TaxTMI 
TaxTMI 
2010 (7) TMI 1000
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.... Chairman of the said Company. It is petitioners' case that the contravention alleged to have been committed by the petitioner in furnishing the bank guarantee to a non resident was on the ground of applicability of Section 6 (3) (1) (J) of the Foreign Exchange Management Act, hereinafter referred to as FEMA, is not sustainable in law and the issue of guarantee by a resident in India to a non-resident is permissible under Section 6 (2) of the said Act and the regulations made thereunder. The company H & M.I.T.L., in order to expand its business activities agreed to purchase 100% shares of vMoksha entities and on 11.05.2005 entered into a share purchase agreement, subscription agreement and Escrow agreement with Moksha Technologies Ltd., Mauritius and 7 others. As per the terms of their share purchase agreement a like amount will be retransferred to the petitioner company which in turn will issue its redeemable preference shares in favour of vMoksha, Mauritius which will be redeemed 18 months from the date of the issue. For the above share purchase agreement M/s. Price Waterhouse Coopers Pvt. Ltd. acted as advisers to the transaction. Moksha deposited the....
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....aining to the alleged contravention of the provisions of FEMA, the other complaints were not sustainable. Based on the above complaint, the second respondent ought to have summoned the petitioners to produce the relevant records. Without doing so, the officials of the second respondent, on 12.03.2008, who came to serve the summons, raided the Corporate Office at Nungambakkam and the Branch Office at T. Nagar simultaneously and seized certain documents relating to the contract referred to above. On 27.11.2008, petitioners made a representation stating that the letter of lien and guarantee for the retransmission of the amount which would be credited to its account at Chennai have already been done and again on 15.12.2008 by way of another representation, a clarification was made. Then it was brought to the notice of the respondents that the Provisions of Section 6 (2) of FEMA is alone applicable. 5. While that being so, the respondents, without considering the representations made by the petitioners, proceeded further based on the complaint made by Rajeev Sawhney and called upon the petitioners to explain the charges framed vide its letter....
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....; and hence, this Court has to interfere with the impugned proceedings though it is only a show cause notice. 7. Mr. M. Ravindran, learned Additional Solicitor General, appearing for the respondents would, at the outset, raise the question of maintainability of the writ petitions filed challenging the show cause notice issued. He would submit that the petitioners having offered their detailed explanation on 01.07.2010 cannot invoke the jurisdiction of this Court under Article 226 of the Constitution of India. 8. I have heard the learned counsel on either side at length and perused the materials available on record. It is the case of the petitioners that the respondents have issued the impugned show cause notice in contravention of the Provisions of Section 6 (2) of the FEMA Act and that the respondents have violated the principles of natural justice by refusing to either furnish or return the documents seized by them from the office of H & T.I.M.L., thereby much prejudice had been caused to the petitioners by compelling them to offer their explanation only based on the available records. On the other hand, according to the learned Additiona....
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.... to respond to the show cause notice and take all stands highlighted in the writ petition. Whether the show cause notice was founded ....