2024 (4) TMI 237 - HC - FEMA

FEMA adjudication proceedings can be transferred between authorities after jurisdiction enhancement without invalidating process

The Madras HC upheld the transfer of FEMA adjudication proceedings from Special Director to Additional Director following enhancement of pecuniary ... Adjudicating Authority under FEMA - Case of the appellants that the show cause notice having been issued by the Special Director, Directorate of Enforcement, he is “the Adjudicating Authority” and the further proceedings are required to be conducted by him alone and not by the Additional Director - Single Judge dismissed the writ petitions holding that the case was transferred from the Special Director to the Additional Director in view of the enhancement of pecuniary jurisdiction and the same is well within the provisions of the Act of 1999. HELD THAT:- The persona designata is a person who is described as an individual, as opposed to a person ascertained as a member of a class. At the first instance, the show cause notice was issued by the Adjudicating Authority. Adjudicating Authority referred to in Rule 4 of the Rules of 2000 does not refer to a designation of an authority or a person. Rules of 2000 do not suggest that the Adjudicating Authority shall only be the Special Director or the Principal Special Director or the Additional Director. It only says “the Adjudicating Authority” and, as such, by no stretch of imagination it can be inferred that the Adjudicating Authority is a persona designata. Adjudicating Authorities exercise their jurisdictions and power according to the pecuniary limits as enumerated in the notification appointing them as Adjudicating Authorities. The notification issued by the Central Government empowers the Adjudicating Authority to decide the case within his/her pecuniary limits. Albeit the notice is issued by the Special Director, who at the relevant and material time was the Adjudicating Authority, subsequently, because of the fresh notification issued on 27.9.2018, the Adjudicating Authority notified by the Central Government is the Additional Director and the Additional Director is empowered to conduct the adjudication proceedings. The inquiry and the adjudication proceedings has to proceed on the basis of the evidence produced. The evidence produced by the person would be considered by the Adjudicating Authority for forming an opinion to proceed further with the show cause notice. The contention of the appellants that the person who issues the show cause notice under Rule 4(1) of the Rules of 2000 would alone be the Adjudicating Authority till the culmination of the proceedings cannot be comprehended and needs to be rejected. According to learned Senior Counsel, the same is a saving clause. Referring to the said phraseology, it is submitted that the show cause notice having already been issued to the appellants, the appellants are covered under the said saving clause and, as such, the appellants' case cannot be transferred from the second respondent to the third respondent. In our opinion, the said arguments does not hold water. The phrase “except as respects things done or omitted to be done before such supersession...” would mean that whatever acts are done till the date of issuance of the notification superseding the earlier notification are saved. The show cause notice issued under Rule 4(1) of the Rules of 2000 before issuance of the said notification dated 27.9.2018 is saved. The further proceedings cannot proceed before the person who was an Adjudicating Authority under the notification already superseded. The inquiry will have to be continued by the Adjudicating Authority as per the notification in vogue and not the Adjudicating Authority under the superseded notification. We are of the firm view that the learned Single Judge has not committed any error while dismissing the writ petitions. Issues Involved:1. Competence of Adjudicating Authority to continue proceedings.2. Retrospective effect of notification revising pecuniary jurisdiction.3. Interpretation of the term 'Adjudicating Authority.'Summary:Issue 1: Competence of Adjudicating Authority to continue proceedings:The appellants contended that the show cause notice issued by the Special Director, Directorate of Enforcement, made him 'the Adjudicating Authority,' and only he could conduct the adjudication. They argued that the proceedings should not be transferred to the Additional Director. The court, however, held that the Adjudicating Authority is not a 'persona designata' but an officer designated by pecuniary jurisdiction. The successor in office can continue the proceedings from where they were left by the predecessor. Thus, the Additional Director, empowered by the notification dated 27.9.2018, is competent to conduct the adjudication.Issue 2: Retrospective effect of notification revising pecuniary jurisdiction:The appellants argued that the notification dated 27.9.2018, which revised the pecuniary jurisdiction, should not have retrospective effect. They pointed out that the show cause notice was issued before the notification, and the savings clause in the notification should protect their case from being transferred. The court rejected this argument, stating that the phrase 'except as respects things done or omitted to be done before such supersession...' means that actions taken before the notification are saved, but further proceedings must be conducted by the Adjudicating Authority as per the new notification.Issue 3: Interpretation of the term 'Adjudicating Authority':The appellants emphasized the use of the word 'the' in 'the Adjudicating Authority' to argue that it specifies a particular person, i.e., the one who issued the show cause notice. The court referred to the Apex Court's interpretation in Canon India Private Limited v. Commissioner of Customs, which clarified that 'the' indicates specificity but does not necessarily mean the same officer must continue the proceedings. The court concluded that the Adjudicating Authority referred to in Rule 4 of the Rules of 2000 is not limited to a specific individual but includes any officer designated by the Central Government with the appropriate pecuniary jurisdiction.Conclusion:The court affirmed the decision of the learned Single Judge, dismissing the writ petitions and holding that the Additional Director is competent to continue the adjudication proceedings. The writ appeals were dismissed, and there was no order as to costs.