2025 (11) TMI 1104 - AT - FEMA

Appeal dismissed; cross-examination ruled premature and document demands conflict with statements under s.108 Customs Act

Mr. Rajesh Aggarwal Versus The Enforcement Directorate, Delhi

The AT upheld the impugned order dismissing the appeal. It held the request for cross-examination was premature, vague and intended to delay ... Entitlement to cross-examination of the witnesses and for supply of certain documents - Show Cause Notice - illegal dealings in foreign exchange viz acquisition/purchase of foreign exchange - failure to realize export dues - Alleging contravention of Section 3(a) and Sections 4, 7, 8 of the Act of 1999 read with Notification No.GSR/397(E) - Principles of fair hearing - Natural justice - The Special Director otherwise found it to be a case based on documents thus denied the cross-examination - HELD THAT:- The way application has been filed shows it to be nothing but to delay the proceedings and that too without filing reply to the Show Cause Notice thus the application was even premature for the aforesaid. The application refers to the cross-examination of holder of the Passport, bank employees and other officers without specifying the name of the holder of the passport, name of the bank employees and name of other officers to seek cross- examination. Thus, apart from the fact that no reason to seek cross-examination has been given, it was otherwise without naming the person of whose cross-examination has been sought. Thus, we do not find that cross-examination can be sought as a right in the quasi-judicial proceedings of summary nature. The appellant has failed to give any reason to seek cross-examination of witnesses and, therefore, the application was for the sake of it. Demand for documents - The appellant demanded the documents/statements to identify the firms or persons who alleged to have supplied foreign currency to the noticee. The demand of documents is in ignorance to show cause notice and contents therein and it was otherwise adjudicated by the Special Director. It would be necessary to refer to the statement of the appellant and his father Sita Ram Agarwal. The statement of appellant and his father was recorded under Section 108 of the Customs Act and has been relied in this show cause notice. The appellant is demanding the documents going contrary to the admission made in those statements though said to be retracted but there is nothing on record to support the statement of retraction, as alleged by the counsel for the appellant. Thus, we do not find any illegality in the impugned order so as to cause interference therein. The appeal accordingly fails and is dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether a party in summary/quasi-judicial adjudication proceedings under the Act of 1999 is entitled as of right to cross-examine witnesses whose statements are relied upon by the Authority. 2. Whether an application for cross-examination must specify the witness by name and particularize reasons showing how cross-examination is necessary and would prevent prejudice. 3. Whether denial of inspection/supply of certain documents (beyond the Relied-Upon Documents served with the Show Cause Notice) can be faulted where the additional documents sought are not shown to be relevant to rebut the allegations. 4. Whether refusal to allow cross-examination or to supply the additional documents warrants interference with the Authority's order in absence of demonstrated prejudice. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Entitlement to cross-examination in summary/quasi-judicial proceedings Legal framework: Adjudication under the Act of 1999 proceeds under statutory/adjudication rules where strict Evidence Act procedure is not applied; principles of natural justice nevertheless govern the proceedings. Precedent treatment: The Tribunal relied on higher-court authority establishing that cross-examination is not an absolute right in summary adjudicatory proceedings (principles drawn from Telestar Travels and subsequent High Court decisions). Those authorities recognize that cross-examination may be permitted where necessary to test probative value or where its denial would cause prejudice, but is not to be granted as a matter of course. Interpretation and reasoning: The Tribunal observed that when a matter is founded primarily on documentary evidence and the documents have been disclosed as Relied-Upon Documents, cross-examination of witnesses whose statements merely corroborate those documents is not obligatory. The Tribunal emphasized that refusal to allow cross-examination must be assessed on whether it causes prejudice; blanket or speculative requests do not attract the protection of natural justice. Ratio vs. Obiter: Ratio - In summary/quasi-judicial proceedings under the relevant scheme, cross-examination is not an unfettered right and may be refused where the evidence relied upon is documentary or where no prejudice is demonstrated. Obiter - General observations on the evidentiary value of