TaxTMI 
TaxTMI 
2019 (8) TMI 265
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....." 3. To decide the aforesaid issues, it is felt necessary to know the background of both the appeals and impugned orders. In both the appeals the parties are same and the issues referred to this Bench are also same, so both the appeals are taken together for a common Judgment and Order. 4. Common facts in both the appeals: The appellant no. 1 is a company incorporated under the Indian Companies Act, 1956 and has its registered office at 8th floor, Backstage, Plot No.612, 15th Road, Junction of Ramkrishna Mission Road, Santacruz (West), Mumbai - 400054. Appellant no. 1 is engaged in Sporting and other related activities, appellant no.2 is noticee no. 2 and appellant no.3 is noticee no. 3 under the Show Cause Notice dated 24th March, 2017 issued by the Respondent. The Special Director of Enforcement, Adjudicating Authority, issued a Show Cause Notice bearing No. T-4/01-B/SDE (VA)/WR/2017/1434 to the appellants on 24th March, 2017. The said Show Cause Notice is based upon a complaint dated 09th December, 2016 filed by one Mrs. V. Kalyani (Assistant Director). 5. (I). APPEAL No. FPA-FEMA-87/MUM/2017 This appeal has been preferred under Section 19 of the Foreign Excha....
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....8.2012. After due examination of the above submission, the undersigned has rejected the request for cross-examination of both the aforesaid ED officials, as unjustifiable. It was also informed by the undersigned that the cross-examination of Sh. Mitil Chokshi, the partner of M/s. Chokshi & Chokshi was concluded on 20.09.2017, as duly noted in the record of cross-examination, which was also given to the advocate of the noticees. 5. The Ld. Advocate was directed by the undersigned to proceed with their arguments in the matter. In response, the Ld. Advocate sought for time, since the appeal filed before the ATFE is due to be taken up on 13.11.2017. The Advocate was directed to file a written submission to this effect. The Ld. Advocate undertook to file their submission/application by 31.10.2017. The matter has been adjourned for a hearing on 15.11.2017 at 15:30 hrs. (VINEET AGARWAL) SPECIAL DIRECTOR Adjudicating Authority" (II) APPEAL No. FPA-FEMA-88/MUM/2017 This appeal has been preferred under Section 19 of the Foreign Exchange Management Act, (FEMA) 1999 against the impugned order dated 15th November, 2017 passed by Special Director, Directorate of Enforceme....
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....ED, mandating M/s. C&C, to give its opinion towards valuation of KRSPL shares ‗Issued'; (iii) Letter dated 15.11.2017, enclosing a copy of letter dated 14.11.2017 from M/s. Karanjawala & Co., Advocates, addressed to Mr. Rustom Mulla, Advocates, informing the filing of Appeal No.87/2017 before the Hon'ble ATFE, New Delhi, seeking cross examination of Smt. V. Kalyani, the Complainant and also Shri D.K. Sinha, Assistant Director. 3. In the 1st ATFE Order dated 13.11.2017, the Hon'ble Appellate Tribunal directed the Adjudicating Authority to decide the application filed by KRSPL, for further cross examination or recall of witness, on merit, before hearing the main matter. 4. In the second Order passed by the Hon'ble ATFE, New Delhi, on the application filed by KRSPL, for the supply of the letter of engagement at C&C on the issue of shares of KRSPL, the Hon'ble Appellate Tribunal has given a direction that if any such application is filed before the Adjudicating Authority, the same will be decided by the Adjudicating Authority, as per its own merit. 5. The Learned Counsel contended that the cross examination of Shri Mitil Chokshi by the Advocate....
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....llowing points to substantiate his request for further cross examination of Shri Mitil Chokshi. (i) The mandate given by ED for engagement of C&C was for giving opinion on fair valuation of KRSPL shares ‗Transferred' whereas, the Opinion given by C&C relates to the valuation of KRSPL shares ‗Issued', which was beyond the scope of mandate given to them: (ii) The scope of appointment of C&C was for giving their Opinion on the fairness of valuation done by CAs of KRSPL, whereas the C&C had given the valuation of shares based on their own assessment: (iii) It is not known from the Opinion given by M/s. C&C as to what are the document/information provided by the ED to enable them to give their opinion on the fairness of valuation of KRSPL shares. (iv) Various expenses incurred year after year on a recurring basis which are on the Books of Account were not taken into account by C&C and on the other hand, they had projected various sources of revenues, which did not exist realistically. (v) The methodology adopted by C&C in arriving at the calculation on the value of KRSPL shares was not in consonance with the requirements of the CC....
