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TaxTMI 
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2018 (2) TMI 762
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.... whose statements have been relied upon in the complaint; (b) issue a writ of Mandamus and/or any other appropriate writ order or direction in the nature of Mandamus directing the Respondent No. 1 to issue summons to Mr. N. Srinivasan, Mr. Prasanna Kannan, Mr. Sundar Raman, Mr. Chirayu Amin, Mr. Shashank Manohar, Mr. Ratnakar Shetty, Ravi Shankar Shastri, Mr. M. P. Pandove and Mr. Peter Griffith ("the said witnesses") and permit the advocates for the Petitioner to cross examine them; (c) issue a Writ of Mandamus and/or any other appropriate Writ/order or direction in the nature of Mandamus directing the Respondent No. 1 and 2 to supply a copy of the reply filed by the other eight Co-Noticees including the BCCI in response to the eleven Show cause Notices issued against the Petitioner and others; (d) issue a writ of Mandamus and/or any other appropriate Writ/order or direction in the nature of Mandamus directing the Respondent No. 1 to hold the proceedings with respect to all the eight Noticees in the eleven Show Cause Notices and the proceedings with respect to the State Bank of Travancore (Authorized Dealer) and a party in the complaint at the same time and venue." 3. The peti....
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....out permission of the Reserve Bank of India (RBI) and that is inter alia apparent from an agreement dated 30th March, 2009 executed between the BCCI and Cricket South Africa. The show cause notices rely upon the complaint of the second respondent to this petition, the gist of which reads as under:- "10. The Complainant, therefore, submits:- I that the notices no 1 to 10 appear to have violated the provisions of FEMA, 1999 as mentioned above, and are liable to penalties under Section 13(1) of FEMA 1999. II It is, therefore, prayed that this complaint may be taken on record and the noticees no 1 to 6 be dealt with in accordance with law. III It is further prayed that directions be issued to BCCI to repatriate to India, the amount of ZAR 931567 which has accrued to BCCI as receivable against pouring rights. IV That the Complainant seeks permission of the adjudicating authority to refer to and to rely, inter alia, on the documetns mentioned in the "Annexure-II" to this complaint. Dated at Mumbai, this 16th day of November, 2011." 6. A copy of the show cause notice issued to the petitioner and others reads as under:- "DIRECTORATE OF ENFORCEMENT Ministry of Finance, Department o....
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....5, 4.7, 4.10, 4.11, 4.12, 4.14, 4.16, 4.22, 4.33 and 4.34 of the Complaint. (ii) Noticee Nos.2 to 5 appear to have contravened the above provisions of FEMA in terms of section 42(1) of FEMA, 1999. (iii) Noticee Nos.6 to 8 appear to have contravened the above provisions of FEMA in terms of section 42(1) of FEMA, 1999. You are therefore required to show cause in writing within 30 days of the receipt of this notice, as to why adjudication proceedings as contemplated under Section 16 of the Foreign Exchange Management Act,1999 should not beheld against yo for the aforesaid contraventions. Your attention in this connection is drawn to Rule (4) of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000; In view of the above, you are required to appear either in person or through Legal Practitioner/Chartered Accountant duly authorized by you to explain and produce such documents or evidence, as may be useful for or relevant to the subject matter of enquiry. In case you fail, neglect or refuse to appear before me on the appointed date, the adjudication proceedings will be initiated against you ex-parte. Reliance has been inter alia placed on the documents ....
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....d a letter, copy of which is at Exhibit-'B' to the petition referring to this show cause notice. By this letter dated 10th January, 2012, the petitioner sought a clarification from the first respondent as to which documents were relied upon for the purpose of issuance of the show cause notices apart from the documents at Annexure - II. The complainant also requested to provide copies of all such documents. Under that letter, the petitioner also sought extension to file a reply to the show cause notices. Since no reply was received, the petitioner followed up his request by a letter dated 23rd January, 2012. These letters are addressed on behalf of the petitioner by his advocate and they sought information and inspection as well of supply of complete set of documents relied upon in the show cause notices. Exhibit - 'C' to this petition is a copy of this letter of 23rd January, 2012. 10. The petitioner states that once again there was no response to these letters. The petitioner's advocate, therefore, addressed a letter dated 3rd May, 2012 reiterating that the petitioner intends to file a detailed reply to the allegations in the show cause notices and in view of ....
