2018 (10) TMI 221 - HC - FEMA

Non-supply of documents - proceedings on the basis of a complaint under FEMA - documents sought for, relied upon by the respondent-authorities to initiate proceedings against the petitioner, have not been furnished - Held that - In the light of statement made by the respondent-authorities in their statement of objections that they are required to provide only relied upon documents and accepting their obligation to provide those documents to the petitioner and also having contended that such documents have already been furnished to the petitioner, this Court desist from going into the merits of the case at this stage, inasmuch as, it may prejudice the rights of either of the parties. This Courts finds that there is no good ground available to entertain this petition and accordingly, Petitions stand rejected.

Summary

Issues:
Challenge to show cause notice under FEMA for contravention of regulations, Violation of principles of natural justice due to non-furnishing of documents relied upon by authorities, Jurisdiction of the court to interfere in proceedings initiated by statutory authorities.

Analysis:
The judgment involves a challenge to a show cause notice issued under the Foreign Exchange Management Act, 1999 (FEMA) for alleged contravention of regulations. The petitioner contested the notice on grounds of violation of principles of natural justice, specifically due to non-furnishing of documents relied upon by the authorities. The court clarified that it would not interfere in proceedings initiated by statutory authorities unless there is a jurisdictional issue, violation of natural justice, or challenge to the statute's validity. The petitioner argued that not all documents relied upon were furnished, impacting their ability to defend against the allegations.

The respondent authorities contended that they had provided the necessary documents to the petitioner, and any additional documents sought were not part of the relied-upon set. The court emphasized that non-furnishing of all documents may not prejudice the petitioner unless it is proven to have impacted their rights. Citing legal precedents, the court highlighted that interference under Article 226 of the Constitution is not necessary if no prejudice is caused. The court also noted that the "useless formality theory" applies, requiring the petitioner to demonstrate prejudice resulting from the non-supply of documents.

Given the facts and the authorities' statement that they provided relied-upon documents, the court refrained from delving into the case's merits at that stage to avoid prejudicing either party's rights. The court rejected the petition but granted the petitioner the liberty to respond to the show cause notice within three weeks. It was explicitly stated that no opinion on the case's merits was expressed, keeping all contentions open for further adjudication. This decision underscores the importance of demonstrating actual prejudice from procedural shortcomings and the need for a thorough adjudication process to assess any alleged violations of natural justice.