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....mination, is disallowed. 10. Also, the request made in the said application, seeking adjournment of the main matter till such time the appeal is filed by the company, in the event of rejection of their application by the Adjudicating Authority, is also rejected by the undersigned as the Hon'ble Appellate Tribunal had already given a ruling on this issue in its order dated 13.11.2017, whereby, the Adjudicating Authority was directed to decide the said application as per merit, before hearing the main matter. 11. In the second application dated 14.11.2017, a prayer was made by KRSPL for inspection of letter/documents mandating C&C to give its opinion towards the valuation of shares ‗Issued' and in case, the same is not allowed by the Adjudicating Authority, the matter should be adjourned till such time an appeal is filed against the said Order. The Hon'ble Appellate Tribunal, while disposing of the application filed by KRSPL on this issue, had given a ruling vide its order dated 13.11.2017 directing the Adjudicating Authority to decide the said application as per its own merits. In this regard, it is revealed from records that a copy oif the engagement letter ....
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.... the relevant Call Notices issued for personal hearing, it was categorically mentioned that in case they fail to appear on the said date, the matter will be decided on the basis of evidence and material available on record. The details of call notices issued posting the case for personal hearing on various dates are given as under:- (i) Call Notice dt. 20th July 2017 posting the case for personal hearing on 23.08.2017. (ii) Call Notice dated 21.08.2017 posting the personal hearing on 20.09.2017. (iii) Letter dated 12.10.2017 intimating the next date of personal hearing posted on 30.10.2017. (iv) Call Notice dated 20.10.2017 posting the case for personal hearing on 30.10.2017. 16. During the course of personal hearing held on 30.10.2017 the Learned Counsel was directed by the Adjudicating Authority to proceed with their arguments on the main charges alleged in the subject SCN, but he refused to proceed with the arguments and sought for further time since the appeal filed by them before the Hon'ble ATFE, New Delhi was due to be taken up on 13.11.2017. Accordingly, the next date of personal hearing was fixed on 15.11.2017. 17. Sinc....
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....ete violation of principle of natural justice. ii. There is no restriction or limitation to the words "an order" in Section 19 (1) of FEMA, 1999. A conjoint reading of section 19 and 35 of the Act makes it abundantly clear that the words "an order" contain in Section 19 (1) is to be given a wide and liberal interpretation to mean any order which affects valuable rights of a person aggrieved or the Central Government. It is not limited to a final order under Section 13 read with Section 16. iii. The first proviso to Section 19 (1) is a specie whereas the words "an order" appearing in the Section 19 (1) is genus. iv. The phrase 'any order' in Section 19 (6) clearly indicates that it is to be given wide and liberal interpretations and is not restricted or limited to final order. Section 16 requires the Adjudicating Authority to hold any inquiry, etc., and variety of orders all of which are different species of the genus 'an' or 'any' order that could be passed under this section and not only a final order (relied on judgment passed by Hon'ble Supreme Court in the matter of Kandla Export Corporation & Anr. v. OCI Corporation & Anr. reported in 2018 (14) SCC 7....
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....n the order passed by Hon'ble High Court of Punjab and Haryana in the case of Sandeep Singh Vs. Debt Recovery Tribunal - 1998 SCC online P & H 1844 wherein it is held that the term "any order" and "an order" would mean every order including an interim order, which substantially affect the rights of the parties. The appellant has also relied on following judgments: a. Passed by Hon'ble High Court of Delhi in the matter of M.C. Mittal Vs. Central Bank of India - 1998 (94) Comp Cases 466 (Delhi). b. Passed by Hon'ble High Court of Madhya Pradesh in the matter of PCC Construction Co. Vs. DRT - 2003 (1) MPJR 260. c. In the matter of Bharat Jayantilal Patel Vs. SEBI - 2010 SCC Online SAT 284. d. Passed by Hon'ble High Court of Kerala in the matter of Abdul Khader Vs. CESTAT - 2016 (336) ELT 389. e. In the matter of (i) Vedanta Limited Vs. Commissioner of Customs, Tuticorin (10.01.2018 - CESTAT, Chennai), and (ii) Swiber Offshore Construction Pvt. Ltd. Vs. Commissioner of Customs, Kandla (2014 [301] ELT 119 (CESTAT - Ahmedabad)). 10. The contentions of the respondent, in support of their stand that the appeals are not maintainable. The sum a....
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....gh Court or Hon'ble Supreme Court. vi. The proceedings before the Adjudicating Authority are in the nature of enquiry as detailed under Section 16 of the Act. vii. The present appeals are misuse and abuse of process of law. Hon'ble Supreme Court and High Courts have deprecated the practice of challenging the proceedings at the initial stage on various small issues. The respondent has relied upon the judgment of Hon'ble High Court of Delhi in the case of Arun Kumar Mishra Vs. Union of India & Ors. (2014) 208 DLT 56. viii. The order passed by this Tribunal on dated 13.11.2017 is without jurisdiction because Section 20 has been omitted by Finance Act, 2017 which came into effect on 01.04.2017. ix. The Tribunals are creature of statutes and hence the appeals could be heard as per the procedures prescribed under the law. They cannot give a different meaning or interpretation to the provisions under the Act. Under the Act only appeal is prescribed after the order of penalty is made and before that since proceedings are inquiry in nature cannot be termed as an order. x. There was conclusion of cross-examination of Mr. Mitil Chokshi on 20.09.201....
