TaxTMI 
TaxTMI 
2018 (2) TMI 762
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....ts were recorded under Section 37 of FEMA and 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 ....
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.... South Africa (CSA) a person residing outside India, without 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 ....
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..... Pandove and Shri Sunder Raman, referred to in the Complaint and the narration of para 4 specially sub-paras 4.1, 4.2, 4.5, 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 o....
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....use notice dated 25th November, 2011, based on the complaint of the Assistant Director dated 16th November, 2011, came to be served on the petitioner. The petitioner addressed 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,....
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....y at this personal hearing and in case he fails to appear, the adjudicating authority will proceed with the case in his absence and pass adjudication order on the basis of the material 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 addre....
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....reply filed by our client. Our client was issued three Show Cause Notices by Shri N. Srinivasan and Shri Shashank Manohar during the course of BCCI disciplinary proceedings. Those notices were 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 witnesse....
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....submissions filed by M/s. Wadia Ghandy & Co., in their letter dated 15.05.2015, wherein they have sought cross examination of various witnesses viz. S/Shri N. Srinivasan, Prasanna Kannan, Sundar Raman, Chirayu 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 b....
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....icitor General, Mr. Chinoy would submit that the case referred in this affidavit in reply dated 16th March, 2016 and the nonbailable warrant do not concern the issue raised in the present petition at all. In the present petition, 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 examina....
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....s wider question open for being decided in an appropriate case. Presently, we proceed on the footing that the order of the present nature and impugned in the present petition is not appealable and that aspect is not clear and discernible 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....
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....hinoy assailed the finding in first paragraph of the impugned order/communication. The statements may be recorded in terms of section 37 of the FEMA, but they could be proved to be false in material particulars. However, the finding is that 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. I....
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.... an order in appeal before the appellate tribunal, the petitioner can very well press the ground of denial of the right to cross examine, which is allegedly part and parcel of the principles of natural justice. The appellate tribunal will deal 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, re....
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....egulation and management is under the control of the said bank. Chapter III is titled as "Authorised Person". The RBI may, on an application made to it in this behalf, authorise any person to be known as authorised person to deal in foreign exchange or 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 penalt....
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....onverted into such deposits; (b) Indian currency, where the said property is converted into that currency; and (c) any other property which has resulted out of the conversion of that property. 34. By section 14, enforcement of the orders of the adjudicating authority 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 whe....
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....ection (1) of section 16 confers in the adjudicating authority a power, if it is of the opinion that said person 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. Then, the respective 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....
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....tendance of any person acquainted with the facts and circumstances of the case to give evidence or to produce any document which in the opinion of the Adjudicating Authority may be useful for or relevant to the subject matter of the inquiry. (7) If any person fails, neglects or refuses to appear as required by sub-rule (3) before the 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....
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....rity, 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 FEMA. 38. The word "evidence" is of great significance. It means that material which has withstand cross-examination by the person 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)" ....
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....nt, what are its contents and are the statements contained therein true. When the Appellant produced the balance-sheet and profit and loss account of the Company, it does not by its mere production amount to a proof of it or of the truth of the entries therein. If these entries are challenged the Appellant must prove each of such entries by producing the books 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 wh....
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....ood now by the respondents or Mr. Singh. Quite otherwise, the petitioner wants to cross-examine these persons because the statements made by these persons are being used against him. Once things are as simple and as plain as they are, then, we do not countenance the submissions of Mr. Singh. 41. The submission is an afterthought. Mr. Singh relies upon the judgment 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 n....
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....ecessarily an opportunity requires to be given for the cross-examination of the witnesses as regards the place at which recovery was made. Since the dispute concerns the confiscation of the jewellery, whether at conveyor belt or at the green channel, perhaps the witnesses were required to be called. But in view of confession made by him, it binds him and, therefore, in 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 eventua....
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.... argument was that this order, as upheld by the CESTAT, violates the principles of natural justice. The Division Bench, from para 7 onwards noted the facts and the legal principles. Applying them, it found that the dispute was raised with regard to the other materials and contents of some certificates relied upon. There was suspicion that the inspection of the consignments 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 t....
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....are sought to be cross-examined on an advisory. There is nothing by which the proceedings partake the character of sullying his image and harming his reputation. It is in the course of the proceedings and to falsify his version that answers are elicited. Depending upon the response to the questions the assessee can modulate and modify his stand and arguments. We do not see what 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 sta....