TaxTMI 
TaxTMI 
2013 (1) TMI 392
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....ection 16(3) of : The Foreign Exchange and Management Act, 1999 (in short FEMA) against the petitioner in view of his failure to comply with the summons issued under section 37, on 02.08.2010 and 24.08.2010, qua proceedings proposed to be taken out against him under section 13 of the FEMA. This communication apparently, also informed the RPO, that notice on the said complaint had been issued on 20.09.2010. 3. The petitioner has challenged, the aforementioned impugned orders, on various grounds, which I will refer to and deal with in the latter part of my judgment. For the moment, it may be relevant to refer to the material and relevant facts which have led to the institution of the present writ petition under Article 226 of the Constitution of India. 4. As indicated above, on 02.08.2010 summons were issued under section 37 of the FEMA, to the petitioner, in respect of investigations being carried out against him for violation of the provisions of FEMA. The petitioner was required to appear before the Assistant Director, on 10.08.2010. It appears that on 08.08.2010, a letter was received through the petitioner's General Counsel and Constituted Attorney, that the petitioner had....
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....pearances in connection with the third (3rd ) edition of the IPL tournament and therefore, the reason trotted out was a bogey, created to avoid his examination under oath, under the provisions of section 37 of FEMA. 9. Since, the officer concerned was of the view that, the petitioner had willfully avoided the summons issued to him, under section 37 of FEMA read with the provisions of section 131 and section 272(A)(i) of the Income Tax Act, 1961, to stall investigation, he decided to institute a complaint for levying penalty on the petitioner under section 13 of FEMA. 9.1. Consequently, a complaint under section 16(3) of FEMA was filed on 16.09.2010. 10. In the said complaint, a notice was issued to the petitioner on 20.09.2010. 11. It appears that on 04.10.2010, the DOE issued a communication which was received by the Assistant Passport Officer (in short APO), on 05.10.2010 informing him with regard to the aforesaid development, with a request that action be taken in public interest for revocation of passport of the petitioner under section 10(3)(c) of the Passports Act, 1967 (in short the Passports Act). 12. On 12.10.2010, the petitioner through his solicitor had se....
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....sponse to the show cause notices issued to the petitioner. By this communication, the APO indicated to the petitioner that, the communication received from the DOE vide letter dated 04.10.2010 and 15.10.2010, were confidential and constituted correspondence exchanged between two government departments which, could not be supplied to him. However, certain extracts from the said letters as also information gleaned from other documents, which had formed the basis, for issuance of the show cause notices were set out, and thus, made available to the petitioner. The extracts set out in the communication dated 01.11.2010, adverted broadly, to the following:- (i). The DOE investigation had revealed that the petitioner as the Chairman of the Governing Council of the IPL of the Board of Control for Cricket in India (in short BCCI), had committed gross irregularities in the conduct of the IPL tournaments, and in the award of contracts by the BCCI to various parties in India and abroad. (ii). The fraudulent activities of the petitioner, which were in violation of FEMA, had led to the siphoning of funds to the extent of hundreds of crores of rupees; which apparently he was suspected to ha....
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....ehalf was conveyed through letter dated 16.11.2010. 20.1 The petitioner's solicitor in their letter of 18.11.2010 had sought to take the stand that the hearing of 18.11.2010, could not be held to consider aspects related to impounding or revocation of the petitioner's passport as, the show cause notice was issued only to adjudicate upon as to: whether or not proceedings under section 10(3)(c) had to be "initiated". 20.2 This stand was reiterated at the hearing held on 18.11.2010. Apart from the above, an objection was also taken to the matter being heard by the RPO, as the show cause notice was issued by the APO. 20.3 The hearing of 18.11.2010 was followed by two letters dated 19.11.2010 and 22.11.2010. In the first letter, an order was sought on the objection taken by the counsel for the petitioner to the matter being heard by the RPO, and by the second letter, a copy of the order was sought whereby, their request for inspection of records, certified copies of the Rojnama and ordersheets, had been declined. 21. The above propelled the RPO to convey to the counsel for the petitioner vide communication dated 23.11.2010 that the Passport Authority at Mumbai was headed by ....
