2018 (3) TMI 119 - HC - FEMA

Violation of provisions of FEMA - cross-examination of the witnesses other than the IO - Held that - 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 Investing Officer, other witnesses examination too, was sought. The Special Director did not deal with that aspect in any manner. In the circumstances, the appellant shall approach the Special Director within three weeks spelling out the reasons why the cross-examination of the witnesses other than the IO is needed.

Summary

Issues:
Challenge to Ld. Single Judge's order upholding Assistant Director's decision under FEMA regarding violation allegations. Denial of cross-examination request by the Special Director and its legality.

Analysis:
1. The appeal challenged the Ld. Single Judge's order upholding the Assistant Director's decision under FEMA. The Enforcement Directorate filed a complaint alleging FEMA violations, leading to a show cause notice to the appellant. The appellant requested cross-examination of the Investigating Officer and others, which was denied by the Special Director. The appellant relied on legal precedents allowing cross-examination of witnesses. The Directorate of Enforcement argued that the request lacked specificity and denial of cross-examination is not always a breach of natural justice. The Court noted the need for a reasoned order on the cross-examination request.

2. The appellant sought cross-examination of witnesses during the proceedings, including the Investigating Officer. The Special Director's order was silent on the other witnesses requested for cross-examination. The Court agreed that cross-examination cannot be an absolute right but required the Special Director to consider the request for other witnesses. The appellant was directed to approach the Special Director with reasons for cross-examining additional witnesses. The Special Director was instructed to provide a reasoned order after granting a hearing to the appellant within a specified timeline.

3. The Court partially allowed the appeal, emphasizing the need for a reasoned order on the cross-examination request for witnesses other than the Investigating Officer. The appellant was granted the opportunity to present reasons for cross-examining additional witnesses, and the Special Director was directed to issue a reasoned order post a hearing. All pending applications were disposed of, and the order was to be provided expeditiously.

This comprehensive analysis covers the challenge to the Single Judge's order, the denial of cross-examination, legal arguments presented, and the Court's directions for addressing the cross-examination request effectively.