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TMI Blog2018 (6) TMI 1492X X X X Extracts X X X X X X X X Extracts X X X X ..... e RBI its view as in this case of serious contravention suspected of money laundering. Thus, there is a broad agreement that this court, in exercise of its powers of judicial review, can seek such answers and clarifications from the Enforcement Directorate. Course adopted by the RBI and its remittance of the proceedings straight away to the adjudicating authority can be questioned by the applicant seeking compounding of the contravention under the FEMA, by making an application to the RBI. Thus, the applicant invoking the RBI's power of compounding can then approach a court of law and challenge both, the refusal or reluctance on the part of RBI to proceed further as also the Enforcement Directorate's communication or view to the aforesaid effect. If that is the constitutional safeguard and protection ensured to every aggrieved applicant, then, it is not necessary to declare the proviso unconstitutional. We agree with Mr. Dwarkadas that no interpretation which totally takes away the power to compound contravention vesting in the RBI be placed on the proviso. We must, on a harmonious and complete reading of the statutory scheme, together with the rules, hold as above and that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Directorate dated 1st December, 2017 or any prior letters/communications, which are quashed and set aside by this judgment We also proceed to direct the RBI to render the necessary guidance to the petitioner in the matter of compounding of the contraventions under the FEMA. Since it was clearly stated before us by the RBI that it is presently inhibited in considering the compounding applications or proceeding to decide the same in view of the communication/letter of the Enforcement Directorate, then, as a result of quashing of the same, the RBI is free to proceed and decide the same. - Writ Petition No. 2026 of 2017 - - - Dated:- 26-6-2018 - MR. S. C. DHARMADHIKARI AND SMT. BHARATI H. DANGRE, JJ. For The Petitioner : Mr. Janak Dwarkadas-Senior Advocate with Ms. Fereshte Sethna, Mr. Pawan Sharma, Mr. Sumit Garg, Ms. Shreema Doshi and Mr. Lokesh Aidasani i/b.M/s.DMD Advocates For The Respondent : Mr. Venkatesh Dhond-Senior Advocate with Mr. Prasad Shenoy, Ms. Mansi Mahida and Mr. Parag Sharma i/b. M/s.Udwadia and Co. And Mr. Hiten Venegaonkar with Mr. D. P. Singh, Ms. Priya Singhania, Mr. Satya Prakash, Mr. Anjan Chanda and Mr.Praful Wable i/b. Mr.S. P. Singh and Ms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oing through the same and examining the legality thereof to quash and cancel the letter/order/direction dated 6 March 2017 issued/passed by Respondent No. 2 to Respondent No. 1 in relation to the compounding applications of the Petitioner; ( a3) that this Hon'ble Court may be pleased to issue a writ of certiorari, or any writ, order or direction analogous to the writ of certiorari, calling for the records of the case and after going through the same and examining the legality thereof to quash and cancel the Order sheet/Hearing Note dated 20 April 2017 passed by Respondent No. 2; ( a4) that this Hon'ble Court be pleased to strike down and declare that the proviso to Rule 8(2) of the Foreign Exchange (Compounding Proceedings) Rules, 2000 inserted vide 2017 Notification introduced by the Foreign Exchange (Compounding Proceedings) Amendment Rules, 2017, ultra vires, unconstitutional, non est and violative of Article 14 of the Constitution of India; ( a5) that this Hon'ble Court may be pleased to issue a writ of certiorari, or any writ, order or direction analogous to the writ of certiorari, calling for the records of the case and after going through the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned as expeditiously as possible and not later than 180 days from the date of application . 8. Respondent no. 2 initiated adjudication proceedings against the petitioner and its Directors vide Show Cause Notice No.F.No.T- 4/2-D/2015 dated 13th November, 2015 issued under section 13 of the FEMA, copy of which is annexed as Exhibit 'B' to the petition. The alleged FEMA violations cited in the show cause notice related to section 3(d), read with sections 6(3)(a), 6(3)(b) and 6(3)(j) of the FEMA, read with Regulations 6(2)(ii) and (iv) of the FEM (Transfer or Issue of any Foreign Security) Regulations, 2004, Regulation 5(1) and 10B of FEM (Transfer or Issue of Security to Persons Resident Outside India) Regulations, 2000 and Regulation 3 of the FEM (Guarantees) Regulations, 2000. 9. The petitioner and its Directors filed replies dated 30th March, 2016 and 18th April, 2016 stating therein that the Petitioner and/or its Directors have not contravened any provisions of the FEMA as alleged in the show cause notice. 10. The petitioner states that although it was satisfied that there was no FEMA contravention warranting compounding, nevertheless, with a view to avert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iaries, reconciling the remittances/guarantees made to the JV and reporting pending APRs in that regard, were immediately complied with and accordingly, the petitioner once again filed two compounding applications, both dated 19th August, 2016 bearing CA Nos. 4113/2016 and 4114/2016, respectively. 13. During the discussions held by the petitioner's counsel with the Overseas Investment Division (OID) of respondent no. 1 in relation to the matter of the compounding applications dated 19th August, 2016, it was pointed out that there were certain other additional technical/procedural contraventions which may also require compounding as a direct consequence of the compounding applications dated 19th August, 2016. In order to immediately address such observations, the petitioner filed a third compounding application dated 24th October, 2016 with respondent no. 1 being CA No. 4195/2016, copy of which is annexed as Exhibit 'K' to the petition. 14. By its letter dated 24th January, 2017 bearing Reference No.FE.CO.CEFA/7579/15.20.67/2016-17 and FE.CO.CEFA/7581/ 15.20.67/2016-17, respondent no. 1 returned all of the three compounding applications of the petitioner (two dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reinafter referred to as the PMLA ) were ongoing. However, in the case of the petitioner, respondent no. 1 has been returning the compounding applications. 20. The petitioner is aggrieved by the fact that respondent no.2 is continuing proceedings against the petitioner and its Directors under the FEMA, despite the legal entitlement of the petitioner and its Directors to seek compounding. Also, when respondent no. 2, on the basis of information available to it, can undertake adjudication proceedings, the basis on which respondent no. 1 claims inability to compound alleged offences, is irreconcilable. 