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....sel in support of the said appeal was heard on 14.07.2011 and 01.08.2011. 28.1 An opportunity was also granted to file written submissions vide communication dated 08.08.2011. In this communication, it was conveyed that hearings in the appeal had been granted on 14.07.2011, between 1500 hours and 1730 hours, while on 01.08.2011, hearing was granted between 1400 hours and 1800 hours. Furthermore, it was conveyed that since, on 01.08.2011, it was mutually agreed that, written submissions as well as additional points which the counsels were required to make, could be filed - there was need for the same to be filed at an early date, so as to enable the CPO, to take a decision in the appeal. 29. Accordingly, on 17.08.2011, written submissions were filed on behalf of the petitioner. 30. Almost simultaneously, it appears, the petitioner through his General Counsel and Constituted Attorney filed three applications of even date i.e., 17.08.2011, under the Right to Information Act, 2005 (in short the RTI Act) with : the Public Information Officer of the Ministry of Home Affairs, Govt. of India; the office of the RPO, Mumbai; and the CPIO, Dy. Passports Officer, CPV Division of Minis....
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....t for culmination of proceedings under the said provision i.e., for revocation of the petitioner's passport. In other words, the impugned orders went beyond what was proposed in the show cause notice. (ii). The proceedings before the Passport Authorities were initiated based on the alleged failure of the petitioner to respond to the two summons issued by the DOE dated 02.08.2010 and 24.08.2010 under section 37 of the FEMA. These summons thus, formed the basis for institution of a complaint by the DOE under section 16(3) of the FEMA, on which, notice had been issued, on 20.09.2010. The RPO and the CPO failed to take into account the fact that a detailed reply had been filed, on 12.10.2010, on behalf of the petitioner, stating therein, that he could not appear in person, on account of threat to his life. (iii). There has been no adjudication in the complaint filed under section 16(3) of FEMA, in which, notice has been issued on 20.09.2010. This was so, despite, a reminder being sent on behalf of the petitioner, on 04.10.2011. The provisions of section 16(6) of FEMA require the adjudicating authority to complete adjudication within a period of one year from the date of receipt o....
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....CPO was bad in law as it was pronounced after a gap of over three months . (xi). The DOE, in its request to the Passport Authorities, had only sought impounding of the petitioner's passport, while the impugned orders proceed to revoke the petitioner's passport. Revocation is a permanent cancellation of the petitioner's passport, while impounding would have led to a mere temporary custody of the passport. (xii). Given the threat to the petitioner's life, he had offered to answer any questionnaire that was submitted to him or, answer questions through video-link or, even answer to a commissioner, if so appointed by the DOE. The complete disregard to the alternative modes available, was illegal. The order of revocation of the petitioner's passport in these circumstances was a draconian measure, which failed to satisfy the test of proportionality. (xiii). The two show cause notices issued by the DOE, were mainly directed against the officials of the BCCI which included the President and the Secretary, in respect of, IPL tournament conducted in South Africa, and the issue related to hiring of services of an entity by the name of IMG, for conduct of the said tournament. The peti....
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.... order of the CPO, which is impugned in the present proceedings, supplied a cause of action to approach this court under the provisions of Article 226 of the Constitution of India. 39.1. In support of their arguments, the petitioner has relied upon the following judgments:- Maneka Gandhi Vs. Union of India (1978) 1 SCC 248; AdityaKhanna Vs. The Regional Passport Officer 156(2009) DLT 17 and Canon Steels (P) Ltd. Vs. Commissioner of Customs, (2007) 14 SCC 464 and 2. 40. On the other hand, on behalf of the respondents, the following submissions were made, beginning with a preliminary objection. (i). The preliminary objection taken was, to this court's jurisdiction to entertain and adjudicate upon the present petition. In this regard, it was submitted that the petitioner was a resident of Mumbai and had applied for passport at Mumbai. A major part of the cause of action had arisen in Mumbai including the fact that the first impugned order, which was passed by the RPO, was passed at Mumbai. The only reason that the petitioner had chosen to approach this court, was on account of the order passed by the CPO, in the appeal, preferred by him, under section 11 of the Passports Act.....
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....e the power of revocation? Second, whether in the given circumstances, the RPO had exercised his powers in the interest of general public? In other words, was there a case, as alleged by the petitioner, of material irregularity displayed by the RPO and the CPO, in exercising their jurisdiction. 42. A careful perusal of the facts, which have emerged from the record, would show that the impugned orders came to be passed in the background of the following events. 42.1 The petitioner was issued a summon under Section 37 of the FEMA on 02.08.2010. It was followed by yet another summon, once again, issued under Section 37 of the said Act, on 24.08.2010. The summons, admittedly, required personal appearance of the petitioner before the concerned officer. The summons were indicative of the fact that the DOE, proposed to take action against the petitioner under Section 13 of FEMA. 42.2 In response to the first summon, issued on 02.08.2010, it was sought to be conveyed on behalf of the petitioner vide communication dated 07.08.2010, which was delivered on 09.08.2010, that there was an apprehension of threat to the petitioner's life. The concerned authority not being convinced, sough....
