2022 (4) TMI 937 - HC - FEMA

Offence under FEMA - maintainability of writ petition before this Court - HELD THAT - This Court finds that the writ petition filed at Jaipur Bench, Jaipur for challenging the order dated 26.04.2019 passed by the Additional Director, is not maintainable as no cause of action has arisen in the territory of State of Rajasthan. The submission of the petitioner that initially a complaint was filed by the Additional Director and further direction to deposit the penalty amount in Jaipur Office, cannot be termed as a part of cause of action. This Court finds that the complaint which was filed against the petitioner, has resulted into issuance of show cause notice to the petitioner and thereafter, adjudication has to take place and as such the petitioners cannot be allowed to state that part of cause of action, has arisen in the territory of State of Rajasthan. This Court finds that initially the petitioner had filed writ petition against show cause notice in the Punjab and Haryana High Court at Chandigarh and after an order being passed to approach the respondents by giving a detailed and comprehensive representation, the Authorities have finally ajdudicated the issue of violation of Foreign Exchange and order dated 26.04.2019 has been passed. The submission of learned counsel for the petitioners that the petitioners are residents of Jodhpur and further, they are having their business operations in the State of Rajasthan and as such, this Court has ample jurisdiction to entertain the writ petition, suffice it to say by this Court that the residence of the petitioners or their place of carrying business, cannot constitute as part of cause of action. The other reason with regard to maintainability of writ petition before this Court on account of violation of principle of natural justice, suffice it to say by this Court that if the petitioner has any grievance in respect of violation of any provisions of Rules of 2000 or the Act of 1999, the Appellate Forum has been constituted by the legislature and all issues including the issue of violation of principle of natural justice or delay can all be agitated by the petitioner before the Appellate Forum. This is beyond comprehension of this Court that when an appeal is provided, before the Appellate Authority, then litigant cannot raise the issue of violation of principle of natural justice/delay/competence of any Authority to issue the orders. This Court finds that the alternative statutory remedy available to the litigant/petitioners is available to them and the order, which is put to challenge itself makes a reference of such a remedy/Authority for raising the grievance. This Court, in the wake of statutory alternative remedy available to the petitioners, would not like to entertain the present petition filed under Article 226 of the Constitution of India. Accordingly, this writ petition is dismissed on account of alternative, statutory remedy available to the petitioners as well as on the ground of lack of cause of action arisen before this Court.

Summary

Issues:
1. Territorial jurisdiction of the court to entertain the writ petition.
2. Availability of statutory alternative remedy under Section 19 of the Foreign Exchange Management Act, 1999 (FEMA, 1999).
3. Violation of principles of natural justice in the adjudication proceedings.

Analysis:
1. Territorial Jurisdiction:
The respondents contended that the writ petition filed in Jaipur challenging the order passed by the Additional Director is not maintainable as no cause of action arose in Rajasthan. The petitioners argued that part of the cause of action did arise in Rajasthan, citing the complaint originating from Jaipur and the direction to deposit the penalty amount in Jaipur. However, the court ruled that these factors do not constitute a cause of action in Rajasthan. It was noted that the petitioners had previously filed a writ petition in the Punjab and Haryana High Court, which led to the adjudication by the authorities resulting in the order in question.

2. Statutory Alternative Remedy:
The respondents emphasized that the petitioners had the option to appeal under Section 19 of FEMA, 1999, which they failed to utilize. The petitioners argued that the violation of natural justice principles justified their approach to the court. The court clarified that the existence of an appellate forum for addressing grievances, including issues of natural justice, delay, or authority competence, precludes the need for the writ petition. It highlighted that the appellate tribunal has the power to consider issues such as limitation and can condone delays upon proper cause being shown.

3. Violation of Principles of Natural Justice:
The petitioners alleged a breach of natural justice principles and non-compliance with the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000. They argued that the authorities did not follow the mandatory provisions of Rule 4 of the Rules. Citing a Supreme Court judgment, the petitioners contended that adherence to the rules is mandatory. However, the court found that the availability of a statutory remedy through the appellate tribunal negated the need for the writ petition based on alleged violations of natural justice. The court dismissed the writ petition due to the existence of an alternative, statutory remedy for the petitioners and the lack of a cause of action before the court.

In conclusion, the court dismissed the writ petition citing the availability of a statutory remedy under Section 19 of FEMA, 1999, and the absence of a cause of action within its jurisdiction. The court clarified that the dismissal of the petition would not affect the petitioners' right to approach the Appellate Authority and raise all relevant issues, ensuring that the order had no impact on the merits of any appeal.