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TMI Blog2010 (10) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... ndeavour shall be made to dispose of the complaint finally at the earliest. No unreasonable request for adjournment shall be entertained by the adjudicating authority. - CIVIL APPEAL NOS. 8601 AND 8602 OF 2010 - - - Dated:- 5-10-2010 - SUDERSHAN REDDY B., SURINDER SINGH NIJJAR , JJ JUDGMENT The central question of law arising on the appeal before this court is whether a noticee served with the show-cause notice under rule 4(1) of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 (hereinafter referred to as "the Rules") is entitled to demand to furnish all the documents in possession of the adjudicating authority including those documents upon which no reliance has been placed to issue a notice requiring him to show cause why an inquiry should not be held against him ? 2. The adjudicating authority's refusal to supply all the documents as demanded by the appellants led to filing of writ petitions by the appellants in the Delhi High Court which were heard and dismissed. 3. In order to consider and decide the issue that arises for our consideration, it is just and necessary to briefly notice the relevant facts : Part I : Back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the instant case . . .". This seemingly innocuous request ultimately turned out to be the origin of this avoidable litigation. The fact remains that the copies of all such documents as relied upon by the adjudicating authority were furnished. The authority, however, declined to furnish copies of other documents and decided to hold an inquiry in accordance with the provisions of the FEMA and the Rules. 6. Aggrieved by the communications so sent by the authority, appellant No. 1 filed a writ petition in the Delhi High Court which was disposed of with direction extending time to file reply to the show-cause notice. As regards the prayer for supply of copies of the documents, the court gave liberty to demand such copies but left the issue regarding the entitlement of appellant No. 1 to such documents open. 7. Thereafter, a preliminary/short reply to the show-cause notice was submitted by the appellants but once again insisting with the demand that the copies of the documents not otherwise relied upon by the adjudicating authority also be supplied before taking any further steps in the matter. 8. The adjudicating authority, by the impugned proceedings, made it clear that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority cannot deviate from the mandate of the statute and the Rules to do something which is not provided for either in the statute or in the Rules. The submission was that the Rules do not provide for furnishing all the documents that may be in possession of the adjudicating authority as prayed for by the appellants. It was alternatively contended that the principles of natural justice are complied with in the instant case since copies of relied on documents were supplied to the appellants. Part III : Relevant statute and rules 14. As part of the ongoing economic liberalization relating to foreign investments and foreign trade, a review of the Foreign Exchange Regulation Act, 1973 was made in the year 1993 and several amendments were enacted subsequently. The Government of India felt that the Foreign Exchange Regulation Act, 1973 must be repealed and be replaced by a comprehensive legislation and for that purpose, a taskforce was constituted to have an overall look on the subject and suggest the required changes. The taskforce submitted its report in 1994. On the recommendations of the taskforce and keeping in view the significant developments that had taken place sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposits ; (b) Indian currency, where the said property is converted into that currency ; and (c) any other property which has resulted out of the conversion of that property." 16. Chapter V deals with "Adjudication and appeal". Section 16 is relevant which is reproduced herein below: "16. Appointment of adjudicating authority.-(1) For the purpose of adjudication under section 13, the Central Government may, by an order published in the Official Gazette, appoint as many officers of the Central Government as it may think fit, as the adjudicating authorities for holding an inquiry in the manner prescribed after giving the person alleged to have committed contravention under section 13, against whom a complaint has been made under sub-section (3) (hereinafter in this section referred to as the said person) a reasonable opportunity of being heard for the purpose of imposing any penalty : Provided that where the adjudicating authority is of opinion that the said person is likely to abscond or is likely to evade in any manner, the payment of penalty, if levied, it may direct the said person to furnish a bond or guarantee for such amount and subject to such conditions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified in the notice (being not less than ten days from the date of service thereof) why an inquiry should not be held against him. (2) Every notice under sub-rule (1) to any such person shall indicate the nature of contravention alleged to have been committed by him. (3) After considering the cause, if any, shown by such person, the adjudicating authority is of the opinion that an inquiry should be held, he shall issue a notice fixing a date for the appearance of that person either personally or through his legal practitioner or a chartered accountant duly authorized by him.