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....icated hereinabove, the petitioner claims that he received only the second show cause notice issued by the APO which is dated 15.10.2010. I would assume that to be the correct position for the moment. A perusal of the show cause notice would show that it required the petitioner to appear before the APO, in person, within 15 days from the date of issuance of the notice alongwith his passport. The notice also indicated that if no reply is received within the stipulated period, necessary action under the Passports Act would be initiated against him. 43.2 The brief reason adverted to in the show cause notice of 15.10.2010 was that the complaint filed by the DOE dated 16.09.2010 (on which notice had been issued for non-compliance of the directions contained in summons issued to the petitioner), had been received. The non-compliance is, in substance, related to non-appearance in person by the petitioner, as directed. 43.3 Therefore, an explanation was sought, as to why, action ought not to be initiated under Section 10(3)(c) of the Passports Act. Admittedly, the petitioner did not present himself either in response to the summons issued by the DOE, to which I have made a reference ....
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.... proposed action to impound/revoke" the passport of the petitioner. It is on account of this communication of the APO, that on behalf of the petitioner, a return communication dated 18.11.2010 was issued, inter alia, to the effect, that the show cause notice of 15.10.2010, did not advert to this aspect. It is, therefore, quite clear, at least prior to the adjudication of the show cause notice dated 15.10.2010, that the petitioner had been put to notice of the possible consequences of the failure to give a satisfactory explanation to the concerned officer. The test which the Supreme Court applied in the context of a suit where one party claimed, inter alia, that no relief could be given as a specific issue was not struck - was: did parties know that the matter in question was involved in the trial. [see observations in Bhagwati Prasad vs Chandramaul AIR 1966 SC 735 at para 10 to 13]. If the same test is applied, this objection cannot sustain. Therefore, the argument made in this behalf, is without merit. 45. The other argument that the passport authorities had abdicated their power, in as much as, they had acted on the dictation of the DOE, is premised on a submission that the sa....
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.... is a case of identity theft under clause (a) or, under clause (b) where some information has been suppressed or incorrectly provided, say for example, with regard to the address or details of parentage, are wrongly supplied, inputs of other departments may have to be taken into account. Similarly, as to whether sovereignty and integrity or, the security of the country is endangered or, the effect on country's relationship with other countries is in issue - necessarily would require reliance to be placed on inputs provided by other wings of the Government of India. The inputs provided may not have the quality of a final determination; however, as long as the material provided is actionable, the passport authority would be well within its right to take the necessary steps for revocation and/or impounding. 45.3 If the aforesaid test is applied to the situations discussed above, I do not see how it cannot apply to the last limb of clause (c) of Sub-Section (3) of Section 10, which invests in the passport authority the power to revoke or impound a passport in the interest of general public - as long as the inputs provided by statutory authorities and other wings of the government, a....
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....vided the necessary jurisdictional facts to exercise power under Section 10(3)(c) of the Passports Act. 46. This brings me to the question whether the power has been exercised by the passport authorities in the interest of general public. There is no gainsaying that FEMA has been enacted by the Parliament to protect the economic interest of the country. The preamble to FEMA makes this aspect quite clear when it refers to the fact that it is an Act made to consolidate and amend the law relating to foreign exchange, with the objective of facilitating external trade and payments, and for promoting the orderly development and maintenance of foreign exchange market in India. It cannot, therefore, be said that summons issued under FEMA for unraveling details with regard to transactions referred to therein are not in public weal. The summons issued under Section 37, required the petitioner to appear before the concerned authority, in person, to tender evidence in respect of various agreements executed by the BCCI /IPL. It is quite possible that during the course of the petitioner's examination he may have to be confronted with material that may be in possession of the concerned officer....