21. The petitioner submits that without in any manner seeking to be trammeling the realm of merits of the show cause notice, vide letter dated 28th February, 2014, respondent no. 1 in relation to one of the contraventions alleged in the show cause notice relating to Regulation 6(2)(ii) of the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 advised the AD Bank of the petitioner to call for the information from the petitioner to enable it to advise the petitioner to opt for compounding. Thus, initially, respondent no.1 was itself participat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mited and NDTV Networks PLC, both of which are apparently under investigation of the second respondent. Then, a reference is made to the petitioner's application dated 20th April, 2017 filed before the adjudicating authority, requesting that the adjudication proceedings be held in abeyance till they seek guidance from the FID and OID of the first respondent. However, the second respondent inquired as to whether there is any provision in law enabling it to hold the proceedings in abeyance, in absence of which, no cognizance can be taken of this application. The petitioner also very fairly stated that there was no legal provision, but it is the discretion of the authority to take the application or not. The adjudicating authority rejected this application dated 20th April, 2017 on the ground that there is no such provision in the Foreign Exchange (Compounding Proceedings) Rules, 2000. Thus, it was denied that there was any provision, under which, the petitioner can insist on keeping the proceedings in abeyance till the compounding application is considered. Finally, what is argued is that by an application dated 20th February, 2017 of the Department of Revenue, Ministry of Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the RBI is dated 7th August, 2017. Pertinently, after these affidavits of the respective respondents, this court was persuaded to pass a detailed order. That order dated 9th August, 2017 reads as under:- 1 Yesterday, when we invited attention of the learned counsel representing the first respondent Reserve Bank of India to the communications at Exhibits J and K, Shri Sharma, the learned counsel on instructions of Shri R. Seetaraman, DGM, OID, FED stated that Reserve Bank of India will immediately address a letter to the petitioner calling upon the petitioner to submit necessary data/ documents to enable its Foreign Investment Division, OID, FED, Central Office Mumbai to provide necessary guidance to the petitioner as stated in the aforesaid communications. He states that on the petitioner supplying necessary data/ documents, necessary guidance will be provided to the petitioner within 20 days from the date on which necessary documents/ data are provided by the petitioner. We accept the said statement. 2 Place the Writ Petition high upon board on 22nd August, 2017. The learned counsel appearing for the second and third respondents states on instructions that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uritius, ( GCSHL ) a wholly owned subsidiary of Maxis. After Maxis acquired the shares of Aircel Ltd., Mr. Dayabnidhi Maran granted licence etc. to Aircel for which he received ₹ 742.58 crores as illegal gratification from Maxis through Astro and other associate entities including the subsidiaries of Astro under the garb of equity contribution in companies controlled by his brother Mr.Kalanithi Maran viz. Sun Direct TV Pvt. Ltd., India ( SDTPL ) and South Asia FM Limited, India ( SAFL ). ii) Although New Delhi Television Ltd. ( NDTV Ltd. ) was not named as an accused in the CBI Charge Sheet, it was established in the Charge sheet that ₹ 742.58 crores was paid by Astro to SDTPL and SAFL through its subsidiaries based in Mauritius as illegal gratification to Mr.Dayanidhi Maran. Out of this amount approximately ₹ 193 crores was paid to SAFL from February 2008 to October 2010 by Astro, directly and indirectly. This amount was paid on the basis of a Share Subscription Agreement and a Joint Venture Shareholder's Agreement, both dated 10th Jan 2008. One of the companies through which part of the aforesaid amount was routed to SAFL was a company called AH Mult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(1)(d) of PC Act and Section 120B of IPC prior to filing of the Charge Sheet by the CBI in this case. The said FIR lodged by the CBI disclosed the above said offences which were/are scheduled offences under the PMLA, 2002. The Enforcement Directorate, therefore, recorded a case being ECIR No.05/DZ/2012 dated 7th February 2012 under the PMLA for investigation of the offence of money laundering as defined u/s 3 punishable under Section 4 of the Act, against the persons accused in the said FIR. The Enforcement Directorate thereafter filed a Prosecution Complaint dated 8th January 2016 under the PMLA before the Hon'ble Special Judge (PMLA) Patiala House Courts, New Delhi. In the Complaint, although NDTV News was not arrayed as an accused, its connection with SAFL was set out in detail. The sale of its shares in SAFL by NDTV News to AHMPL for approximately ₹ 5.10 crores was also noticed in the Complaint. The fact that the investigation was ongoing was also mentioned in the Complaint and leave of the Hon'ble Special Judge was sought to file a further supplementary Complaint under PMLA on the basis of the outcome of the ongoing investigation. vi) On 27th February 2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nse to the letter of RBI dated 05.12.2016 the Enforcement Directorate issued the letter dated 6th March, 2017 to RBI advising the RBI not to compound the contraventions referred to in the Compounding Applications of NDTV, the Petitioner. 28. Thereafter, it was stated that from the Airce Maxis case, the CBI has registered another FIR on 2nd June, 2017 against the petitioner, its promoters and unknown officials of ICICI Bank Limited and other unknown persons in respect of the offences punishable under section 120B read with section 420 of the Indian Penal Code, 1860 and section 13(2) read with section 13(1)(d) of the Prevention of Corruption Act, 1988. Based on this FIR, the Enforcement Directorate recorded a case under the PMLA against the accused in the aforesaid FIR dated 7th August, 2017. Then, the facts as alleged by the Enforcement Directorate against the accused are set out in para 7 (sub paras of the additional counter affidavit). Then, as far as the contraventions against some companies, which are Mauritius based, are set out and it is stated that the order of discharge of the learned CBI Judge is also under challenge. The further steps have been set out in the subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 22nd December, 2017. After these dates, on 12th January, 2018 onwards, it has been listed before us. From the record, it appears that another Chamber Summons (ST) No. 64 of 2018 for amendment was moved. That was moved after inspecting the records by the petitioner. On that chamber summons, a detailed order was passed on 8th February, 2018. That order reads as under:- 1. We have heard Mr. Dwarkadas appearing in support of the chamber summons and Mr. Venegaonkar for the contesting respondent, particularly the second respondent. 