TaxTMI 
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2025 (2) TMI 17
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....f 2021 :Mr.Harish Narasappa Senior Advocate for M/s.P.Giridharan For the Respondents : Mr.S.V.Raju Additional Solicitor General Assisted by Mr.N.Ramesh Special Public Prosecutor for all Wps COMMON ORDER These writ petitions are filed challenging the complaint made by the 3rd respondent against the petitioners complaining violation of Foreign Exchange Management Act (herein after called FEMA) and Transfer or Issue of Security by a Person Resident Outside India, Regulations 2000 (herein after called as TISPRO Regulations) and the show cause notice issued by the second respondent dated 01.07.2021 against the petitioners based on the complaint of the 3rd respondent. The writ petitions in W.P.Nos.18682, 24517, 23237, 23235, 23013 of 2021 are filed challenging the complaint of the 3rd respondent by noticees 2, 3, 6, 7 and 10 respectively. The writ petitions in W.P.Nos.18630, 24511, 23231, 23236, 20721 and 23019 of 2021 are filed by noticees 2, 3, 6, 7, 9 and 10 respectively challenging the show cause notice issued by the second respondent based on the complaint of the 3rd respondent. 2. The main allegation against the petitioners is that they have contravened the provisions of Sectio....
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....ns 3, 4 and 5 and para-3 and para 9(1) (B) (i) of Schedule 1 of TISPRO Regulations 2000. 5. The complaint of the 3rd respondent was preferred to the second respondent on 28.06.2021 and pursuant to the same, the second respondent issued impugned show cause notice dated 01.07.2021 to the petitioners and other noticees directing them to show cause as to why an adjudication proceedings as contemplated under Section 16 of FEMA should not be initiated against them in the manner as provided under Rule 4 of Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules 2000 for the above mentioned contravention. The notice further read that in case the second respondent decides to hold adjudication proceedings, the noticees would be required to appear either in person or through the legal practitioner/Chartered Accountant during enquiry. Challenging the complaint of the third respondent and the consequential show cause notice issued by the second respondent, the petitioners have come before this Court. 6. Heard the arguments of the learned senior counsel appearing for the petitioners viz., Mr.Arvind Datar, Senior Advocate, for M/s.Edward Jamesh in W.P.No.18682 of 2021, Mr.P.H.Ar....
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....rs that omission of a provision in Statute Book would completely obliterate the effect of the omitted provision even during its existence in the Statute Book. In other words, he would submit that Section 6 of General Clauses Act is not applicable to provisions which are omitted by the legislation and the same is applicable only to the provisions which are repealed by the legislation. Therefore, it is submitted that no proceedings can be initiated against the petitioners/noticees in respect of the Act done in the year 2009-2011 even though the above said provision was very much available in the Statute Book. In support of the said contention, the learned Senior Counsel appearing for the petitioners relied on the following judgments: (i) Rayala Corporation. (P) Ltd. and another v. Director of Enforcement reported in (1969) 2 SCC 412; (ii) Kolhapur Cane Sugar Works Limited and another Vs Union of India and others reported in (2000) 2 SCC 536. It is further submitted by the learned counsel appearing for the petitioners that since there was no saving clause in Finance Act of 2015 which omitted Section 6(3) of FEMA, the impugned communication issued by the second respondent has no ....
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.... of appeal before this Court under Section 35 of FEMA, the writ petitions filed by the petitioners without exhausting alternative remedy are not maintainable. 9. The learned Additional Solicitor General by taking this Court to the counter affidavit filed by the 3rd respondent in W.P.Nos.18630 and 18682 of 2021 submitted that the common counter affidavit was sworn by the 3rd respondent and the same is filed only on behalf of the first and third respondent. He emphasised that the common counter affidavit was not filed on behalf of the second respondent and the expression common counter was used to denote the counter was common in two writ petitions in W.P.Nos.18630 and 18682 of 2021. Therefore, he submitted that the allegation made by the petitioners that the second respondent is biased by taking a definite stand in the counter affidavit is without any substance. The learned Additional Solicitor General further submitted that under the provisions of FEMA, no time limit is prescribed for initiating action under Section 13 of said Act, though he conceded that even in the absence of time prescribed under the Act, the proceedings shall be initiated within reasonable time. However, he ad....