depositions vis-à-vis cross-examination in all contexts. Conclusions: The Tribunal upheld the principle that cross-examination is discretionary in such proceedings and that denial per se is not illegal; it must be evaluated in context of prejudice and the nature of the evidence. Issue 2 - Requirement to name witnesses and particularize reasons for seeking cross-examination Legal framework: Principles of fair hearing require that applications for procedural relief be bona fide and specific so that the Authority can fairly adjudicate the request within the constraints of summary proceedings. Precedent treatment: The Tribunal followed authorities holding that parties seeking cross-examination must demonstrate specific reasons and cannot convert show-cause proceedings into mini-trials by blanket requests; requests lacking particulars may be rejected. Interpretation and reasoning: The Tribunal found the application failed because it neither named the witnesses sought to be cross-examined nor provided reasons showing how cross-examination of unnamed persons would be necessary. The application, filed before a detailed reply, appeared aimed at delay. The Tribunal treated absence of specificity (names and connected reasons) as a legitimate ground for refusal in the summary context. Ratio vs. Obiter: Ratio - Requests for cross-examination in summary adjudication must specify the persons and the grounds for cross-examination; unspecified blanket requests can be refused. Obiter - Commentary on procedural prematurity where no detailed reply had been filed. Conclusions: The Tribunal concluded refusal was justified where the applicant did not identify witnesses or articulate why cross-examination was necessary, and where the request seemed intended to delay proceedings. Issue 3 - Duty to supply additional documents and relevance standard Legal framework: Authorities require disclosure of Relied-Upon Documents to enable effective reply; entitlement to further documents is governed by relevance to rebut the allegations and the need to prevent prejudice. Precedent treatment: The Tribunal adhered to the principle that disclosure of relied documents and opportunity to inspect amounts to substantial compliance with natural justice; additional disclosure is required only where relevance and necessity are shown. Interpretation and reasoning: The Tribunal observed that the relied-upon documents had been supplied with the Show Cause Notice. Items additionally sought (RBI report, overseas property reports, photocopies of shipping bills/BRCs allegedly already available to the appellant) were not shown to be necessary to rebut the specific allegations of illegal foreign exchange dealings and non-realization of export proceeds. The applicant could not explain the material significance of those documents or how absence of them prejudiced defence. Documents that are irrelevant or already in the applicant's possession need not be produced to frustrate or delay proceedings. Ratio vs. Obiter: Ratio - Additional document production may be denied where the documents are irrelevant to the allegations, already served as RUD, or not shown to be necessary to prevent prejudice. Obiter - Remarks on documents said to be seized but available to the noticee. Conclusions: The Tribunal held the Special Director was justified in refusing to supply the additional documents which were not demonstrated to be material to the defence and which appeared sought to delay the process. Issue 4 - Whether denial of cross-examination or documents warrants interference absent demonstrated prejudice Legal framework: Appellate/interference jurisdiction requires showing of illegality or material prejudice resulting from procedural denial; mere non-provision of a requested procedure is not sufficient without prejudice. Precedent treatment: The Tribunal relied on binding and persuasive authority that a challenge based on denial of cross-examination succeeds only where prejudice to the party is demonstrated; courts have refused to order de novo enquiries where no substantial prejudice is shown. Interpretation and reasoning: Applying that standard, the Tribunal found no illegality in the impugned order because (a) the evidence was documentary and disclosed, (b) the application for cross-examination lacked specificity and appeared premature, and (c) additional documents were not shown to be relevant or necessary. No specific prejudice was demonstrated that would nullify the fairness of the proceedings. Ratio vs. Obiter: Ratio - Denial of cross-examination or document supply in summary proceedings will not require interference absent a demonstrated likelihood of prejudice affecting the fairness of adjudication. Obiter - Observations on the scope for selective cross-examination of some witnesses where warranted. Conclusions: The Tribunal concluded that refusal to permit cross-examination and to supply the additional documents did not amount to a denial of natural justice or cause such prejudice as to merit interference; appeal dismissed.