for breach of natural justice and was set aside.

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Issues: (i) whether the show-cause notice and ensuing adjudication were vitiated for having been initiated after an inordinate and unreasonable delay; (ii) whether failure to supply the relied upon documents and to afford an effective hearing vitiated the adjudication.

Issue (i): whether the show-cause notice and ensuing adjudication were vitiated for having been initiated after an inordinate and unreasonable delay.

Analysis: The transaction was of 1992, while the memorandum/show-cause notice was issued only on 23.05.2002, shortly before the sunset of FERA. The governing principle is that where the statute prescribes no limitation, proceedings must still be initiated within a reasonable time, to be assessed on the facts of each case. The Court applied the ratio of the Supreme Court decision in Citibank and held that the explanation offered by the Directorate, including intermittent statements and later call letters, did not justify the decade-long delay in commencing proceedings.

Conclusion: The notice and the proceedings were held to be vitiated by unreasonable delay, in favour of the appellant.

Issue (ii): whether failure to supply the relied upon documents and to afford an effective hearing vitiated the adjudication.

Analysis: The appellant had sought copies of the relied upon documents and requested an opportunity to defend and cross-examine, but the record did not show supply of the relied upon material. The Court applied the principle of disclosure in adjudicatory proceedings and held that material relied upon for adjudication must be made available to the noticee to ensure a fair hearing and effective participation. On the facts, non-supply of the relied upon documents was established.

Conclusion: The adjudication was held unsustainable for violation of the right to disclosure and fair hearing, in favour of the appellant.

Final Conclusion: The impugned adjudication order could not stand judicial scrutiny and was set aside, leaving the appellant without the penalty imposed in the proceedings.

Ratio Decidendi: Where no statutory limitation is prescribed, enforcement proceedings must be initiated within a reasonable time, and adjudication based on undisclosed relied upon documents violates natural justice and cannot be sustained.

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