2023 (4) TMI 718 - HC - FEMA

Adjudication proceedings as contemplated u/s 13(1) of the FEMA - whether the supply of documents relied upon by an Adjudicating Authority in framing an opinion to proceed against the notice is a mandatory requirement? - whether a person has contravened any provision of FEMA, the Adjudicating Authority has to adjudge the matter? - HELD THAT - It is clear that for the purpose of adjudication under Section 13 of FEMA, the Adjudicating Authority has to hold an enquiry after giving the person alleged to have committed contravention under Section 13 a reasonable opportunity of being heard. The Adjudicating Authority has to hold an enquiry upon a complaint in writing made by any the authorized officer and the person, against whom allegations of contravention are made, has a right to appear in person or to have legal assistance before the Adjudicating Authority. As per the said provision, the powers of civil court have been vested to an Adjudicating Authority. The record, which contains these documents, goes on to confirm this fact. Therefore, even the respondents are not in possession of legible copies of the aforesaid documents, as such, there was no occasion or possibility for the respondents to provide legible copies of these documents to the petitioners when they were not themselves in possession of the legible record. Though the respondents were obliged to provide legible copies of the documents relied upon by them but when they themselves were not in possession of the legible copies of the documents mentioned above, it was impossible for them to provide the same to the petitioners. The rules of natural justice do not operate in vacuum. Therefore, when the respondents themselves incapable of furnishing legible copies of certain documents, it cannot be stated that by non-furnishing of these documents to the petitioners, the principles of natural stand violated. A perusal of the reply to the show cause notice filed by the petitioners clearly indicates that they have effectively replied each and every allegation made in the show cause notice and they have also responded to the allegations relating to confessional statements of petitioners No.1 and 2 and their statements recorded before the Chief Judicial Magistrate, Srinagar, which are stated to be not legible. Therefore, no prejudice has been caused to the petitioners by non-supply of legible copies of these two documents which, in any case, are not available with the respondents themselves. In the present case, if the respondents are insisted upon to provide legible copies of those documents which are not even in their possession, it will amount to stretching the principles of natural justice too far, particularly at a stage when only the adjudication proceedings have been initiated and the parties are yet to produce their respective evidences/material before the Adjudicating Authority, whereafter the matter is required to be considered finally by the said Authority. We do not find that non-furnishing of legible copies of the documents by the respondents to the petitioner has infringed the principles of fairness. Thus, the impugned communication issued by the Adjudicating Authority does not call for any interference from this Court. For what has been discussed hereinbefore, the petition is dismissed.

Summary

Issues Involved:
1. Maintainability of the writ petition.
2. Requirement of providing legible copies of documents relied upon by the Adjudicating Authority.
3. Validity of the impugned communication issued by the Adjudicating Authority.

Summary:

1. Maintainability of the Writ Petition:
The respondents argued that the writ petition was not maintainable as the impugned communication was appealable before the Court of Special Director (Appeals) under FEMA. However, the court held that the impugned communication was not an appealable order since the Adjudicating Authority had not passed any order under Rule 4(8) of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000. Therefore, the writ petition was deemed maintainable, and the preliminary objection raised by the respondents was rejected.

2. Requirement of Providing Legible Copies of Documents:
The petitioners contended that the documents relied upon by the Adjudicating Authority were unreadable and requested legible copies or inspection. The court referred to the Supreme Court's decision in Natwar Singh vs. Director of Enforcement, which mandates that the Adjudicating Authority must provide documents relied upon to the noticee to ensure a fair opportunity to respond. However, the court noted that some documents were not legible due to damage in floods and were not available in a legible form with the respondents. Consequently, the court concluded that the principles of natural justice were not violated as the respondents could not provide what they did not possess.

3. Validity of the Impugned Communication:
The petitioners argued that the Adjudicating Authority issued the impugned communication mechanically without considering their request for legible documents. The court found that the respondents had provided all available documents and that the petitioners had effectively responded to the allegations despite the unreadable documents. Therefore, the court held that the non-supply of legible copies did not prejudice the petitioners and did not infringe the principles of fairness.

Conclusion:
The court dismissed the petition and directed the Adjudicating Authority to proceed further in the matter in accordance with the law expeditiously. The impugned communication issued by the Adjudicating Authority was upheld.