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....rial and evidence available to him. The petitioner, through his advocate, on 19th June, 2013, stated that the notice is not adequate. The advocate is out of station and it will not be possible to get ready by the given date and time. Further, these notices of personal hearing do not refer to a personal meeting of one Gaurav Gopal when he met Shri. D. K. Sinha to collect the documents in respect of the other show cause notices. This meeting was held on 11th June, 2013, on which date, it was not informed that these show cause notices would be adjudicated so soon and a notice has already been issued in that behalf. Thus, the time was not adequate. The petitioner states that in these circumstances, the petitioner was constrained to move this court and a writ petition was filed being Writ Petition No. 1703 of 2013. That writ petition was disposed of by this court and in terms of the order passed by this court, it was directed that the petitioner be furnished with the documents. 13. The petitioner then addressed another letter dated 22nd July, 2014 and prayed for supply of the documents, withdrawal of the notices themselves and alternatively and without prejudice, proceed with the adjud....
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....re result of internal political wranglings within the BCCI as Shri N. Srinivasan and Shri Shashank Manohar tried to oust our client from the BCCI. Our client had also exposed the deep and pervasive conflict of interest of Shri N. Srinivasan in the BCCI as he was wearing two hats of administrator as well as franchisee in the BCCI. Due to this, Shri N. Srinivasan had deep grudge against our client and all his actions were malacious and vengeful. These office bearers were having tremendous influence within BCCI. For example Shri Prasanna Kannan while being employed in India Cements Ltd. (a company owned by Shri N. Srinivasan) was also employed in BCCI as CFO of IPL and was directly reporting to Shri N. Srinivasan, Shri Sundar Raman was close associate of Shri N. Srinivasan and was considered as his alter ego. Similarly, other BCCI witnesses were under influence of Shri Shashank Manohar and Shri N. Srinivasan who were the two most important office bearers of BCCI. The statements of the BCCI witnesses before the ED are false in material particulars. Our client craves leave to rely on his reply to show the falsity of the stand of these BCCI witnesses. These witnesses have further tried, ....
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....Amin, Shashank Manohar, Ratnakar Shetty, Ravishankar Shastri, M.P. Pandove, Peter Griffiths and also the Investigating Officer, who is the Complainant in the SCN. While raising the said demand for cross-examination, it was submitted by the said Advocate that the statements given u/s 37 of FEMA 1999 by the various BCCI officials were all false in material particulars and at variance with that of the same tendered by them before the BCCI Disciplinary Committee with regard to the role played by their client in the entire IPL proceedings. 2 In this connection, the undersigned has examined the Complaint as well as the documents relied upon in the subject SCN which disclose that the statements of the aforesaid BCCI officials were recorded under oath administered u/s 36 of FEMA and it contain true facts, which were given voluntarily by the concerned persons. Moreover, none of the statements of the aforesaid BCCI officials stated to have been given before the BCCI were available before the ED authorities nor are they forming part of the relied upon documents in the impugned SCN. 3 Considering the above position, the request made by the Advocates seeking cross examination of the above off....
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....the show cause notices issued by the Directorate of Enforcement, exercising powers under the FEMA, are the subject matter and particularly when the said show cause notices are being adjudicated, has the petitioner a right to cross examine the persons whose statements are being relied upon to support the allegations in the show cause notices. Further, inviting our attention to the FEMA, particularly sections 13, 14 and 16 of the said Act, it is urged that sub-section (4) of section 16 in clearest terms says that a person to whom the show cause notice is addressed may appear either in person or take assistance of the legal practitioner or a Constituted Attorney of his choice for presenting his case before the adjudicating authority. On instructions, Mr. Chinoy says that the petitioner, who is presently based in London, has duly appointed and instructed a legal practitioner of his choice to appear before the adjudicating authority. Even when the cross examination, if permitted, is conducted or held, the petitioner will not insist on his presence, but would cross examine the persons, whose statements are relied upon, through his duly appointed and instructed advocate/counsel. The petit....
