2020 (12) TMI 479 - HC - FEMA

Holding of inquiry against the petitioner in the manner provided in Rule 4 of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 - HELD THAT - Impugned Show Cause Notice is at the first stage wherein the Adjudicating Authority on receiving a reply to the Impugned Show Cause Notice is to form an opinion whether an inquiry at all should be held against the petitioner. At this stage we do not deem it appropriate to entertain this present petition. The petitioner shall be at liberty to raise all its contentions before the Adjudicating Authority. Needless to say, if the petitioner is aggrieved of the decision taken by the Adjudicating Authority, it shall always be open to the petitioner to challenge the same in accordance with law.

Summary

Issues:
Challenge to Show Cause Notice issued under Foreign Exchange Management Rules, 2000.

Analysis:
1. The petitioner challenged a Show Cause Notice dated 24.08.2020 issued by the respondent under Rule 4 of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000. The petitioner argued that the notice, related to proceedings from 2010, was highly belated, and sought its setting aside citing Standard Chartered Bank vs. Directorate of Enforcement, MANU/DE/3676/2010.

2. The petitioner contended that no violation of Clause 2.2 of the Circular dated 17.05.2005 was evident from the Show Cause Notice. The petitioner claimed full compliance with the Circular, relying on General Electric Company and Ors. Vs. Deputy Director of Income Tax and Ors. MANU/DE/3364/2011 and The Deputy Commissioner, Central Excise & Anr. vs. Sushil & Company & Anr. MANU/SC/0547/2016 to support the argument that the Court could quash the Notice if no case was made out.

3. The Impugned Show Cause Notice was issued under Rule 4, requiring a two-stage scrutiny by the Adjudicating Authority. The rules stipulate a notice to the person alleged to have contravened, indicating the nature of the alleged contravention. The Authority must then decide whether an inquiry should be held and provide an opportunity for the person to appear and present relevant documents or evidence.

4. The Court noted that the Notice was at the initial stage where the Authority decides whether an inquiry should proceed. Consequently, the Court declined to entertain the petition at this stage, advising the petitioner to present contentions before the Adjudicating Authority and challenge its decision if necessary according to the law.

5. The petition was dismissed without costs, allowing the petitioner to address concerns before the Adjudicating Authority and pursue legal recourse if dissatisfied with its decision.