(4) On the date fixed, the adjudicating authority shall explain to the person proceeded against or his legal practitioner or the chartered accountant, as the case may be, the contravention, alleged to have been committed by such person indicating the provisions of the Act or of rules, regulations, notifications, direction or orders or any condition subject to which an authorization is issued by the Reserve Bank of India in respect of which the contravention is alleged to have taken place. (5) The adjudicating authority shall, then, give an opportunity to such person to produce such documents or evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oreign exchange. The provisions of the Act mandate that save as otherwise provided in the Act, rules or regulations made there under or with the general or special permission of the Reserve Bank, no person shall deal in or transfer any foreign exchange or foreign security to any person not being an authorized person; make any payment to or for the credit of any person resident outside India in any manner ; receive otherwise through an authorized person, any payment by order or on behalf of any person resident outside India in any manner ; enter into any financial transaction in India as consideration for or in association with acquisition or creation or transfer of a right to acquire, any asset outside India in any manner. It is further provided that no person resident inIndiashall acquire, hold, own, possess or transfer any foreign exchange, foreign security or any immovable property situated outsideIndia. That if any person contravenes any provision of the Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under the Act, or contravenes any condition subject to which an authorization is issued, he shall, upon adjudication, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avention, every adjudicating authority shall have the powers of a civil court under the Code of Civil Procedure, 1908, in respect of the matters, namely, (a) summoning and enforcing the attendance of any person and examining him on oath ; (b) requiring discovery and production of documents ; (c)receiving evidence on affidavits ; (d) requisitioning any public record, document or copy of such record or document from any office ; (e) issuing commissions for examination of witnesses or documents etc. That all proceedings before the adjudicating authority shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code, 1860 ; shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973. Principles of natural justice : statutory requirement and fair hearing 21. It is true that rule 4 does not require the adjudicating authority to supply copies of any documents along with the show-cause notice. The rule does not require the adjudicating authority even to furnish any list of documents upon which reliance has been placed by him to set the law in motion. Does it mean that the adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l ensure the attainment of fairness." 23. As Lord Reid said in Wiseman v. Borneman 4 "For a long time the courts have, without objection from Parliament, supplemented procedure laid down in legislation where they have found that to be necessary for this purpose." [ 1. See page 430 of [1970] 2 QB. 2. See [1970] 2 QB 417 (CA). 3. See [1987] AC 625. 4. See [1971] AC 297, 308 (HL). ] 24. It is thus clear that the extent of applicability of the principles of natural justice depends upon the nature of inquiry, the consequences that may visit a person after such inquiry from out of the decision pursuant to such inquiry. 25. The right to fair hearing is a guaranteed right. Every person before an authority exercising the adjudicatory powers has a right to know the evidence to be used against him. This principle is firmly established and recognized by this court in Dhakeswari Cotton Mills Ltd. v. CIT 1 . However, disclosure not necessarily involves supply of the material. A person may be allowed to inspect the file and take notes. Whatever mode is used, the fundamental principle remains that nothing should be used against the person which has not brought to his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to whether any inquiry at all is required to be held. In this regard, learned senior counsel for the appellant pressed into service the doctrine of duty of adequate disclosure which according to him is an essential part of the principles of natural justice and doctrine of fairness. Abare reading of the provisions of the Act and the Rules do not support the plea taken by the appellants in this regard. Even the principles of natural justice do not require supply of documents upon which no reliance has been placed by the authority to set the law into motion. Supply of relied on documents based on which the law has been set into motion would meet the requirements of the principles of natural justice. No court can compel the authority to deviate from the statute and exercise the power in altogether a different manner than the prescribed one. As noticed, a reason-able opportunity of being heard is to be provided by the adjudicating authority in the manner prescribed for the purpose of imposing any penalty as provided for in the Act and not at the stage where the adjudicating authority is required merely to decide as to whether an inquiry at all be held into the matter. Imposing of pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be available with him to the noticee, placed reliance on State Inspector of Police v. Surya Sankaram Karri 1 which is not an authority for the proposition canvassed. It was a case where the court found that the investigation into an offence punishable under section 13(1)(e) of the Prevention of Corruption Act was undertaken without the required authorization of the Superintendent of Police. In that context, this court observed that the manner in which 2 ". . . the investigation was conducted, is