2. Mr. Venegaonkar would submit that this chamber summons should not be granted for leave to amend is sought to insert the pleas inconsistent with the case of the petitioner as initially or originally pleaded. Therefore, the structure of the petition undergoes a drastic change and equally the cause of action. 3. Mr. Dwarkadas would submit to the contrary. He would submit that as pointed out in the affidavit in support, the petitioner was required to move this chamber summons. The petitioner was required to move this chamber summons only on account of the stand of the Directorate of Enforcement. 4. The facts are relevant and the ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 2nd December, 2017 filed in this petition seeking to place on record the outcome of the inspection of the documents taken by the petitioner. The writ petition raises the issue of a compounding application being not considered by the RBI, though the Rules enable it to do so, but the RBI maintains that it was equally bound to consider the contents of a letter from the Enforcement Directorate. It is in these circumstances and when the RBI relied upon the amendment to the Compounding Rules that the petitioner filed an affidavit seeking to raise certain legal issues. Prior to that, it sought to place on record the further developments/events and further correspondence exchanged with the RBI. That is how this affidavit of 2nd December, 2017 was filed. 34. The petitioner, as stated above, filed a chamber summons for amendment of the petition, which was allowed and the contents of that amendment are equally material for this petition. It is based on those contents that the issue of legality and validity of the Rules would arise for determination of this court, according to the petitioner. 35. Mr. Dwarkadas learned senior counsel appearing on behalf of the petitioner submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a reasonable, bonafide and honest opinion/inference can be drawn to the aforesaid effect and in particular that the compounding proceedings, therefore, relates to a serious contravention suspected of money laundering. 37. Mr. Dwarkadas would submit that the delegated legislation fails to conform to parent legislation. In that, the impugned notification seeks to deprive RBI of its vast powers as statutory custodian of foreign exchange, to exercise powers to compound offences under section 15 of the FEMA read with Rule 4 of the Compounding Rules and purports to clothe the Enforcement Directorate with powers to denude RBI of exercise of statutory powers and authority without stipulating any minimum safeguards of objectivity. 38. Mr. Dwarkadas submits that wide and untrammeled powers are conferred upon the Enforcement Directorate under the impugned notification, whereby, if the Enforcement Directorate were merely of the view , that a serious contravention suspected of money laundering or terror financing or affecting the sovereignty and integrity of the nation, the compounding authority shall become liable to remit the matter to the appropriate adjudicating authority for adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry right to secure compounding under the FEMA, whether through the RBI or the Enforcement Directorate and where such compounding of a civil offence were granted by the RBI or the Enforcement Directorate, cannot hinder the Enforcement Directorate from instituting criminal proceedings. In the case of Sociedade De Fomento Industrial Pvt. Ltd., despite the pendency of proceedings before the adjudicating authority, the RBI proceeded ahead with compounding. 42. Mr. Dwarkadas further submits that the PMLA is a complete Code in itself, providing inter alia for imprisonment, attachment, confiscation of proceeds of crime and civil compounding under the FEMA cannot in any manner affect the maintainability of the PMLA proceedings. While the PMLA proceedings arise out of offences which are criminal in nature, since the FEMA contraventions are civil in nature, these are completely independent of the PMLA proceedings. Thus, even if the FEMA contraventions by the petitioner were compounded, such compounding can have no bearing on any contravention of the PMLA, since any such proceedings are capable of being proceeded with independently in law, despite the FEMA contraventions being compounded. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch an investigation can be ordered. If it is shown that the circumstances do not exist or that they are such that it is impossible for anyone to form an opinion therefrom suggestive of the things necessary, the opinion is challengeable on grounds of non-application of mind, or perversity or on the ground that it was formed on collateral grounds and was beyond the scope of the statute. 44. Mr.Dwarkadas would submit that the impugned notification is contrary to and exceeds the scope and amplitude of section 15 of the FEMA, which gives a right to every person to make a compounding application and empowers the RBI and the Enforcement Directorate to compound offences in the manner prescribed. Section 46(1) of the FEMA empowers the Central Government to make rules to carry out the provisions of this Act. Section 46(2) provides that the Central Government may make rules to provide for the manner in which the contravention may be compounded under sub-section (1) of section 15. However, the impugned notification, on the contrary, provides that a compounding application will be rejected without any consideration if the Enforcement Directorate is of the view that the applicant is suspected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... something so absurd that no sensible person could ever dream that it lay within the powers of the authority. It is an unwritten rule of law, constitutional and administrative, that whenever a decision making function is entrusted to the subjective satisfaction of a statutory functionary, there is an implicit obligation to apply his mind to pertinent and proximate matters only, eschewing the irrelevant and the remote ( Shalini Soni vs. Union of India 1980 Cri. L. J. 1487 ). A decision will be said to be unreasonable in the wednesbury sense when it is (a) based on wholly irrelevant material or irrelevant considerations; (b) it has ignored a very relevant material which it should have taken into consideration; or (c) it is so absurd that no sensible person could ever have reached it. As Lord Diplock observed in the CCSU case, a decision will be said to suffer from wednesbury unreasonableness, if it is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it. Interference is called for when there is an abuse of power or what is sometimes called fraud on power (see par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification seeks to take away the right of compounding and thus transgresses principles of natural justice. While Rule 8(2) of the Compounding Rules provides for the right of a personal hearing before passing orders on a compounding application, the impugned notification does not provide for the right of a personal hearing before rejecting the compounding application. 