2015 (5) TMI 907 - HC - FEMA

Violation of the provisions of Section 9 (1)(b) and 9(1)(d) of FERA - Receipt and distribution of money - Receipt of commission - Validity of assessment proceedings - inordinate delay in conclusion of the proceedings - Held that - Frivolous proceedings or proceedings taken out to merely delay the day of reckoning cannot be treated as proceedings taken in good faith, and that, mere fact on an application or petition, a stay is granted by a superior court is no ground to construe that the proceedings are not frivolous as very often such orders are obtained on exparte representation. In effect, it was observed by the court that while it may not be advisable or practicable to fix time limit for trial of offences, the courts while ascertaining whether undue delay has occurred must have regard to all attendant circumstances including the nature of offence, number of accused and witnesses, the work-load of the court concerned, prevailing local conditions, i.e., that which is termed as systemic delays . In sum, the guideline formulated is to balance and weigh all relevant factors. Respondents from very inception have procrastinated in prosecuting the case unmindful of the detriment that it would cause to the petitioner. - petitioner, was entitled in law to seek copies of the relied upon documents. The fact that respondents admittedly kept them back till March 2004 clearly shows that either they lacked, for whatever reasons, the interest to prosecute the petitioner or, they had no actionable case against the petitioner. Despite, repeated requests made on behalf of the petitioner to summon panch witnesses, the said request was declined by the respondents. This request attains significance as SCN proceeds on the basis as if the petitioner was the owner of the Minto Road premises. The premises, (since then demolished) was, concededly, a Government accommodation. The reason why the petitioner happened to visit the Minto Road premises would have, perhaps, come to light if, an opportunity was given to the petitioner to cross-examine the panch witnesses, who accompanied the official witnesses at the time of search. - Similarly, the production of co-noticees who allegedly received moneys distributed by the petitioner was equally important from the point of view of the petitioner. These persons have not been produced for cross-examination at least since 2004; despite a categorical request made in this behalf in the communication dated 27.07.2004 addressed by the petitioner s counsel to the respondents. There were no answers forthcoming on behalf of the respondents on these aspects of the matter. There are no answers supplied in the counter affidavit as well. The reason for the same perhaps is, that these witnesses have either died or are not traceable. Either way, the dis-appearance of evidence which could be crucial to the petitioner s case has occurred on account of the delay on the part of the respondents in concluding the adjudicatory process with due expedition. - adjudication cannot proceed any further on account of undue and unexplained delay in concluding the proceedings. Accordingly, the adjudication proceedings, which commenced vide memorandum dated 14.11.1995, are quashed. - Decided in favour of appellant.

Summary

Issues Involved:
1. Unexplained delay in adjudication proceedings.
2. Service and sufficiency of Show Cause Notice (SCN) and relied upon documents.
3. Right to cross-examine witnesses.
4. Impact of delay on the petitioner's health and resources.
5. Legal precedents on quashing proceedings due to delay.

Detailed Analysis:

1. Unexplained Delay in Adjudication Proceedings:
The petitioner challenged the SCN issued by the Enforcement Directorate on the ground of unexplained delay, asserting that more than 19 years had passed without conclusion of the proceedings. The court noted that the delay was not attributable to the petitioner and emphasized the right to speedy trial as part of the fundamental right under Article 21 of the Constitution. The court referenced judgments such as Hussainara Khatoon vs. Home Secretary, State of Bihar, and Abdul Rehman Antulay vs. R.S. Nayak, which established that undue delay in legal proceedings could impair the accused's ability to defend themselves and cause significant prejudice.

2. Service and Sufficiency of SCN and Relied Upon Documents:
The SCN dated 14.11.1995 was served on the petitioner only on 17.07.1997, without the accompanying relied upon documents. Despite multiple requests, the documents were supplied only on 17.03.2004, nearly nine years after the search. The court found this delay inexcusable and noted that the petitioner was entitled to these documents to prepare his defense. The respondents' failure to supply the documents in a timely manner indicated either a lack of interest in prosecuting the case or an absence of actionable evidence against the petitioner.

3. Right to Cross-Examine Witnesses:
The petitioner requested the opportunity to cross-examine witnesses, including the investigating officers and co-noticees whose statements were relied upon in the SCN. This request was largely ignored, with only two official witnesses being made available for cross-examination in December 2006, more than a decade after the alleged infractions. The court highlighted the petitioner's right to cross-examine witnesses to establish his defense and noted the respondents' failure to produce these witnesses as another significant delay contributing to the prejudice against the petitioner.

4. Impact of Delay on the Petitioner's Health and Resources:
The court acknowledged the petitioner's claims that the prolonged proceedings had taken a toll on his health, resources, and financial capacity. The petitioner, aged 68, had lost crucial evidence over time, which could have been used to prove his innocence. The court found that the delay had caused undue mental and physical harassment to the petitioner, further justifying the quashing of the proceedings.

5. Legal Precedents on Quashing Proceedings Due to Delay:
The court referenced several judgments where proceedings were quashed due to inordinate delays, including Smita A. Patel vs. Additional Director of Enforcement Directorate and Shrish Harshavadan Shah vs. Deputy Director, E.D., Mumbai. These cases established that even in the absence of a statutory period of limitation, authorities must exercise their powers within a reasonable period. The court also referred to the Supreme Court's judgment in P. Ramachandra Rao vs. State of Karnataka, which reiterated that while no fixed time limit could be prescribed, undue delay could be grounds for quashing proceedings.

Conclusion:
The court concluded that the adjudication proceedings could not proceed further due to the undue and unexplained delay. Consequently, the proceedings initiated by the memorandum dated 14.11.1995 were quashed, and the respondents were ordered to release the sum of Rs. 7 lakhs seized from the petitioner. The prayer for interest on the seized amount was declined as it was not demanded during the proceedings. Each party was directed to bear its own costs.