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....e from the legal provisions relied upon. In any event, existence of an alternate remedy is not an absolute bar for entertaining a petition under Article 226 of the Constitution of India. It is merely a rule of caution and prudence rather than a legal bar. In these circumstances, even the second preliminary objection is overruled. 26. Now we come to the contentions of Mr. Chinoy insofar as the issue at hand. Mr. Chinoy would contend and by placing reliance on the wording of the impugned communication that the same adversely affects the rights of the petitioner. Mr. Chinoy invited our attention to the FEMA, particularly the Chapter empowering imposition of penalty and holding of adjudication and contends that the consequences of an adjudication order are indeed grave and serious. The penalties are imposed and in contravention of the statutory provisions and which could be twice the sum which is stated to have been remitted/withdrawn in contravention of the provisions of law. Thus, the monetary liability could be huge, according to Mr. Chinoy. In the scheme of the Act and conferring in the authorities thereunder such drastic powers, Mr. Chinoy would submit that the legislature has fr....
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....at the documents relied upon in the subject show cause notices include these statements of the officials recorded under oath administered under section 37 of the FEMA and they contain true facts, which were given voluntarily by the concerned persons. Moreover, none of the statements of the aforesaid BCCI officials, stated to have been given before the BCCI, were available before the Enforcement Directorate authorities. Mr. Chinoy criticised both these observations to submit that a conclusive opinion has now been rendered by the adjudicating authority that he would proceed to rely upon these statements, as according to him, they contain true facts. Precisely, for this reason, Mr. Chinoy would submit that the cross-examination becomes crucial and vital. It is only on a cross-examination of these witnesses that the petitioner can bring out the truth. The adjudicating authority, at this stage, cannot conclude that these statements contain true facts. It is in these circumstances, Mr. Chinoy would submit that in the teeth of the show cause notices, the specific statements made therein, now, as an afterthought, the adjudicating authority cannot say that these statements are not being rel....
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....with it on facts and in law. Thus, there is a complete remedy available to the petitioner and we should not, therefore, entertain this petition or decide a wider question as is raised, particularly on the ambit and scope of subrules (5) and (6) of Rule 4 of the Rules in question. He would, therefore, submit that we should not grant the request made by the petitioner. More so, when no prejudice is caused to the petitioner. 30. Mr. Singh would rely upon a judgment of the Hon'ble Supreme Court in the case of Telestar Travels Pvt. Ltd. vs. Special Director of Enforcement 2013 (289) ELT 3. He would also rely upon a Division Bench judgment of this court, to which one of us (S. C. Dharmadhikari, J.) was a party in the case of Patel Engineering Ltd. vs. Union of India 2014 (307) ELT 862. 31. Mr. Singh, to support his argument that this is but a procedural order and should not be interfered with unless it is ex-facie illegal and perverse, relies upon a Full Bench Judgment of the High Court of Madhya Pradesh at Jabalpur in the case of Kowa Shipping Ltd. and Ors. vs. Debt Recovery Tribunal and Ors. AIR 2004 MP 1. For the above reasons, he would submit that the petition be dismissed. 32....
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.... in foreign securities, as an authorised dealer, money changer or offshore banking unit or in any other manner as it deems fit. The RBI has powers to issue directions to the authorised persons. Then, the power of the RBI to inspect authorised person is to be found in section 12. Chapter IV is titled as "Contravention and Penalties". Therein appears section 13 and the same reads as under:- 13. Penalties. - (1) If any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorisation is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such contravention is a continuing one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues. (1-A) If any person is found to have acquired any foreign exchange, foreign security or immovable property, situated outside India, of....