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....ed before the Appellate Tribunal ...... Provided that where any appeal ..... (6) The Appellate Tribunal may, for the purpose of examining the legality, propriety or correctness of any order made by the Adjudicating Authority under section 16 in relation to any proceeding, on its own motion or otherwise, call for the records of such proceedings and make such order in the case as it thinks fit. 35. Appeal to High Court.- Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law arising out of such order: Provided that the High Court may, ......." The words "an order" appearing in Section 19(1), "any order" appearing in Section 19(6) and the words "any decision or order" appearing in Section 35 above are emphasized by the undersigned. 14. The word "order" has not been defined under FEMA, 1999 nor it has been defined under the general definitions provided in Section 3 of General Clauses Act, 1897. However, the word "order" has been defined under Section 2 (14) of CPC....
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....an inquiry should not be held against him. (2) Every notice under sub-rule (1) to any such person shall indicate the nature of contravention alleged to have been committed by him. (3) After considering the cause, if any, shown by such person, the Adjudicating Authority is of the opinion that an inquiry should be held, he shall issue a notice fixing a date for the appearance of that person either personally or through his legal practitioner or a chartered accountant duly authorised by him. (4) On the date fixed, the Adjudicating Authority shall explain to the person proceeded against or his legal practitioner or the chartered accountant, as the case may be, the contravention, alleged to have been committed by such person indicating the provisions of the Act or of 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 is alleged to have taken place. (5) The Adjudicating Authority shall, then, given an opportunity to such person to produce such documents or evidence as he may consider relevant to the inquiry and if necessary, t....
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....l or relevant to the subject matter of inquiry, etc., even though there is no mention of word "order" in Rule 4 (1) to 4 (7) of the said Rules. The aforesaid provisions of the Rules are procedural in nature to come to a conclusion i.e. the final order. 20. In these appeals the undersigned is to examine whether the word "an order" appearing in Section 19 (1) is having the same meaning of the word "any order" appearing in Section 19 (6) and the words "any decision or order" appearing in Section 35 of FEMA, 1999. If it is concluded that the word "an order" is the same as "any order" than whether the impugned orders are covered within the meaning of the word "an order". 21. In Prem Singh Vs. Special Director, Directorate of Enforcement case, before the Hon'ble High Court of Delhi in the matter of CRL.A. 276 of 2008, the question of maintainability of the appeal, in the given circumstances, before the Appellate Tribunal was neither raised nor decided. 22. The appellants have relied on the judgment of the Hon'ble High Court of Punjab & Haryana in the matter of Sandeep Singh Sandhu Vs. Debt Recovery Tribunal, [1998 SCC OnLine P&H 1844 : (1999) 2 BC 556]. In the said judgment the ....
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.... of the Tribunal made under the Act which affects the rights and liabilities of the parties. Obviously, any interim order passed under Section 19(6) of the Act by the Tribunal, if it affects the rights or liabilities of any party, will be subject to appeal under Section 20(1) of the Act." This judgment has clarified the meaning of the words "an order". According to this judgment, any interim or interlocutory order which affects the rights or liabilities of any party is an appealable order. 23. The appellants have also relied on the judgment passed by the Hon'ble High Court of Madhya Pradesh in the matter of M/s. P.C.C. Construction Co. & Ors. Vs. Debts Recovery Tribunal & Anr. in W.P. No. 705 of 2002 (J). In this case Hon'ble High Court of Madhya Pradesh has categorically held that an appeal against an order, which substantially affects the rights and liabilities of a party, shall lies to the Appellate Tribunal. The most important thing that has been held in the said judgment was that the order to be questioned before the Appellate Tribunal should have substantially affected the rights and liabilities of the party. 24. The appellants have also relied on the judgment of ....
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....5, which calls for interpretation in this case, runs as follows: "35. Appeal to the High Court.-Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law arising out of such order: Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days. Explanation.-In this section 'High Court' means - (a) the High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain; and (b) where the Central Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one respondent, any of the respondents, ordinarily resides or carries on business or personally works for gain." 17. A reading of Section 35 makes it clear that jurisdiction has been clearly conferred o....