49. Mr.Dwarkadas then submits that the impugned notification is in any event meaningless and/or contrary to law: (a) it contemplates serious contravention failing to carry minimum safeguards quintessential to distinguishing a serious transgression of law from one otherwise than serious. All contraventions of law are bound to be treated as serious and therefore, no effective meaning can be given to the use of the word 'serious' within the purported proviso to sub-rule (2) of Rule 8 of the Compounding Rules, absent requisite minimum objective safeguards; (b) alternately, 'serious' must be attributed the meaning of something more than routine contravention, assuming without admitting that the FEMA contraventions were at all capable of such a distinction being drawn, in which event, again, no rational cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justify purported investigation, which, in turn, must form and is treated as the view required under the impugned notification. If that alone were the requirement, the impugned notification would have to provide that wherever any investigation under the PMLA is undertaken, compounding applications shall be liable to stand rejected. However, that is not the language of the impugned notification and such a meaning, which would run contrary to the parent legislation, would, in any event, be ultra vires the FEMA. 51. Mr.Dwarkadas then submits that the facts of the petitioner's case would reveal that the actions of the Enforcement Directorate in purporting to interdict RBI display non application of mind and perversity. The Enforcement Directorate's view is founded on collateral grounds beyond the scope of the statute and the impugned notification. 52. Mr. Dwarkadas submits that the applications for compounding, which have been returned by the RBI arise from the show cause notices of the Enforcement Directorate and do not concern any matters, which are alleged to be subject of a purported PMLA investigation by the Enforcement Directorate. To the extent this Directorate pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and vesting solely in the RBI. Therefore, today there is no material, based on which, any view can be recorded by the Enforcement Directorate. 54. Mr. Dwarkadas then submitted that the Enforcement Directorate has since attempted to supplement its position vide affidavit in reply dated 8th February, 2018 filed by the Enforcement Directorate to Chamber Summons (L) No. 64 of 2018 contending (a) the petitioner is accused in FIR No.2172017A009 dated 2nd June, 2017; (b) the petitioner is accused in a case registered by the Enforcement Directorate vide ECIR/09/HIU/2017 dated 7th August, 2017; and (c) the petitioner is under investigation in PMLA Case No. ECIR/05/DZ/2012 (Aircel-Maxis case), wherein overseas investigation is pending. 55. Mr. Dwarkadas further submits that it is not available in law to the Enforcement Directorate to supplement/amplify/add to the lack of credible basis apparent from the Enforcement Directorate's letter of 1st December, 2017 which forms the premise for purporting to interdict the RBI's right to proceed with its statutory power to consider the petitioner's compounding application, through the means of the Enforcement Directorate's affid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oor method of the affidavit in reply to the petitioner's chamber summons. In any event, in the Aircel-Maxis case, the Special Judge/Trial Court has discharged/acquitted the accused persons, vide order dated 2nd February, 2017. 57. Mr.Dwarkadas, therefore, submits that this court should allow the petition and direct the RBI to take a decision on the compounding applications preferred by the petitioner. This court should also direct that the Enforcement Directorate now cannot adjudicate on the alleged contravention of the provisions of the FEMA by passing an adjudication order and the Enforcement Directorate should be restrained accordingly by this court by passing an appropriate order and issuing a writ in regard thereto. Mr.Dwarkadas also supported his oral arguments by the written note handed in on 12th March, 2018. To be fair, Mr. Dwarkadas also argued that the proviso below Sub-rule (2) of Rule 8 cannot be relied upon for the Rules have to be amended and the amendment has to take effect strictly in accordance with law. The position today is that the law has not been abided by and in that regard, strong reliance is placed by Mr.Dwarkadas on the provisions contained in sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the details of the days when the House was in session. He would submit that once the Rules have been laid before the Parliament, then, there is complete compliance with law. In any event, the position is very clear and that is that the provision, which requires laying of rules and regulations before the Parliament, is not mandatory, but directory. Section 48 of the FEMA entails laying of rules before the Parliament simplicitor. That does not mean that the rules have to wait to take effect until both Houses agree in making the modification in terms of the proviso or until both Houses agree with the rule, amendment should not be made. In any event, that requirement can be still complied with. Once the rules have been tabled before the Rajya Sabha, then, there are further sittings of both Houses, during which, the amendment can be considered. Therefore, the invocation of the notification and its application at the instance of the Enforcement Directorate is not illegal. 61. Mr. Venegaonkar placed strong reliance upon the judgment of the Hon'ble Supreme Court in the case of Atlas Cycles (supra). Our attention was also invited to a Division Bench judgment of this court rendered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egaonkar submits that the power to compound, which has been conferred in the RBI should be exercised in terms of section 15 read with the Compounding Rules and that procedure should be strictly followed. Even without the amendment and intervention of the proviso below Sub-rule (2) of Rule 8, that power of compounding was not absolute or uncontrolled. Once the compounding has to be done by the authority only after passing an order and before that order, opportunity of being heard has to be granted to all concerned, then, it is evident from the scheme of the Act that such power, as is vesting in the RBI, has to be exercised more or less on par with similar power, which is conferred in the Enforcement Directorate. Our attention in that behalf is invited to Rules 4 and 5 of the Compounding Rules by Mr.Venegaonkar. On the aspect of the constitutional validity of the proviso recently introduced by the amendment to the rules, Mr.Venegaonkar contended that in the affidavit in reply/counter affidavits of the Enforcement Directorate, sufficient and adequate light is thrown on this aspect and it is elaborately pointed out as to how this proviso is not unconstitutional, much less ultra vires t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate or detailed exercise is contemplated as the process is entirely subjective. No objective analysis is contemplated at that stage. It is only to set in motion or initiate a process in law that some material is to be provided to the authority. Thus, adequacy and sufficiency of that material cannot be probed by this court in its writ jurisdiction. So long as there was some material to form a view or an opinion and communicate it to the Compounding Authority, then, that test is satisfied in the instant case. There is enough material, which would raise suspicion about the involvement of the petitioner in contravention of PMLA. Therefore, on merits as well, the requirement of the proviso is satisfied and the writ petition must be dismissed. 