condemnable. The least that a court of law would expect from the prosecution is that the investigation would be a fair one. It would not only be carried out from the stand of the prosecution, but also the defence, particularly, in view of the fact that the onus of proof may shift to the accused at a later stage". Shri Lalit, strongly relied upon the observations so made by this court which in our considered opinion, are not relevant for our purpose. One cannot pick a sentence from here and there in the judgment and characterize it to be the ratio of the case. The observations made in that case were in the context of criminal investigation which was found to be unfair and illegal. [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed under rule 4 of the Rules comes in their way in getting a fair trial and therefore the said provision is violative of article 14 of the Constitution of India. It is not the case that the adjudicating authority constituted under the present Act is not an independent and impartial tribunal. 33. In Tribhuvandas Bhimji Zaveri v. Collector of Central Excise 3 , officers of the Income-tax Department raided the business premises of the appellant and prepared an inventory of the stock of gold and gold ornaments found in the premises. This was followed by a show-cause notice as to why penal action should not be taken against the appellants. The appellants by their letter had requested the authorities to furnish a certified copy of the check list prepared at the time of raid with a view to enabling them to check and verify the particulars. In reply thereto, the Income-tax Officer expressed his inability to provide the required documents on the ground that they were not readily available with the officer. It is under those circumstances, this court observed that the failure to supply important piece of information to the appellants has prejudiced the appellants and to this extent the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appear. A line or a word in a judgment cannot be read in isolation or as if interpreting a statutory provision to impute a different meaning to the observations (see Haryana Financial Corporation v. Jagadamba Oil Mills 1 ). 36. One more decision upon which heavy reliance has been placed by learned senior counsel is R. v. H/R v. C 2 . We fail to appreciate as to how the said judgment would render any assistance and support the case set up by the appellants in the present proceedings. In that case, the defendants were charged with criminal conspiracy to supply a class A drug. The prosecution case was based on police surveillance evidence. In pre-trial proceedings the defendants made far-reaching requests for disclosure, including all material relating to any covert human intelligence sources involved in the investigation. At a preliminary hearing, it appeared that a public interest immunity inquiry would be necessary as the prosecution wished to withhold documents from disclosure to the defence on that ground. The judge ruled, without having looked in detail at the documents provided by the prosecution, that unless independent counsel were appointed, so as to introduce an adversa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he prosecution case. The disclosure under the Act should assist the accused in the timely preparation and presentation of their case and assist the case to focus on all the relevant issues in the trial. 38. It appears that those Acts recognise rights of accused persons in a criminal case to a fair trial. It is clear that disclosure of unused material in criminal proceedings in theUnited Kingdomis regulated by the provisions of those Acts and applicable to criminal trials where the accused are charged with criminal offences. Duty of disclosure of unused material is not a definite concept to be applied in any and every case in this country. There is no such Act or law as in theUnited Kingdom, nor any procedure prescribed for disclosure of unused material in criminal proceedings. In the present case, the appellants are not defendants in any criminal trial. The judgment has no application as to the fact situation and the law applicable in theUnited Kingdomis not applicable to either the adjudicatory proceedings or even criminal trials in this country. 39. On a fair reading of the statute and the Rules suggests that there is no duty of disclosure of all the documents in possessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument which may be useful for or relevant to the subject-matter of inquiry. Such request may have to be considered upon its own merits. A fair reading of rule 4 which is a complete compendium for holding of inquiry suggests that all the evidence and documents which the adjudicating authority may consider relevant for the purpose of inquiry may have to be furnished to a person facing the inquiry on the allegations of contravention of the provisions of the Act etc., alleged to have been committed by him. In addition, the authority may require attendance of any person acquainted with the facts and circumstances of the case to give evidence and to produce any documents which in its opinion, may be useful for or relevant to the subject-matter of the inquiry. Only upon consideration of the entire evidence produced, if the adjudicating authority is satisfied that the person has committed the contravention, he may by order in writing accordingly impose such penalty as he thinks fit in accordance with the provisions of the Act which of course is not final as it is subject to appeal. Practice of inclusion of list of judgments in compilations not cited at the Bar 41. Before parting with t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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