TaxTMI 
TaxTMI 
2023 (4) TMI 718
X X X X Extracts X X X X
X X X X Extracts X X X X
....The petitioners were further informed that in the complaint contravention of Sections 3(c), 4, 6(3)(g) and Section 3(a) of FEMA has been alleged against them. As per the complaint, prima facie, contravention of the provisions of FEMA, Rules and Regulations framed thereunder was committed by the petitioners and they were asked to show cause in writing within 30 days from the date of receipt of notice as to why adjudication proceedings as contemplated in Section 13(1) of FEMA should not be held against them and as to why the seized foreign currency of 1,00,000/ US Dollars should not be confiscated to the Central Government in terms of Section 13(2) of FEMA. The petitioners were also informed by way of the aforesaid show cause notice that in case it is decided to hold enquiry proceedings in terms of Section 13 of FEMA, they would be required to either appear in person or through Legal Practitioner/Chartered Accountant to explain and produce such documents or evidences, as may be useful for or relevant to the subject matter of the enquiry and in case of their failure, the adjudication proceedings would proceed against them exparte. In the show cause notice, it was further indicated tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 6) The respondents have contested the writ petition on the ground that the writ petition is not maintainable because the impugned communication is appealable before the Court of Special Director (Appeals), in terms of provisions of FEMA and without exhausting the said remedy, the petitioners could not have invoked the writ jurisdiction of this Court. 7) On merits, it has been submitted by the respondents that as per the prosecution case in FIR No.14/2002 for offences under Section 3/6 POTA registered with P/S Kud Udhampur, foreign currency of US Dollars 1.00 lac was seized from petitioners No.1 and 2. According to the respondents, the said petitioners disclosed that the seized foreign currency was acquired by them from Nepal from one Altaf Qadri, leader of All Parties Hurriyat Conference and was meant to be handed over to petitioner No.3. Thus, according to the respondents, there were cogent grounds for proceeding against the petitioners. The respondents have given details regarding the case registered against the petitioners and seizure of foreign currency. 8) Regarding supply of legible copies of relied upon documents, the respondents have submitted that the petitioners n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eeding initiated by the Adjudicating Authority prior to passing of an order under Rule 4(8) of the Rules of 2000 is not appealable before Special Director (Appeals). Therefore, the contention of learned counsel for the respondents that the impugned notice issued by the respondents to the petitioners is appealable in nature, is without any merit. The writ petition is, therefore, held to be maintainable and the preliminary objection raised by the respondents about its maintainability is rejected. 14) That takes us to the merits of the case. It has been vehemently contended by Mr. Qayoom, learned counsel appearing for the petitioners, that once the petitioners had made it known to the respondents that some of the documents relied upon by the respondents for issuing show cause notice to the petitioners were not legible, it was the duty of the respondents to provide legible copies of those documents to the petitioners or else allow them inspection of the record and without undertaking such an exercise, the respondent No.2 could not have framed an opinion to proceed against the petitioners. It has been submitted that in the impugned notice, the respondent No.2 has not even made a pass....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... punishable with imprisonment for a term which may extend to five years and with fine. (1-D) No court shall take cognizance of an offence under sub-section (1C) of section 13 except as on complaint in writing by an officer not below the rank of Assistant Director referred to in sub-section (1B). (2) Any Adjudicating Authority adjudging any contravention under sub-section (1), may, if he thinks fit in addition to any penalty which he may impose for such contravention direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government and further direct that the foreign exchange holdings, if any, of the persons committing the contraventions or any part thereof, shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf. Explanation.--For the purposes of this sub-section, "property" in respect of which contravention has taken place, shall include- (a) deposits in a bank, where the said property is converted into such deposits; (b) Indian currency, where the said property is convert....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 346 of the Code of Criminal Procedure, 1973. (6) Every Adjudicating Authority shall deal with the complaint under sub-section (2) as expeditiously as possible and endeavour shall be made to dispose of the complaint finally within one year from the date of receipt of the complaint: Provided that where the complaint cannot be disposed of within the said period, the Adjudicating Authority shall record periodically the reasons in writing for not disposing of the complaint within the said period. 19) From a perusal of the aforesaid provision, it is clear that for the purpose of adjudication under Section 13 of FEMA, the Adjudicating Authority has to hold an enquiry after giving the person alleged to have committed contravention under Section 13 a reasonable opportunity of being heard. The Adjudicating Authority has to hold an enquiry upon a complaint in writing made by any the authorized officer and the person, against whom allegations of contravention are made, has a right to appear in person or to have legal assistance before the Adjudicating Authority. As per the said provision, the powers of civil court have been vested to an Adjudicating Authority. 20) In ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 the rule 4 shall specify the provisions of the Act or of the rules, regulations, notifications, directions 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 copi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iry. In such view of the matter, we hold that all such documents relied on by the authority are required to be furnished to the noticee enabling him to show a proper cause as to why an inquiry should not be held against him though the Rules do not provide for the same. Such a fair reading of the provision would not amount to supplanting the procedure laid down and would in no manner frustrate the apparent purpose of the statute. 23) From the analysis of the aforesaid law on the subject, it is clear that though the provisions of FEMA and the Rules made thereunder do not mandate the Adjudicating Authority to provide copies of the documents relied upon by it in issuing the show cause notice to the concerned person, yet the Adjudicating Authority has to provide these documents to the person concerned so as to enable him to file a proper reply to the show cause notice. 24) Coming to the facts of the instant case, it has been clearly indicated by the petitioners in their reply to the show cause notice dated 26th October, 2017, that the relied upon documents forming Annexure-B are unreadable, blurred and not legible and a request has been made to provide legible copies of these docu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cuments, it is clear that the documents mentioned at serial No.3 and 4, available with the respondents, are not legible as the same have been partly damaged in the floods of 2014. The record, which contains these documents, goes on to confirm this fact. Therefore, even the respondents are not in possession of legible copies of the aforesaid documents, as such, there was no occasion or possibility for the respondents to provide legible copies of these documents to the petitioners when they were not themselves in possession of the legible record. Though the respondents were obliged to provide legible copies of the documents relied upon by them but when they themselves were not in possession of the legible copies of the documents mentioned above, it was impossible for them to provide the same to the petitioners. The rules of natural justice do not operate in vacuum. Therefore, when the respondents themselves incapable of furnishing legible copies of certain documents, it cannot be stated that by non-furnishing of these documents to the petitioners, the principles of natural stand violated. 28) Even otherwise, a perusal of the reply to the show cause notice filed by the petitioners ....