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....is possible and by section 14-A, power to recover arrears of penalty is provided. The power to compound contravention by section 15 is conferred in the RBI. Then fallows adjudication and appeal and that provision is in Chapter V. Section 16 falling thereunder reads as under:- "16. Appointment of Adjudicating Authority.- (1) For the purpose of adjudication under section 13, the Central Government may, by an order published in the Official Gazette, appoint as many officers of the Central Government as it may think fit, as the Adjudicating Authorities for holding an inquiry in the manner prescribed after giving the person alleged to have committed contravention under section 13, against whom a complaint has been made under sub-section (3) (hereinafter in this section referred to as the said person) a reasonable opportunity of being heard for the purpose of imposing any penalty: Provided that where the Adjudicating Authority is of opinion that the said person is likely to abscond or is likely to evade in any manner, the payment of penalty, if levied, it may direct the said person to furnish a bond or guarantee for such amount and subject to such conditions as it may deem fit. (2) Th....
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....spective jurisdiction of the adjudicating authority has also to be specified in the order to be published by the Central Government in the Official Gazette. Subsection (3) says that no adjudicating authority shall hold an inquiry under sub-section (1) except upon a complaint in writing made by any officer authorised by a general or special order by the Central Government. Pertinently, such an application was forwarded by the second respondent before us, based on which, respondent no. 1 issued the subject show cause notices. Then, sub-section (4) enables appearance, as we have noted above, either in person or with the assistance of a legal practitioner or Constituted Attorney for presenting the case before the adjudicating authority. The power of the adjudicating authority enumerated in sub-section (5) of section 16 is clear and that makes the proceedings before it to be judicial proceedings and the adjudicating authority shall be deemed to be a civil court for the purpose of section 345 and 346 of the Code of Criminal Procedure, 1973. Then, by sub-section (6), a time frame is stipulated so as to dispose of the complaints. 36. It is because sub-section (1) of section 16 employs the....
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....e Adjudicating Authority, the Adjudicating Authority may proceed with the adjudication proceedings in the absence of such person after recording the reasons for doing so. (8) If, upon consideration of the evidence produced before the Adjudicating Authority, the Adjudicating Authority is satisfied that the person has committed the contravention, he may, by order in writing, impose such penalty as he thinks fit, in accordance with the provisions of section 13 of the Act. (9) Every order made under sub-rule (8) of rule 4 shall specify the provisions of the Act or of the rules, regulations, notifications, direction or orders or any condition subject to which an authorisation is issued by the Reserve Bank of India in respect of which contravention has taken place and shall contain reasons for such decisions. (10) Every order made under sub-rule (8) shall be dated and signed by the Adjudicating Authority. (11) A copy of the order made under sub-rule (8) of rule 4 shall be supplied free of charge to the person against whom the order is made and all other copies of proceedings shall be supplied to him on payment of copying fee @ Rs. 2 per page. (12) The copying fee referred to in sub-....
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....against whom it is sought to be used. In the case of M/s. Barelilly Electricity Supply Co. Ltd. vs. The Workmen and Others AIR 1972 SC 330, the Hon'ble Supreme Court has laid down the principle in the following words:- 13. In Bengal Kagazkal Mazdoor Union v. Titaghur Paper Mills Co. Ltd., 1964-3 SCR 38, Wanchoo J, (as he then was) observed at page 45: "It is now well settled that the balance-sheet cannot be taken as proof of a claim to what portion of reserves has actually been used as working capital and that the utilisation of a portion of the reserves as working capital has to be proved by the employer by evidence on affidavit or otherwise after giving opportunity to the workmen to contest the correctness of such evidence by cross- examination (See Patlad Turkey Red Dye Works Ltd. vs. Dyes and Chemicals Workers' Union)" 14. An attempt is however made by the learned Advocate for the Appellant to persuade us that as the Evidence Act does not strictly apply the calling for of the several documents particularly after the employees were given inspection and the reference to these by the witness Ghosh in his evidence should be taken as proof thereof. The observations of Ven....