65. Mr. Venegaonkar relies upon the following decisions in support of his aforereferred rival contentions:- (i) Narayan Govind Gavate and Ors. vs. State of Maharashtra and Ors., (1977) 1 SCC 133. (ii) Rochester Telephone Corporation vs. United States, (1939) No. 481, decided on 17th April, 1939. (iii) New Delhi Television Limited vs. Deputy Commissioner of Income Tax, Circle-18(1), New Delhi and Anr., WP No. 9120 of 2015 and connecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etting up of Directorate of Enforcement and several powers conferred in the authorities under the FEMA. The last Chapter, Chapter VII is titled as Miscellaneous . 67. Section 2 contains definitions and the term Adjudicating Authority is defined in section 2(a) to mean an officer authorised under sub-section (1) of section 16. The person authorised to deal in foreign exchange or foreign securities is an Authorised Person and that definition is to be found in section 2(c). Since section 37-A refers to an Authorised Officer , even that term is defined under section 2(cc). The word Competent Authority is defined in section 2(gg). The term Director of Enforcement means the Director of Enforcement appointed under sub-section (1) of section 36. The term foreign exchange is defined under section 2(n). The term prescribed is defined under section 2(x) to mean prescribed by Rules made under the Act. Finally, the term Reserve Bank means the Reserve Bank of India constituted under sub-section (1) of section 3 of the Reserve Bank of India Act, 1934. No person can deal in foreign exchange, save as otherwise provided under the Act, Rules or requirements made thereunder or with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sub-section (1-A), punishable with imprisonment for a term which may extend to five years and with fine. ( 1-D) No Court shall take cognizance of an offence under sub-section (1-C) of section 13 except as on complaint in writing by an officer not below the rank of Assistant Director referred to in sub-section (1-B). ( 2) Any Adjudicating Authority adjudging any contravention under sub-section (1), may, if he thinks fit in addition to any penalty which he may impose for such contravention direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government and further direct that the foreign exchange holdings, if any, of the persons committing the contravention or any part thereof, shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf. Explanation . - For the purpose of this sub-section, property in respect of which contravention has taken place, shall include - ( a) deposits in a bank, where the said property is converted into such deposits; ( b) Indian currency, where the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose 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 as it may deem fit. ( 2) The Central Government shall, while appointing the Adjudicating Authorities under sub-section (1), also specify in the order published in the Official Gazette, their respective jurisdictions. ( 3) No Adjudicating Authority shall hold an enquiry under sub-section (1) except upon a complaint in writing made by any office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst to be appointed. We feel that particular emphasis has to be laid on section 34 for that completely takes away the jurisdiction of a civil court in matters of adjudication and appeals. Therefore, the law gives further power to appeal to this court and that appeal is provided by section 35. As observed above, Chapter VI deals with the Directorate of Enforcement and such a Directorate with a Director and such other officers or class of officers, as deemed fit by the Central Government, have to be appointed. By section 37, there is a power of search and seizure conferred in the Director of Enforcement and we would also refer to sub-section (2) of section 37, where the power of investigation of contravention referred to in section 13 can be exercised by an officer of the RBI to be appointed by the Government of India. There are several provisions relating to estates held outside India in contravention of section 4 and there is also a provision in section 38, which empowers other officers to discharge such of the duties of the Director of Enforcement or any other officer of the Enforcement, as may be stated in the order. Since great emphasis has been laid on Chapter VII containing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Enforcement can control the exercise of that power by the RBI or interfere, much less interdict it and for that purpose, we would have to refer to the Rules, styled as the Foreign Exchange (Compounding Proceedings) Rules, 2000. These Rules were made vide G.S.R. 383(E) dated 3rd March, 2000, published in the Gazette of India, Extension, Part II section 3(2) dated 4th May, 2000. It is known as Government Standing Order. These rules are made in exercise of powers conferred by section 46 read with sub-section (1) of section 15 of the FEMA. 75. Rule 2 contains definitions and the definition of the term applicant is relevant. The expression Compounding Authority is defined in Rule 3 and in the case of a RBI officer, an officer of the RBI not below the rank of the Assistant General Manager can be entrusted with the exercise of powers under section 15(1) of the FEMA. Rule 4 reads as under:- 4. Power of Reserve Bank to compound contravention. - ( 1) If any person contravenes any provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) except clause (a) of section 3 of that Act - ( a) in case where the sum involved in such contravention is ten lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As far as the power of the Enforcement Directorate to compound contravention is concerned, that is to be found in Rule 5. In that case as well, the Director of Enforcement has to direct, control and supervise the exercise of power to compound contravention. Rule 6 is important and it says that where any contravention is compounded before the adjudication of any contravention under section 16, no inquiry shall be held for adjudication of such contravention in relation to such contravention against the person in relation to whom the contravention is so compounded. However, Rule 7 says that where the compounding of any contravention is made after