TaxTMI 
TaxTMI 
2025 (3) TMI 336
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.... been filed by Shri Manoj Kumar Jain against the Interlocutory Order dated 21.03.2012, whereby the Ld. Special Director, Enforcement Directorate had denied the request to seek the cross-examination of i) Officer who recorded the statement of the Appellant under the provisions of Customs Act, 1962 and ii) Officer who recorded the statement of co-noticees under the provisions of FERA. 3. The Appeal FPA-FE-13/HYD/2012 has been filed by Shri Bimal Kumar Jain against the Interlocutory Order dated 14.03.2012, whereby the Ld. Special Director, Enforcement Directorate had denied the request to seek the cross-examination of i) Officer who recorded the statement of the Appellant under the provisions of Customs Act, 1962 and ii) Officer who recorded the statement of Appellant under the provisions of FERA, iii) Persons who had purportedly received payments from the Noticees, namely, S/Shri Rajnish Agarwal and Sanjay Agarwal, and iv) Manager of Centurion Bank. 4. Ld. Counsel for the Appellants have pleaded that the Impugned Orders suffer from the vice of non-application of mind. Ld. Counsel argued that by denying the request for cross-examination, the Impugned Orders are in breach of prin....
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....d in the present matters. 8. Ld. Counsel for the Respondent relied on the judgments of the Hon'ble Supreme Court in the matters of Kanungo & Co vs. Collector of Customs, (1973) 2 SCC 438; Telstar Travels Pvt. Ltd. vs. Enforcement Directorate, (2013) 9 SCC 549; Dharampal Satyapal Ltd. vs. Deputy Commissioner of Central Excise, Guwahati & Ors., (2015) 8 Supreme Court Cases 519; Directorate of Enforcement vs. Shahid Balwa in SLP (Civil) No. 28231-28232/2018; Special Director, Directorate of Enforcement vs. Lalit Kumar Modi in SLP (Civil) No. 012840/2020 to press his case. Ld. Counsel has also cited the judgments of Delhi High Court in the matter of Shahid Balwa 2013 SCC OnLine Del 334 and 2013 SCC OnLine Del 2208 (also relied upon by the Appellants); and the judgment of High Court of Bombay in Lalit Kumar Modi vs. Special Director, Directorate of Enforcement (Western Region) 2018 SCC OnLine Bom 209. He further cited the judgments of High Court of Delhi in the matters of Bimal Kumar Jain vs. Directorate of Enforcement 2018 SCC OnLine Del 6940 and 2018 SCC OnLine Del 7513; in the matter of Arun Kumar Mishra vs. Union of India & Ors. in LPA No. 99/2014. Ld. Counsel pleaded to dismiss ....
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....re to the principles of natural justice. Courts have held that adherence to the principles of natural justice in the decision-making process of administrative and quasi-judicial authorities/bodies prevents injustice. Courts have carved out an exception to the adherence to the principles of natural justice." 11. Ld. Counsel for the Appellant has also relied on the judgment of Hon'ble Delhi High Court in Shahid Balwa vs. The Directorate of Enforcement in LPA No. 79/2013 dated 29.05.2013, the relevant paragraphs of which have been extracted herein below: "29. The legal position that would follow is that normally if the credibility of a person who has testified or given some information is in doubt or if the version or the statement of the person who has testified is in dispute normally right to cross-examination would be inevitable. If some real prejudice is caused to the complainant, the right to cross-examine witnesses may be denied. No doubt, it is not possible to lay down any rigid rules as to when in compliance of principles of natural justice opportunity to cross-examine should be given. Everything depends on the subject matter. In the application of the concept of f....
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....law, as cross-examination is an integral part and parcel of the principles of natural justice." 13. Ld. Counsel for the Appellants has also pressed forth the decision of the Hon'ble Apex Court in Rajiv Arora v. Union of India, (2008) 15 SCC 306. The relevant paragraph has been extracted herein below: "13. No explanation has been offered as to why the witnesses concerned could not be examined. Shri Reddy, PW 7 was the custodian of the report. He was not the maker thereof. Effective cross-examination could have been done as regards the correctness or otherwise of the report, if the contents of them were proved. The principles analogous to the provisions of the Evidence Act as also the principles of natural justice demand that the maker of the report should be examined, save and except in cases where the facts are admitted or the witnesses are not available for cross- examination or similar situation. No reason has been assigned as to why the named witnesses who only could prove the charges had not been examined. Indisputably, they were the prime witnesses." 14. Ld. Counsel relied upon the judgment of the Hon'ble Supreme Court in the matter of Andaman Timber Industries ....
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....v. Andaman Timber Industries Ltd. [CCE v. Andaman Timber Industries Ltd., (2005) 12 SCC 151] , order dated 17-3-2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 8. In view of the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the show-cause notice." 15. Ld. Counsel for the Appellant has pressed upon the decision of Hon'ble Punjab & Haryana High Court in M/s Jindal Drugs Pvt. Ltd. & Anr. vs. Union of India & Anr., CWP No. 12714 of 2016 dated 21.06.2016. The relevant paragraph has been extracted herein below: "(iv) Once examination-in-chief, of the makers of the statements, on whom the Revenue seeks to rely in adjudication proceedings, takes place, and a copy thereof is made available to the assessee, it would be open to the assessee to seek permission to cross-examine the persons who have made the said statements, should it choose to....