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.... Section 19 of the said Act. Any person further aggrieved by the order passed by the Appellate Tribunal may file an appeal before High Court under Section 35 of FEMA. Therefore, the learned Additional Solicitor General submitted that the Act provides for effective remedy including appeal remedy before this Court and hence the petitioners are not entitled to invoke the extraordinary remedy of writ. 13. The learned Senior Counsel appearing for the petitioners submitted that in view of violation of natural justice principles and also the fact that impugned show cause notice having been issued without jurisdiction, the petitioners need not be relegated to the alternative remedy of statutory appeal provided under the Act. 14. It is settled law that existence of alternative remedy is not a bar for invoking Article 226 of Constitution of India especially in following cases: (i) Violation of fundamental rights; (ii) Violation of natural justice principles; (iii) Impugned order passed without authority of law or jurisdiction; In this regard, reference may be had to Whirlpool Corporation Vs. Registrar of Trade Marks, reported in (1998) 8 SCC 1, wherein the Hon'ble Apex Court hel....
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.... General Clauses Act had been applied, no doubt this complaint against the two accused for the offence punishable under Rule 132-A of the DIRs could have been instituted even after the repeal of that rule." 17. The above said decision was reiterated by the subsequent decision of the Apex Court in Kolhapur Cane Sugar Works Limited and another Vs Union of India reported in (2000) 2 SCC 536, wherein, it was held as follows: "37. The position is well known that at common law, the normal effect of repealing a statute or deleting a provision is to obliterate it from the statute-book as completely as if it had never been passed, and the statute must be considered as a law that never existed. To this rule, an exception is engrafted by the provisions of Section 6(1). If a provision of a statute is unconditionally omitted without a saving clause in favour of pending proceedings, all actions must stop where the omission finds them, and if final relief has not been granted before the omission goes into effect, it cannot be granted afterwards. Savings of the nature contained in Section 6 or in special Acts may modify the position. Thus the operation of repeal or deletion as to the future and....
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....he earlier law is the basis upon which the doctrine of implied repeal is founded could there be any incongruity in attributing to the later legislation the same intent which Section 6 presumes where the word 'repeal' is expressly used. So far as statutory construction is concerned, it is one of the cardinal principles of the law that there is no distinction or difference between an express provision and a provision which is necessarily implied, for it is only the form that differs in the two cases and there is no difference in intention or in substance. A repeal may be brought about by repugnant legislation, without even any reference to the Act intended to be repealed, for once legislative competence to effect a repeal is posited, it matters little whether this is done expressly or inferentially or by the enactment of repugnant legislation. If such is the basis upon which repeals and implied repeals are brought about it appears to us to be both logical as well as in accordance with the principles upon which the rule as to implied repeal rests to attribute to that legislature which effects a repeal by necessary implication the same intention as that which would attend the case of a....
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.... Shri Radhakrishnan, learned Senior Counsel on behalf of the Revenue, clarifies the law in holding that an omission would amount to a repeal. The converse view of the law has led to an omitted provision being treated as if it never existed, as Section 6 of the General Clauses Act would not then apply to allow the previous operation of the provision so omitted or anything duly done or suffered thereunder. Nor may a legal proceeding in respect of any right or liability be instituted, continued or enforced in respect of rights and liabilities acquired or incurred under the enactment so omitted. In the vast majority of cases, this would cause great public mischief, and the decision of Fibre Board case is therefore clearly delivered by this Court for the public good, being, at the very least a reasonably possible view. Also, no aspect of the question at hand has remained unnoticed. For this reason also we decline to accept Shri Aggarwal's persuasive plea to reconsider the judgment in Fibre Board case. This being the case, it is clear that on point one the present appeal would have to be dismissed as being concluded by the decision in Fibre Board case." 22. A Division Bench of this ....
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....ct repeals any enactment. It is not applicable in the case of omission of a "rule"." The aforesaid judgment neither deals with the distinction between the terms omission and repeal, nor were any arguments regarding the same were raised before the Bench. It simply dealt with the applicability of Section 6 of the General Clauses Act in context of the rules and upholds Rayala Corporation judgment. But reading between the lines of Kolhapur Cane sugar judgment, it can be said that it makes no distinction between repeal and omission. In para 37 of the judgment, the Apex Court states that: "37. The position is well known that at common law, the normal effect of repealing a statute or deleting a provision is to obliterate it from the statute book as completely as if it had never been passed, and the statute must be considered as a law that never existed. To this rule, an exception is engrafted by the provisions of Section 6(1). If a provision of a statute is unconditionally omitted without a saving clause in favor of pending proceedings, all actions must stop where the omission finds them, and if final relief has not been granted before the omission goes into effect, it cannot be grant....