making of a complaint under subsection (3) of section 16, such compounding shall be brought by the authority specified in rule 4 or rule 5 in writing, to the notice of the Adjudicating Authority and on such notice of the compounding of the contravention being given, the person in relation to whom the contravention is so compounded shall be discharged. Rule 8, after its amendment reads as under:- 8. Procedure for compounding. - ( 1) The Compounding Authority may call for any information, record or any other documents relevant to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the contravention. Therefore, no compounding is then permissible. In any event, if the compounding results in making payment, but that payment is not made, then, no compounding can come into effect. No contravention can be compounded if an appeal stands filed under sections 17 and 19 of the Act. 80. It is in these circumstances, that we are of the opinion that there is much substance in the argument of Mr.Venegaonkar that there is no absolute right to seek compounding of contravention. At the same time, Mr.Dwarkadas can justifiably argue that an application for compounding, if made to the RBI, the power to compound vesting in the RBI cannot be taken away nor that exercise can be nullified except in the eventualities set out in the statute. Whether the same are found in the statute and whether there is any flaw in the view communicated resulting in a prohibition against compounding by the RBI is the moot question before us. 81. Before we address that issue/question, we would also like to refer to the PMLA. That Act has been enacted so as to prevent money laundering and to provide for confiscation of property derived from, or involved in, money laundering and for matters c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the term money-laundering is to be found in section 2(p). The word money-laundering is defined by stating that the word carries the meaning assigned to it in section 3 of the PMLA. The word investigation is defined in section 2(na), which is inserted by the Act 20 of 2005 to include all the proceedings under the PMLA conducted by the Director or by an authority authorised by the Central Government under the PMLA for collection of evidence. The word Director or Additional Director or Joint Director means a Director or Additional Director or Joint Director, as the case may be, appointed under sub-section (1) of section 49. That section falls in Chapter VIII titled as Authorities . Thus, these and the other words, including the definition of the term financial institution as appearing in section 2(l), the expression offence of cross border implications as defined in section 2(ra) together with the definition of the word proceeds of crime and prior thereto the word prescribed , the expression Schedule and scheduled offence as appearing in section 2(x) and (y) would enable us to understand as to what is money laundering. Section 3 is titled as offence of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as serious and far reaching implications across even national boundaries that Chapter IX contains provisions regarding reciprocal arrangement for assistance in certain matters and procedure for attachment and confiscation of property. Chapter X contains miscellaneous provisions, prominent amongst which is section 71, which has given the Act an overriding effect. Thus, when the FEMA in the FEMA Rules relating to compounding refers to the view of the Enforcement Directorate that the compounding proceedings relate to a serious contravention suspected of money laundering, terror financing or affecting sovereignty and integrity of the nation so as to compel the Compounding Authority to remit the case to the adjudicating authority for adjudication of the contravention under section 13, then, that view of the Enforcement Directorate has to be based on materials pointing towards firstly, the relation of the compounding proceedings and secondly to a serious contravention suspected of money laundering, terror financing or affecting sovereignty and integrity of the nation. 84. Since the matter before us involves the view relating to serious contravention suspected of money laundering, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IR 2002 SC 564, p. 566 : (2002) 2 SCC 135; Ramphal Kundu v. Kamal Sharma, AIR 2004 SC 1039, p. 1042 : (2004) 9 SCC 279]. The Legislature is deemed not to waste its words or to say anything in vain and [Wuebec Railway, Light, heat Power Co. V. Vandry, AIR 1920 PC 181, p. 186 : 1920 AC 662; see further Union of India v. Hansoli Devi, supra] a construction which attributes redundancy to the Legislature will not be accepted except for compelling reasons [Ghanshyamdas v. Regional Asstt. Commr., Sales Tax, AIR 1964 SC 766, p. 772 ; CIT v. Kanpur Coal Syndicate, AIR 1965 SC 325; State of Rajasthan v. Leela Jain, AIR 1965 SC 1296, p. 1299; Bhanu Pratap Singh (Raja) v. Asstt. Custodian, E. P., Bahraich, AIR 1966 SC 245, p. 247; CIT v. Moon Mills, AIR 1966 SC 870, p. 873, D. R. Jerry v. Union of India, AIR 1974 SC 130, p. 133; Shri Balaganeshan Metals v. Shanmugham Chetty, (1987) 2 SCC 707, p. 713; State of Uttar Pradesh v. Radhey Shyam, AIR 1989 SC 682, pp. 689, 690; State of Maharashtra v. Santosh Shankar Acharya, (2007) 7 SCC 463, p. 469; Borosil Glass Works Ltd. Employees Union v. D. D. Bambode, AIR 2001 SC 378, p. 380; Union of India v. Hansoli Devi, AIR 2002 SC 3240, p. 3246; Nathi D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr.Dwarkadas argued that it is not any other authority, but the apex bank in whom the power is invested as is apparent from a reading of section 15 of the FEMA read with the Compounding Rules. The RBI will not surrender its authority and power in favour of the applicant seeking the compounding of the contravention. It will not, in each and every case, compound the contravention even though the applicant may pray for it. The RBI will bear in mind the object and purpose of the FEMA, its role in the scheme of the said Act, the gravity and seriousness of the contravention and may, in a given case, by assigning reasons, refuse to compound it. Thus, the RBI is expected to exercise this power cautiously, carefully and reasonably. Once enormous powers are vesting in the RBI insofar as dealings in foreign exchange are concerned and it is entrusted with the management of foreign exchange, then, the RBI is bound to take into consideration all the relevant facts of a matter before exercising its discretionary power in terms of sub-section (1) of section 15. Mr. Dwarkadas submits that a bald or vague communication from the Enforcement Directorate should not interdict this power conferred in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial review, can seek such answers and clarifications from the Enforcement Directorate. That would ensure that the RBI is not unnecessarily and unjustifiably prevented from exercising its discretionary powers to compound a particular contravention inviting penalty under section 13 of the FEMA. To enable the RBI