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....y party to inter alia issue summons to persons whose attendance is required either to give evidence or to produce documents or such other objects, as aforesaid. The coercive power of the court to compel attendance of any person to whom summons have been issued under Section 30 of the CPC are provided in Section 32 of the CPC. The coercive power includes the power to : issue warrant of arrest; order attachment and sale of the delinquents' properties; impose fine not exceeding Rs.5000; and order for furnishing security for his appearance, and in default, commit him to the civil prison. 47.2 It is, therefore, contended that this power was available only vis-a-vis a witness and not vis-a-vis a person against whom the proceedings have been initiated. The example given was that of proceedings in a civil suit where, on the failure of a defendant to appear in a proceedings initiated in a civil court, would only result in him being proceeded ex-parte, and not being subjected to the penalties, provided in Section 32 of the CPC. It was submitted that Section 31 which precedes Section 32 of the CPC makes this aspect quite obvious. 47.3 In my view, this submission is again misconceived fo....
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....es were issued by the passport authorities. The position was no different when the impugned order was passed. Thus, it cannot be said that the pendency of the complaint under Section 16(3) of FEMA ought to have influenced the decision of the passport authorities; a situation for which, the petitioner is himself responsible. This would also answer the submission made on behalf of the petitioner that, issuance of show cause notices by the APO was premature. 49. On behalf of the petitioner an elaborate argument has been raised with regard to breach of principle of natural justice. In this regard broadly four submissions were made. First, the proceedings before the RPO were abruptly terminated on 26.11.2010. Second, that the show cause notices were issued by the APO, while the impugned order dated 03.03.2011 was passed by the RPO. Third, the material on which the show cause notice was issued to the petitioner was not supplied to the petitioner. Fourth, no opportunity was granted to cross-examine the officers of DOE. As regards the first submission, it may be noted that the material on record suggests that lengthy hearings were held both on 18.11.2010 and 26.11.2010. In the hearing h....
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....the contours of natural justice will vary with the nature of the inquiry. See observations in Local Government Board vs Alridge, 1915 AC 120; Ridge vs Baldwin 1964 AC 40; Regina vs Race Relations Board, Ex parte Selvarajan (1975) 1 WLR 1686 and in de Smiths Judicial Review of Administrative Action (4th edn., pp. 219-220). Also see observations in Ossein and Gelatine Manufacturers' Association of India vs Modi Alkalies & Chemicals Limited & Anr. (1989) 4 SCC 264 at page 268 para 6, which has noticed the said authorities. However, I have not been called upon to deal with such a situation. The submission of the learned counsel for the petitioner on this score is therefore rejected. 49.3 The third limb of this argument which is that the relevant material which formed the basis for issuing the show cause notice was not supplied ,is also not quite correct. The APO vide letter dated 01.11.2010, admittedly had given extracts of the material, which was supplied by the DOE to him. The receipt of the said letter is not denied by the petitioner. It is also not denied by the petitioner that he was made available the complaint filed by the DOE under Section 16(3) of FEMA. The petitioner was w....
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....lf of the petitioner that the expression 'in the interest of general public' appearing in Section 10(3)(c) of the Passport Act should take its colour from a similar provision appearing in Article 12 of the CCPR, does not impress me for the following reason: Firstly, as indicated above, the action taken by the DOE to protect the economic interest of the country in respect of which the allegation is that money to the tune of hundreds of crores has been parked by the petitioner outside the country, would require examination. Secondly, there is no scope for invoking the provisions of Article 12 of the CCPR once the municipal law on a given subject occupies the field. See observations of the Supreme court in Vishakha and Ors. Vs. State of Rajasthan and Ors., AIR 1997 SC 3011 at page 298 para 7 and Jolly George Varghese & Anr. vs The Bank of Cochin (1980) 2 SCC 360 at page 364 para 6. It is not the case of the petitioner before me, that there is any doubt with regard to the interpretation to be given to the expression "in the interest of the general public", appearing in Section 10(3)(c) of the Passports Act. Therefore, this submission of the petitioner is also without merit and is, acco....
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....cts. In the said case, the petitioner came to the court on the ground that his passport had been revoked without issuance of the show cause notice and grant of an opportunity to represent his case before the Passport authorities. It is noticed that, the court recorded in that case that, in the affidavit of the Central Bureau of Investigation, there was "not a single allegation that the petitioner had not appeared in the past to make an appearance". In fact, it is in those circumstances that, the court directed the passport authorities to hand over the petitioner's passport in that case as the principles of natural justice had been breached. There is no such situation obtaining in the present case. 55. As regards the submissions made on behalf of the respondents to jurisdiction of the court to entertain the writ petition on the ground that the jurisdiction of this court is invoked based only on the ground that the order of appellate authority, i.e., CPO has been passed in Delhi, in my opinion, may perhaps have enabled me to employ my discretion and relegate the petitioner to the appropriate court based on the principle of forum non conveniens. See observations in Kusum Ingots and....