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...."any dispute" is somewhat akin to "any order" or "any decision". Any dispute, occurring in Section 51 of the English Arbitration Act, 1975 has been interpreted to have a wide meaning to cover all situations where one party makes a request or demand and which is refused by the other party [see Ellerine Bros. (Pty) Ltd. vs. Klinger, [(1982) 1 WLR 1375 : (1982) 2 AII ER 737 (CA)]. 23. Bachawat, J. while in the Calcutta High Court, in Satyanarain Biswanath v. Harakchand Rupchand, [AIR 1955 Cal 225], interpreted the word "any" in Rule 10 of Bengal Chamber of Commerce, Rules of the Tribunal of Arbitration. Construing the said Rule, the learned Judge held that the word "any" in Rule 10 means one or more out of several and includes all and while doing so the learned Judge relied on an old decision of the Calcutta High court in Jokhiram Kaya v. Ganshamdas Kedarnath, [AIR 1921 Cal 244]. This Court is in respectful agreement with the aforesaid view of the learned Judge. 24. In Black's Law Dictionary the word "any" has been explained as having a "diversity of meaning" and may be "employed to indicate 'all' or 'every' as well as 'some' or 'one' and its meaning in a given statu....
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....ode of Civil Procedure read with Order 43 Rule 1 thereof, it has been indicated from which interlocutory order an appeal will lie. But it has been made clear that no second appeal from such order will lie [See Section 104 sub-section (2) of the Code]. But in Debt Recovery Tribunal Act, as in FEMA, an appeal lies from an interlocutory order and this has been made clear in Section 20(1) of the Act. 29. By referring to the aforesaid schemes under different statutes, this Court want to underline that the right of appeal, being always a creature of a statute, its nature, ambit and width has to be determined from the statute itself. When the language of the statute regarding the nature of the order from which right of appeal has been conferred is clear, no statutory interpretation is warranted either to widen or restrict the same." The judgment of the Hon'ble Supreme Court in the aforesaid matter is exclusively regarding the interpretation of words "any decision or order" appearing in Section 35. In the said judgment it is held that "any order", "any decision" of the Appellate Tribunal would mean all decisions or orders of the Appellate Tribunal, and all such decisions are, s....
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....tion which appears to be an afterthought and to delay the proceedings before the Adjudicating Authority. (d) It is seen from the record that the appellants have shoot up several letters to the Adjudicating Authority till 30.10.2017, but except in their letter dated 30.10.2017 they did not ask for cross-examination of Mrs. Kalyani and Shri D.K. Sinha. (e) As it appears from the record that no cogent and justifiable reasons have been cited by the appellants before the Adjudicating Authority in their letter to Adjudicating Authority asking for cross-examination of Mrs. Kalyani and Mr. D.K. Sinha. So also did not justify how their rights and liabilities are violated or how there is violation of principle of natural justice? Even during the course of argument before the undersigned the learned counsel for the appellants could not be able to justify as to how the appellants rights and liabilities are substantially affected by the impugned order. (f) The learned counsel for the appellants contended that this Tribunal in the matter of Knight Riders Sports Pvt. Ltd. Vs. Special Director, Enforcement Directorate in appeal no. 83/2017 by its order dated 13.11.2017, ....
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....38 (1) of the Act did not include interlocutory orders, which were merely procedural and did not affect the rights or liabilities of the parties. The relevant portion of the said judgment is reproduced below: "R.S. Bachawat, J. 1. This appeal raises a question of construction of s. 38(1) of the Delhi Rent Control Act, 1958 (Act 59 of 1958). The appellant is a tenant of premises No. 7, Sriram Road, Delhi, under the respondent. The respondent made an application to the Controller for eviction of the appellant on the ground that he bona fide required the premises for his occupation. The respondent resides at No. 17, Alipur Road, Delhi. The appellant filed an application before the Controller alleging that the accommodation in premises No. 17, Alipur Road consisted of more than three rooms and consequently, the respondent did not bona fide require the premises in dispute for his own occupation and praying for the issue of a commission to go to No. 17, Alipur Road and to prepare a plan of the premises. By his order dated May 29, 1965 the Controller rejected the application. He said : "The petitioner came into the witness box and the respondent had ful....
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.... Tribunal) consisting of one person only to be appointed by the Central Government by notification in the Official Gazette." 4. The object of s. 38(1) is to give a right of appeal to a party aggrieved by some order which affects his right or liability. In the context of s. 38(1), the words "every order of the Controller made under this Act", though very wide, do not include interlocutory orders, which are merely procedural and do not affect the rights or liabilities of the parties. In a pending proceeding, the Controller may pass many interlocutory orders under Sections 36 and 37, such as orders regarding the summoning of witnesses, discovery, production and inspection of documents, issue of a commission for examination of witnesses, inspection of premises, fixing a date of hearing and the admissibility of a document or the relevance of a question. All these interlocutory orders are steps taken towards the final adjudication and for assisting the parties in the prosecution of their case in the pending proceeding; they regulate the procedure only and do not affect any right or liability of the parties. The legislature could not have intended that the parties would be harass....