to exercise that power in accordance with law, it must be allowed to proceed with the compounding proceedings. They can be interdicted only when the Enforcement Directorate is of the view as above. However, if the Enforcement Directorate's view is challenged or questioned, then, a writ court is not prevented from seeking appropriate and necessary answers and clarifications. We propose to place such interpretation on this proviso so as not to make it impossible for the RBI to exercise its statutory power of compounding contravention. The RBI's authority or power will be undermined in the event a mere communication conveying a view of the Enforcement Directorate is received by it but there being no backup material at all to hold that there is serious contravention suspected of money laundering. It may not be possible for the RBI to go behind the Enforcement Directorat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould not be lightly and casually interfered with or interdicted frequently, but we cannot agree with him that it is open for the RBI to question the view of the Enforcement Directorate or to seek from that Directorate necessary clarifications every time when the RBI is confronted with a situation of a 'view' of the Enforcement Directorate communicated to it and to the aforesaid effect. If the RBI is allowed to go on questioning every communication and seek clarification about the presence of necessary material before the Enforcement Directorate, then, the RBI would be acting as either an appellate authority or a superior, which is not envisaged by law. The law invests both, the RBI and the Enforcement Directorate with the power to compound an offence and expects both high functionaries to trust and respect each other so also abide by the mandate of the statute. Once the power is parallel and vested in both, then, allowing the RBI to question the communication or the view of the Enforcement Directorate recorded therein would mean that the Enforcement Directorate would be prevented from exericising the powers of adjudication of the contravention in terms of the powers confer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed of a detailed or elaborate exercise by the fact that it is agreed that none can claim a absolute right of compounding an offence. That right is not unconditional or unfettered. If it is conferred by a statute, then, its exercise is controlled and regulated by the statute. If the law gives a right to seek compounding of an offence by making an application, then, that right to make an application cannot be placed at such a pedestal or height that the authority is left with no choice, but to pass an order compounding the offence. It is a right at best to make an application seeking compounding of the contravention, but beyond that, the applicant cannot insist on an order of compounding contravention, as prayed by him, to be passed. The matter is left to the Compounding Authority's discretion and if that discretion is not exercised reasonably, the applicant has a legal remedy available to him/her to approach a court of competent jurisdiction questioning that action of the RBI. Hence, if the exercise of the right to seek compounding of the contravention is controlled and regulated by the statute, then, we cannot agree with Mr. Dwarkadas that the intervention as envisaged by the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout forming any such opinion cannot publish the modifications considered necessary along with notice inviting suggestions or objections. We have already noticed that as on the day when the Minister concerned took the decision proposing to designate the land for educational use the material available on record were : (a) the opinion of the Chief Town Planner; (b) Note dated 23rd April, 2004 prepared on the basis of the record providing the entire background of the previous litigation together with the suggestion that the land should no more be reserved for the purpose of South Gujarat University and after releasing the lands from reservation, the same should be placed under the residential zone. 21. It is true that the State Government is not bound by such opinion and entitled to take its own decision in the matter provided there is material available on record to form opinion that substantial modifications in the draft development plan were necessary. Formation of opinion is a condition precedent for setting the law in motion proposing substantial modifications in the draft development plan. 22. Any opinion of the Government to be formed is not subject to objective tes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of all the relevant aspects of the matter. A plain reading of the relevant provision suggests that the State Government may publish the modifications only after consideration that such modifications have become necessary. The word necessary means indispensable, requisite; indispensably requisite, useful, incidental or conducive; essential; unavoidable; impossible to be otherwise; not to be avoided; inevitable. The word necessary must be construed in the connection in which it is used. (See-Advanced Law Lexicon, 3rd Edition, 2005; P. Ramanatha Aiyar) 26. The formation of the opinion by the State Government should reflect intense application of mind with reference to the material available on record that it had become necessary to propose substantial modifications to the draft development plan. 27. In J. Jayalalitha v. Union of India [(1999) 5 SCC 138] this Court while construing the expression as may be necessary employed in Section 3(1) of the Prevention of Corruption Act, 1988 which conferred the discretion upon the State Government to appoint as many Special Judges as may be necessary for such area or areas or for such case or group of cases to try the offences punis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not create any difficulty as investigation is instituted either at the wishes of the company itself expressed through a special resolution or through an order of the court where a judicial process intervenes. Clause (b), on the other hand, leaves directing an investigation to the subjective opinion of the Government or the Board. Since the legislature enacted Section 637(i)(a) it knew that Government would entrust to the Board its power under Section 237(b). Could the legislature have left without any restraints or limitations the entire power of ordering an investigation to the subjective decision of the Government or the Board? There is no doubt that the formation of opinion by the Central Government is a purely subjective process. There can also be no doubt that since the legislature has provided for the opinion of the Government and not of the court such an opinion is not subject to a challenge on the ground of propriety, reasonableness or sufficiency. But the Authority is required to arrive at such an opinion from circumstances suggesting what is set out in sub-clauses (i), (ii) or (iii). If these circumstances were not to exist, can the Government still say that in its opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... napplication of mind or perversity or on the ground that it was formed on collateral grounds and was beyond the scope of the statute. 