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2024 (8) TMI 793
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....s) COMMON JUDGMENT S.M.SUBRAMANIAM, J. The Letters Patent Appeal on hand has been instituted questioning the validity of the show cause notice dated 22.12.2021 and the corrigendum issued consequently in proceedings dated 13.03.2023 and the writ order dismissing the writ petition. 2. Since the show cause notice is under challenge, it is necessary for this Court to consider the grounds regarding entertainability of the writ petition at the first instance. Normally, High Court would not entertain a writ petition challenging show cause notice. On exceptional circumstances, show cause notice issued by an incompetent authority having no jurisdiction or tainted with the allegation of mala fides are entertained under Article 226 of the Constitution of India. 3. The noticees on receipt of such show cause notice, has to defend their case before the authority competent by availing the opportunities to be afforded under the provisions of Acts, Rules and procedures contemplated therein. In the present case, the appellants raised grounds regarding the jurisdiction and therefore it becomes necessary for this Court to interpret the scope of the provisions of the Foreign Exchange Man....
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.... by an order, seize value equivalent, situated within India, of such foreign exchange, foreign security or immovable property". 10. The Scope of Special Provision under Section 37A expressly provides power to the authority to seize the property or value equivalent situated within India. Therefore, Section 4 contemplates no person resident in India shall acquire, hold, own, possess or transfer any foreign exchange, foreign security or any immovable property situated outside India. On receipt of any information, the Authorised Officer under Section 37A is empowered to seize the properties by recording reasons in writing by an order. Thus, Section 37A is all about passing an order by the Authorised Officer to seize the value equivalent to the properties situated within India of such foreign exchange, foreign security or immovable property acquired in violation of Section 4 of FEMA. 11. Section 37A(2) contemplates that "The order of seizure along with relevant material shall be placed before the Competent Authority, appointed by the Central Government, who shall be an officer not below the rank of Joint Secretary to the Government of India by the Authorised Officer within a perio....
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....f the adjudication proceedings. The interim seizer made under Section 37A is to be dealt with by the Adjudicating Authority, while disposing of the adjudication proceedings under FEMA. 15. In the context of the above constructive interpretation of Sections 4, 16 and 37A, it is made clear that action under Section 16(1) is independent and seizer under Section 37A with reference to Section 4 is an interim measure, which is to be dealt with by the Adjudicating Authority, while passing final orders. 16. That apart, the Act contemplates remedial mechanism to the aggrieved persons. An order passed by an Adjudicating Authority is appealable under Section 19 of FEMA. Second Appeal is provided under Section 35 of the Act before the High Court. Therefore, entertaining a show cause notice in the absence of establishing jurisdictional error is not desirable. 17. In the present case, the show cause notice along with the corrigendum issued are under challenge in the writ proceedings and the Writ Court dismissed the writ petition with a finding that the appellants should participate in the process of adjudication to be conducted under the provisions of the Acts and Rules and thereafter e....
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....n 13 would not arise at all. Corrigendum issued is to circumvent the process adopted, which is not in accordance with the scheme of the Act. At the first instance, the respondents have invoked Section 13(2) of the Act and by issuing corrigendum they have replaced Section 13(1A) of the Act only for the purpose of penalising the appellants and such an idea mooted out cannot be sustained in view of the scope under the provisions of the Act. 22. Regarding the entertainability of the writ petition under Article 226 of the Constitution of India against show cause notice, the Hon'ble Supreme Court of India in the case of L.N.Phulkan and Ors v. Mahendra Mohan Choudhury and Ors. [AIR 1965 Assam and Nagaland 74], it was observed that: "20. In the above case it was clearly laid down that even if the powers and privileges claimed and the immunities conferred by Article 194(3) of the Constitution are repugnant to the fundamental right, they will not be void to the extent of the repugnancy. The contention raised in this case on behalf of the Petitioner was that he had a fundamental right under Article 19 of the Constitution and by issuing a notice calling upon him to show cause as to....
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....ts entertaining writ petitions questioning legality of the SCNs stalling enquiries as proposed and retarding investigative process to find actual facts with the participation and in the presence of the parties. Unless, the High Court is satisfied that the SCN was totally non est in the eye of law for absolute want of jurisdiction of the authority to even investigate into facts, writ petitions should not be entertained for the mere asking and as a matter of routine, and the writ petitioner should invariably be directed to respond to the SCN and take all stands highlighted in the writ petition. Whether the SCN was founded on any legal premises is a jurisdictional issue which can even be urged by the recipient of the notice and such issues also can be adjudicated by the authority issuing the very notice initially, before the aggrieved could approach the Court. Further, when the Court passes an interim order it should be careful to see that the statutory functionaries specially and specifically constituted for the purpose are not denuded of powers and authority to initially decide the matter and ensure that ultimate relief which may or may not be finally granted in the writ petition is....
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....ons and out of which, Chapter V, which deals with adjudication and appeal, contains detailed provisions starting from Sections 16 to 35, thus spanning 20 sections. Rules styled as the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 have been framed in exercise of powers under Section 46 read with sub-section (1) of Section 16, sub-section (3) of Section 17 and sub-section (2) of Section 19 of FEMA. 15. It is thus clear that Chapter V of FEMA, read with the aforesaid Rules, provides a complete network of provisions adequately structuring the rights and remedies available to a person who is aggrieved by any adjudication under FEMA. 16. ...... 17. ...... 18. ...... 19. ...... 20. ..... 21. ..... 22. ...... 23. ...... 24. ..... 25. ...... 26. ..... 27. ..... 28. ..... 29. By referring to the aforesaid schemes under different statutes, this Court wants 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....
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....awyers. The corrigendum was issued by the 1st respondent on 13.03.2023 and even after issuing corrigendum further opportunity of personal hearing was provided at the request of the appellants on 10.04.2023. 28. Pertinently, the compounding application filed by the appellants were considered by the authority and it was returned. After providing personal hearing at the request of the appellants on the impugned corrigendum proceedings dated 13.03.2023, notice for personal hearing for adjudication proceedings under FEMA was issued on 12.04.2023. The appellant filed reply to impugned corrigendum on 01.05.2023. A personal hearing was held on the same day. Thereafter, the 1st respondent asked the appellants to appear on 17.07.2023. At the final stage of adjudication proceedings, writ petition was instituted challenging the show cause notice and the consequential corrigendum on 12.07.2023. 29. Mr.AR.L.Sundaresan, learned Additional Solicitor General of India appearing on behalf of the respondents would contend that the writ petitions itself were instituted on the verge of the adjudication proceedings, which is not maintainable. The discretionary power under Article 226 of the Constit....