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....s and speaking from the entries made therein. If a letter or other document is produced to establish some fact which is relevant to the enquiry the writer must be produced or his affidavit in respect thereof be filed and opportunity afforded to the opposite party who challenges this fact. This is both in accord with principles of natural justice as also according to the procedure-under Order XIX Civil Procedure Code and the Evidence Act both of which incorporate these general principles. Even if all technicalities of the evidence Act are not strictly applicable except in so far as Section 11 of the Industrial Disputes Act 1947 and the rules prescribed therein permit it is inconceivable that the Tribunal can act on what is not evidence such as hearsay, nor can it justify the Tribunal in basing its award on copies of documents when the originals which are in existence are not produced and proved by one of the methods either by affidavit or by witnesses who have executed them, if they are alive and can be produced." 39. In the facts and circumstances before us, we have found, from a perusal of the show cause notices and the complaint, based on which they have been issued, that the ad....
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....nt in the case of Telestar Travels (supra). True it is that it says that the right emphasised in this petition cannot be claimed is not absolute. Telestar was a case of adjudication under the FERA. It was based on the proceedings, which were initiated to pass an adjudication order. The argument was that right of cross-examination available under the Evidence Act, 1872 ought to be read into FERA. The Hon'ble Supreme Court repelled it with reference to section 79 of the FERA and held that in a given situation, cross-examination may be permitted to test veracity of the deposition sought to be used against the party against whom action is proposed to be taken. Far from assisting the learned Additional Solicitor General, the observations in the paras relied upon would denote that though the right cannot be claimed and is not conferred in absolute terms, still, if it is claimed, it can be granted in a given situation. The Hon'ble Supreme Court found from the facts before it in that case that it is not that because such a right is denied that the order of the adjudicating authority should be quashed and set aside on that ground alone. However, para 18, which is relied upon, contai....
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.... the facts and circumstances of the case the failure to give him the opportunity to cross-examine the witnesses is not violative of the principles of natural justice. It is contended that the petitioner had retracted within six day from the confession. Therefore, he is entitled to cross-examine the panch witnesses before the authority takes a decision on proof of the offence. We find no force in this contention. The customs officials are not police officers. The confession, though retracted, is an admission and binds the petitioner. So, there is no need to call panch witnesses for examination and cross-examination by the petitioner." 42. Equally, the Hon'ble Supreme Court was shown its earlier decision in the case of Kanungo and Co. (supra), and it dealt with the argument based on that decision and held eventually that the Hon'ble Supreme Court in that case laid down certain principles. The principle is that natural justice does not require that in matters like the Sea Customs Act and Import and Export (Control) Act, 1947 and the adjudication thereunder, The persons who have given information should be examined in the presence of the person proceeded against or should be a....
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.... carried out was before the containers were opened. There was a contradiction in the Chartered Engineer's certificate and the contents of the bills of entry. That is how the Chartered Engineer was summoned and he admitted that he issued the certificate without inspecting the machines. He gave conflicting opinion. Later on, the officers, such as in the rank of Vice President of the assessee, suppliers were summoned and their statements were recorded and show cause notices were issued and adjudicated. The dispute raised was with regard to other material and contents of these certificates relied upon. Hence, it was decided by the Department to form an expert panel. That also included the representatives of the assessee. The opinion of the expert panel, after examination, was taken on record. After conclusion of this, show cause notice was issued and impugned order was passed. The assessee was not permitted to cross examine the panel members. In the absence of any prejudice, this court held that the tribunal was not obliged to grant the request made before it and belatedly. Once there was a final adjudication order and that was assailed on several grounds, including that the right ....
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....inconvenience and lack of comfort is noticed by the adjudicating authority and why he is keen to protect these persons has not been explained to us at all. If the very purpose of the cross-examination is to elicit the truth and the adjudication proceedings are nothing but an attempt to vindicate the truth, then, the adjudicating body or authority should not adopt such a position and stand. It is this communication and a lengthy one running into two pages which enables us to interfere in writ jurisdiction with the same. It would be a complete mockery of rule of law and there would be no guarantee of justice if such high level officials and adjudicating authorities hold such a view with regard to compliance with the principles of natural justice. While it is true that they are not codified or embodied in a statute, yet they are fundamental to the rule of law and administration of justice. Courts and Quasi-Judicial bodies heavily rely on these principles which are salutary in nature. Therefore, when the principle and to be followed is that justice should not only be done but seen to be done that enables us to interfere in this matter in writ jurisdiction." 46. As a result of the abov....