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....mar Jain vs. Directorate of Enforcement 2018 SCC OnLine Del 6940), whereby the Division Bench of the Hon'ble High Court of Delhi in the matter of Bimal Kumar Jain vs. Directorate of Enforcement, 2018 SCC OnLine Del 7513 had partly allowed the decision of the Single Bench. The relevant paragraph has been extracted herein below: "5. The application made to the Special Director in the course of proceedings in this case (dated 21.12.2017), is part of the record. No doubt, the appellant sought the Investigating Officer's cross-examination inasmuch as, according to him, examination as to the conclusion in his report was necessary. The appellant, at the same time requested for cross-examination of the other witnesses, whose statements were on record by the Directorate of Enforcement. So far as statements of these witnesses or individuals are concerned, the order of the Special Director is absolutely silent. In this given situation, the Single Judge's conclusion that cross-examination cannot be sought as a matter of right in respect of witnesses is correct. At the same time, what appears to have been overlooked in the impugned order is that, apart from the Investigating Of....
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....otice or after holding an enquiry, the authority concerned may drop the proceedings. It was further held that a writ lies only when some right is infringed and a mere show cause notice does not infringe the right of any one and it is only when a final order adversely affecting the party is passed, that the said party can be said to be having any grievance. The Supreme Court held that the writ jurisdiction being discretionary, should not ordinarily be exercised by quashing a show cause notice." 21. Ld. Counsel for the Respondent relied upon the decision of the Hon'ble Supreme Court in Kanungo & Company vs. Collector of Customs & Ors., AIR 1972 SC 2136, which has laid down that in all cases cross- examination of a witness may not be necessary: - "12. We may first deal with the question of breach of natural justice. On the material on record, in our opinion, there has been no such breach. In the show-cause notice issued on August 21, 1961, all the material on which the Customs Authorities have relied was set out and it was then for the appellant to give a suitable explanation. The complaint of the appellant now is that all the persons from whom enquiries were alleged to ha....
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....ions, fair procedures appear to serve no purpose since 'right' result can be secured without according such treatment to the individual. In this behalf, we need to notice one other exception which has been carved out to the aforesaid principle by the Courts. Even if it is found by the Court that there is a violation of principles of natural justice, the Courts have held that it may not be necessary to strike down the action and refer the matter back to the authorities to take fresh decision after complying with the procedural requirement in those cases where non-grant of hearing has not caused any prejudice to the person against whom the action is taken. Therefore, every violation of a facet of natural justice may not lead to the conclusion that order passed is always null and void. The validity of the order has to be decided on the touchstone of 'prejudice'. The ultimate test is always the same, viz., the test of prejudice or the test of fair hearing." 23. The judgment of the Hon'ble Supreme Court in M/s Telestar Travels Pvt. Ltd. vs. Special Director of Enforcement, 2013 AIR SCW 1304, has held that denial of request to cross-examine the witnesses by the Ld. Adj....
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.... in vain any remedy merely because there is a breach of procedure unless it is demonstrated that such breach has caused loss of something of substance. (c) The Courts have taken consistent stand that the cross-examination of the Investigating Officers is not necessary unless compelling reasons are brought forth. In fact, cross-examination of those witnesses who have produced documents has also not been found necessary. The disclosure of the documents to the Appellants and the opportunity given to them to rebut and explain the same has been regarded as substantial compliance with the principles of natural justice. 25. On perusal of the impugned interlocutory order dated 21.03.2012, we observe that the Ld. Special Director distinguished the CESTAT Order dated 02.04.2007 cited by the Appellant from the proceedings before him, on the basis of factual differences. Further Ld. Special Director cited the Adjudication Proceedings and Appeal Rules 1974 under FERA to hold that the cross-examination is not a compelling requirement in Adjudication Proceedings under FERA. Ld. Special Director also cited the judgment dated 26.07.2000 of the Hon'ble Madras High Court in the matter of ....
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....ore the Ld. Special Director or in the Appeals before us as to how exactly the prejudice is being caused to their respective interest by denial of cross-examination other than the ground mentioned in the Appeal. 28. In this regard, we find support from the three Judge Bench judgment of the Hon'ble Supreme Court in State of U.P. v. Sudhir Kumar Singh, (2021) 19 SCC 706. The relevant paragraphs are extracted below: "42. An analysis of the aforesaid judgments thus reveals: 42.1. Natural justice is a flexible tool in the hands of the judiciary to reach out in fit cases to remedy injustice. The breach of the audi alteram partem rule cannot by itself, without more, lead to the conclusion that prejudice is thereby caused. 42.2. Where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction per se does not lead to invalidity of the orders passed. Here again, prejudice must be caused to the litigant, except in the case of a mandatory provision of law which is conceived not only in individual interest, but also in public interest. 42.3. No prejudice is caused to the person complaining of the breach of na....
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....tural justice would apply when some real prejudice is going to be caused out of the action of one party. In the instant case, the appellant has failed to reflect as to what prejudice is going to cause to him if the cross examination of witness is not permitted. It is apart from the fact that the material on record shows that the allegations against the appellant are in reference to the documentary evidence which has not been refuted by the appellant by filing reply. The Madras High Court in the case "G. Gopalakrishnan Versus Deputy Director, Directorate of Enforcement, Chennai" supra referred to the judgment of the Apex Court in the case of "Chairman, Board of Mining Examination v. Ramjee, (1977) 2 SCC 256". Relevant paras of the said judgment are quoted as under: "2.1. In Chairman, Board of Mining Examination v. Ramjee, (1977) 2 SCC 256, the Court has observed that natural justice is not an unruly horse, no lurking landmine, nor a judicial cure-all. If fairness shown by the decision-maker to the man proceeded against, the form, features and the fundamentals of such essential processual propriety being conditioned by the facts and circumstances of each situation, no breach....