2025 (12) TMI 760 - HC - Indian Laws

Writ petition against diamond export fraud adjudication dismissed as non-maintainable due to alternate appellate remedy, liberty reserved

HC dismissed the writ petition challenging the adjudication order concerning alleged participation in a fraudulent diamond export syndicate, holding it ... Maintainability of petition - availability of alternative remedy - requirement of making pre-deposit - involvement in fraudulent diamond export syndicate - denial to cross-examine some of the parties who had given statements in the adjudication proceedings - violation of principles of natural justice - HELD THAT:- The allegations in the Petition regarding the violation of natural justice are vague. In any event, this is not a case of ‘no opportunity’, but at the highest, this is a case of alleged inadequate opportunity. To determine whether there was indeed any violation of natural justice, this Court would have to examine the several factual issues. Besides, it is well settled that there is nothing like a mere technical breach of natural justice. Prejudice must be pleaded and established. The pleadings fall short of this standard - The plea of violation of natural justice, at least prima facie, has been raised only to avoid making a pre-deposit in the Appeal. The learned counsel for the Petitioner did not even submit that the Petitioner cannot afford to make the pre-deposit amount. The order gives details about the Petitioner’s involvement. Therefore, the submission that the Petitioner is innocent or is not at all involved in the fraudulent diamond export syndicate cannot be accepted at its face value or at this stage. No doubt the Petitioner would be at liberty to appeal the impugned order and convince the appellate authority that the findings recorded in the impugned order are incorrect. However, that is not an exercise which the Writ Court can be expected to undertake based upon bare denials. In the case of Oberoi Constructions Ltd. Vs. Union of India & Ors.[2024 (11) TMI 588 - BOMBAY HIGH COURT], this Court, examined the issue of exhaustion of alternate remedies in great detail. Relying on the reasoning in the said decision and the reasoning in the several precedents referred to therein, we are satisfied that no case is made out to deviate from the practice of exhaustion of alternate remedies in both these Petitions. This Court in the case of Nikhil Garg S/o Vishnu Prasad Garg Vs. Union of India & Anr. [2025 (12) TMI 142 - BOMBAY HIGH COURT] declined to entertain the Writ Petition based on vague allegations of breach of principles of natural justice or incapacity to comply with the pre-deposit requirements. Here, the impugned order has recorded that the fraudulent exports were valued at over Rs. 180 crores. The order also records the modus operandi adopted and the Petitioner's role herein, which involved fraudulent operations. This Petition is dismissed with liberty to the Petitioner to avail of the alternate remedy of Appeal. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the writ petition under Article 226 challenging a show cause notice and the consequential adjudication order is maintainable in the presence of an alternate and efficacious statutory remedy of appeal. 1.2 Whether alleged breach of principles of natural justice, including denial of cross-examination and alleged inadequate opportunity, justifies bypassing the statutory appellate remedy. 1.3 Whether the requirement of pre-deposit for filing a statutory appeal, having regard to the quantum of penalty, constitutes a ground to invoke writ jurisdiction in preference to the alternate remedy. 1.4 Whether, in writ proceedings, the Court should examine factual findings on the petitioner's alleged role in a fraudulent export syndicate when such findings can be assailed in statutory appeal. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Maintainability of writ petition in presence of alternate and efficacious statutory remedy Legal framework (as discussed) 2.1 The Court considered the settled principle that writ jurisdiction under Article 226 is ordinarily not to be exercised where an alternate and efficacious statutory remedy of appeal is available, save in exceptional situations. The Court relied upon and followed its own prior decisions and the decision of the Supreme Court reiterating this doctrine and delineating the limited exceptions. Interpretation and reasoning 2.2 The impugned show cause notice had culminated in an adjudication order against which a statutory appeal was available. The Court held this remedy to be alternate and efficacious. 2.3 The Court referred to its detailed analysis on exhaustion of alternate remedies in a previous decision and to the Supreme Court's reiteration that High Courts should not entertain writ petitions where statutory remedies exist, except in exceptional cases supported by proper pleadings and material. 