2010 (9) TMI 1089 - HC - FEMA

Issues Involved:
1. Legality of issuance and dispatch of the notice dated 31.05.2002.
2. Compliance with service requirements under Rule 10 of the Adjudication Proceedings and Appeals Rules, 1974.
3. Validity of the proceedings held on 13.01.2004.
4. Existence and implications of a draft order found on the record.
5. Maintainability of the petition challenging the legality of a show cause notice.

Issue-wise Detailed Analysis:

1. Legality of Issuance and Dispatch of Notice Dated 31.05.2002:
The petitioner challenged the notice dated 31.05.2002 issued by Mr. K.R. Bhargava, questioning whether it was issued in his capacity as an Adjudicating Officer under Section 51 of the FERA and Rule 3 of the Adjudication Proceedings and Appeals Rules, 1974, or merely as an officer of the Enforcement Directorate. The court noted that the respondent clarified this aspect through an additional affidavit, confirming that Mr. K.R. Bhargava acted as an Adjudicating Officer, supported by a notification dated 16.04.1999. This settled the controversy in favor of the respondent.

2. Compliance with Service Requirements Under Rule 10:
The petitioner argued that the notice was not served in accordance with Rule 10 of the Adjudication Proceedings and Appeals Rules, 1974, which mandates service by registered post or personal delivery. The notice was dispatched by courier, which the petitioner claimed was not a recognized mode of service. The court found that the notice was indeed dispatched by courier on 31.05.2002 and received by the petitioner on 03.06.2002. However, the court did not explicitly rule on whether this mode of service complied with Rule 10.

3. Validity of Proceedings Held on 13.01.2004:
The petitioner contended that the proceedings on 13.01.2004 were invalid as the matter had been adjourned sine die on 23.12.2003 due to non-inspection of original documents. The court agreed, noting that the notice dated 31.12.2003 for a personal hearing was premature and vitiated, as the petitioner had not been given an opportunity to inspect the documents. Consequently, the court quashed both the notice to show cause dated 31.05.2002 and the proceedings held on 13.01.2004.

4. Existence and Implications of a Draft Order:
The petitioner discovered a draft order on the record during file inspection on 06.01.2004, raising concerns about the fairness of the proceedings. The court found the existence of the draft order suspicious and indicative of a pre-determined outcome, undermining the petitioner's opportunity for an unbiased hearing. This further justified quashing the proceedings.

5. Maintainability of the Petition:
The respondent argued against the maintainability of the petition, asserting that it challenged the legality of a show cause notice. The court noted that the petitioner had cooperated with the proceedings and that the delay was attributable to the respondent's inaction despite court orders. Given the six-year duration and the change of the Adjudicating Officer, the court decided to dispose of the petition with specific directions for fresh consideration of the reply to the notice to show cause.

Conclusion:
The court directed the new Adjudicating Officer to reconsider the reply filed by the petitioner to the notice to show cause, issue a fresh notice if necessary, and ensure a fair hearing. The petitioner was allowed to raise all legal pleas in the fresh proceedings. The court emphasized that the petitioner could seek further legal remedies if aggrieved by future orders. No costs were awarded.

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