2012 (4) TMI 258 - HC - FEMA

Under-invoicing and Hawala transactions petition for stopping the investigation initiated by the Enforcement Directorate petitioner alleges of documents being forged and fabricated - Held that - Enforcement Directorate is fully entitled to investigate in such matters. Mere complaint of petitioner regarding alleged forgery and fabrication is no ground to stay the investigation by the Enforcement Directorate petition dismissed.

Summary

Issues:
Prayer to stop investigation by Enforcement Directorate based on under-invoicing and hawala transactions.

Analysis:
The judgment by the High Court of Andhra Pradesh addressed a writ petition seeking to halt an investigation by the Enforcement Directorate following a summon and notice issued by the 3rd respondent. The investigation pertained to imports made by the 1st petitioner, with allegations of under-invoicing and hawala transactions. The 1st petitioner claimed that documents indicating under-invoicing were forged and fabricated, a matter being investigated by the Central Crime Station, D.D., Hyderabad for the past two years. The court observed that it was not within its purview to interfere in investigations conducted by the Enforcement Directorate. The court emphasized that if there were allegations of under-invoicing and hawala transactions, the Enforcement Directorate had the authority to investigate. Additionally, if there were substantial claims of forgery and fabrication, the 1st petitioner could bring them to the authorities under the Foreign Exchange Management Act. Mere complaints of forgery and fabrication by the 1st petitioner did not warrant a stay on the Enforcement Directorate's investigation. Consequently, the court found no merit in the writ petition and dismissed it along with the interim applications.

This judgment highlights the court's stance on the scope of its intervention in investigations conducted by specialized agencies like the Enforcement Directorate. It underscores the principle that such agencies have the discretion to probe allegations of financial irregularities, including under-invoicing and hawala transactions. The court's decision emphasizes the importance of allowing investigative bodies to carry out their mandates without undue interference, especially when serious allegations are involved. The judgment also underscores the significance of presenting substantial evidence to support claims of forgery and fabrication, rather than solely relying on complaints to halt official investigations. Overall, the ruling reaffirms the autonomy and authority of specialized investigative agencies in matters concerning financial impropriety.