2.4 It was noted that the petitioners attempted to bring the case within the recognised exceptions without adequate pleadings or substantiating material, and even tried to argue a case not pleaded while abandoning what was cursorily pleaded. Conclusions 2.5 The Court held that no exceptional case had been made out to depart from the standard rule of relegating the petitioner to the alternate statutory remedy and that the writ petition was not maintainable on this ground. Issue 2: Alleged violation of principles of natural justice (including denial of cross-examination and adequacy of opportunity) Legal framework (as discussed) 2.6 The Court reiterated that there is 'nothing like a mere technical breach of natural justice'; prejudice must be specifically pleaded and established. Only serious violations, properly articulated and supported, can justify bypassing alternate remedies. Interpretation and reasoning 2.7 The petitioner alleged violation of natural justice, inter alia on the ground that it was not permitted to cross-examine certain persons whose statements were relied upon in adjudication, and that it was innocent and unconnected with the alleged fraudulent syndicate. 2.8 The Court held that the allegations of breach of natural justice were 'vague' and at best indicated a case of alleged 'inadequate opportunity,' not 'no opportunity.' Determining whether there was any violation would require examination of several factual issues, which is ordinarily within the domain of the appellate authority rather than the writ court. 2.9 The Court found that the pleadings did not meet the required standard because there was no clear articulation of prejudice suffered by the petitioner as a consequence of the alleged breach. 2.10 The Court observed, prima facie, that the plea of violation of natural justice appeared to be invoked mainly to circumvent the requirement of pre-deposit in appeal, rather than as a substantiated ground of serious procedural illegality. Conclusions 2.11 The Court held that the alleged violation of natural justice did not, on the pleadings and material presented, constitute an exceptional ground to entertain the writ petition in the face of an efficacious appellate remedy, and that such contentions should be raised before the appellate authority. Issue 3: Effect of pre-deposit requirement and alleged harshness of quantum on recourse to writ jurisdiction Interpretation and reasoning 2.12 The petitioner argued that, having regard to the quantum of penalty, it would be harsh to insist on availing the appellate remedy, which required a statutory pre-deposit. 2.13 The Court noted that the learned counsel for the petitioner did not contend that the petitioner was unable to afford the pre-deposit amount, only that the requirement was harsh given the penalty quantum. 2.14 Relying on its own recent decision in a similar context, where vague claims of incapacity to comply with pre-deposit were rejected, the Court reaffirmed that mere assertion of harshness or inconvenience does not render the statutory remedy inefficacious nor justify bypassing it. Conclusions 2.15 The Court held that the pre-deposit requirement, even in the context of a high penalty, does not by itself constitute a valid ground to invoke writ jurisdiction in preference to the prescribed appeal, absent concrete pleadings and proof of genuine incapacity. Issue 4: Scope of writ jurisdiction in reassessing factual findings on involvement in alleged fraudulent export syndicate Interpretation and reasoning 2.16 The adjudication order recorded detailed findings that the petitioner had emerged as a 'key orchestrator of a fraudulent diamond export syndicate, centrally coordinating operations involving the misuse of dummy IECs, forged documents and shell firms,' and contained particulars of the petitioner's alleged involvement. 2.17 Against such detailed findings, the petitioner's case in the writ petition largely comprised bare denials and general assertions of innocence and lack of involvement. 2.18 The Court emphasized that it could not, in writ jurisdiction, re-appreciate evidence or undertake a reassessment of factual findings based on such bare denials, especially where a comprehensive appellate mechanism existed and the impugned order itself detailed the modus operandi and role attributed to the petitioner. 2.19 The appropriate forum to challenge and seek reversal of these factual findings is the statutory appellate authority, where the petitioner can lead arguments and material to contest the conclusions in the impugned order. Conclusions 2.20 The Court declined to entertain the petitioner's challenge to the factual findings on involvement in the fraudulent syndicate under writ jurisdiction and held that such issues must be agitated in appeal. Overall Disposition 2.21 The writ petition was dismissed, with liberty to the petitioner to avail of the alternate statutory remedy of appeal against the impugned adjudication order; no order as to costs was made.