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....a reconsideration for omission of a provision results in abrogation or obliteration of that provision in the same way as it happens in repeal. The Court discussed the two terms and concluded that "it is clear that repeals may take any form and so long as a statute or part of it is obliterated, such obliteration would be covered by the expression "repeal" in Section 6 of the General Clauses Act." The Apex Court then went ahead and nullified the effect of the above five-Judge Bench judgment with respect to difference between repeal and omission. The Apex Court held that: "31... once it is found that Section 6 itself would not apply, it would be wholly superfluous to further state that on an interpretation of the word "repeal", an "omission" would not be included. We are, therefore, of the view that the second so-called ratio of the Constitution Bench in Rayala Corporation (P) Ltd. cannot be said to be a ratio decidendi at all and is really in the nature of obiter dicta."(emphasis supplied) The Apex Court even declared that the above two five-Judge Bench decisions in Rayala Corporation case and Kolhapur Canesugar case were per incuriam (emphasis supplied), as they did not consider....
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....d respondent is entitled to issue notice for alleged contravention of Section 6(3) (b) that existed at the relevant point of FDI transactions in the years 2009-2011. Hence, I hold omission of Section 6 (3) by Finance Act 20 of 2015 will not make the impugned show cause notice issued by the second respondent as the one without sanctity of law. Therefore, the said submission made by the learned counsel appearing for the petitioners is rejected. 24. It is also vehemently contended by the learned counsel appearing for the petitioners that the 3rd respondent filed a counter taking a definite stand against the petitioner and hence no purpose will be served by relegating the petitioner to approach the adjudicating authority namely the second respondent who had already made up his mind by filing a counter. 25. A reading of the counter affidavit filed by the 3rd respondent would suggest that he raised a preliminary objection with regard to the maintainability of the writ petition due to the availability of appeal remedy under Section 19 (1) and Section 35 of FEMA. The 3rd respondent in his counter has only stated that the delay in issuing show cause notice is a factual issue and the same ....
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....nate Officers in the Cadre of Assistant Director working in the office of the third respondent and the same is not binding on the Superior Officer namely the second respondent. Therefore, I am not impressed by the arguments advanced on behalf of the petitioners that the second respondent has already made up his mind regarding the delay in issuing show cause notice and the contravention of provisions of FEMA and accordingly, the arguments regarding violation of natural justice principles is also rejected. 28. As mentioned earlier, the impugned show cause notice has been issued to petitioners by directing them to offer an explanation why adjudicatory proceedings shall not be initiated against them. After considering the explanation offered by the petitioner, the second respondent will decide whether to initiate the adjudicatory proceedings under Section 16 or not. In case he decides to go ahead with adjudication process, the petitioner shall be given reasonable opportunity to put forth his case. Any final order passed by the adjudicating authority under Section 16 is liable to be questioned by filing an appeal under Section 19 of FEMA. Any order passed in appeal by the Tribunal can ....
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.... State of Punjab and others v. Bhatinda District Coop. Milk Producers Union Ltd., reported in (2007) 11 SCC 363. 32. A close scrutiny of Citi Bank case would suggest in the said case, the petitioners submitted a reply to the show cause notice and not satisfied with the same, the adjudicatory authority proceeded with the adjudicatory process and challenging the same, writ petitions were filed. In the case on hand, the petitioners have not even submitted their explanation to the adjudicatory authority and rushed to this Court immediately on receipt of the show cause notice. Therefore, the ratio laid down in Citi Bank case cannot be made applicable to the facts of the present case. 33. A reading of Bhatinda case cited supra would indicate that the same arises out of revisional proceedings initiated for re-opening the assessment order under Punjab General Sales Tax Act, 1948. Section 11(3) of said Act prescribed three years limitation for completing the assessment from the last date of filing return. Section 11(6) prescribed a limitation of five years. In the light of the said provisions, the Apex Court observed as follows: "17. A bare reading of Section 21 of the Act would reveal ....