30. This Court while expressly referring to the expressions such as reason to believe , in the opinion of observed: (AIR p. 324, para 63) 63. .. Therefore, the words, reason to believe or in the opinion of do not always lead to the construction that the process of entertaining reason to believe or the opinion is an altogether subjective to process not lending itself even to a limited scrutiny by the court that such a reason to believe or opinion was not formed on relevant facts or within the limits or as Lord Radcliffe and Lord Reid called the restraints of the statute as an alternative safeguard to rules of natural justice where the function is administrative. 31. In the Income-tax Officer, Calcutta Ors. Vs. Lakhmani Mewal Das [(1967) 3 SCC 757] this court construed the expressions reason to believe employed in Section 147 of the Income-tax Act, 1961 and observed: the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public authorities are therefore essentially different from those of private persons. A man making his will may, subject to any rights of his dependents, dispose of his property just as he may wish. He may act out of malice or a spirit of revenge, but in law this does not affect his exercise of his power. In the same way a private person has an absolute power to allow whom he likes to use his land, to release a debtor, or, where the law permits, to evict a tenant, regardless of his motives. This is unfettered discretion. But a public authority may do none of these things it acts reasonably and in good faith and upon lawful and relevant grounds of public interest. The whole conception of unfettered discretion is inappropriate to a public authority, which possesses powers solely in order that it may use them for the public good. There is nothing paradoxical in the imposition of such legal limits. It would indeed be paradoxical if they were not imposed. 93. Thus, the Hon'ble Supreme Court has reiterated the settled principles and it is not now open to contend that the RBI should be inhibited in compounding the offences merely because the Enforcement Directorate is holding so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the RBI dropped the proceedings or has sat over it deliberately or illegally refused to compound the contravention. Though it is empowered to do so, merely it was pressurised or has acted at the behest of the Enforcement Directorate. A mere forwarding letter is being relied upon not to proceed with the compounding proceedings and that is untenable in law. We are of the opinion that such a foundation can be laid in the pleadings and once that is laid, then, none, much less the Enforcement Directorate can escape the consequences in law. 94. By Exhibit 'DD' to the petition, the petitioner is pointing out that in response to the petitioner's e-mail dated 2nd December, 2017, the subject of reporting of transactions undertaken by the petitioner and group companies under the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004, as amended from time to time, appears to have been taken up. An advise was given by the RBI by its letter dated 18th December, 2017 to the petitioner and in this letter, that advise is mentioned. At the same time, in para 3 of this letter, the RBI is inviting the attention of the petitioner to a letter dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for adjudicating the contraventions under Section 13 of FEMA. Yours faithfully, sd/- ( D. K. Gupta) Special Director) 95. In relation to this communication/letter of the Enforcement Directorate, the pleading in the petition is as under:- X. Without prejudice, the Respondent No. 2 once again failed to consider that the 2017 Notification can become applicable only if Respondent No. 2 is of the 'view' that 'proceedings' relate to a serious contravention 'suspected' to be money laundering, and any such 'view' of Respondent No. 2 is bound to have been based on cogent material, which is significant by its absence. Y. Barring the bald allegation in the letter dated 1 December 2017 issued by Respondent No. 2 to Respondent No. 1 that the impugned contraventions of suspected of money laundering and are being investigated under PMLA, there is no allegation of a predicate offence triggering PMLA, in the absence of which the 2017 Notification can have no application to the Petitioner. Mere allegation of an investigation under PMLA is insufficient to trigger the applicability of the 2017 Notification. Z. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is very precarious manner which is arbitrary and discriminatory because in other cases the Respondent No.1 has been compounding similar contraventions on standalone basis even where the Respondent No.2's investigation under PMLA are still going on. 96. In reply to these specific grounds and the contents of the letter referred above, there is an affidavit, which has been filed, but it is evident that in the earliest affidavit, a reference is made to the letter dated 6th March, 2017, but the Enforcement Directorate itself gave up its reliance on this letter of 6th March, 2017 addressed by it to RBI, as recorded in this court's earlier order and reproduced above. In relation to the amended pleadings, what we find is that the Enforcement Directorate filed its response/reply, in which, it stated that the view of the Directorate was formed on the basis of material against the petitioner relating to suspected money laundering, which is under investigation in the Directorate. The petitioner has also invited our attention to the reply to the chamber summons dated 8th February, 2018/affidavit of the Enforcement Directorate filed to the proposed amendments to the petition, in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctorate as above is false to its knowledge for it is not in respect of any investigation against the petitioner. It is pointed out in the petition itself as to how the petitioner is not at all under investigation or suspected of any money laundering. In that regard, we have already referred to the requisite assertions. The petitioner has also relied upon the judicial orders passed by the Special Judge-CBI, New Delhi in what is styled as the 2G Spectrum Case. The petitioner has also annexed documents pointing out as to how the petitioner has not been summoned as an accused, but as a witness. The petitioner's stand is that even in its writ petition filed before the High Court of Delhi, New Delhi, it has pointed out as to how no offence is disclosed in the FIR, which is subject matter of Writ Petition (Cri.) No. 1863 of 2017. Thus, the petitioner cannot be said to be suspected of involved in money laundering operations. 99. In the written notes of arguments, the details are set out with reference to the FIRs and the case numbers taken from the Enforcement Directorate's affidavit. It is pointed out as to how the FIR dated 2nd June, 2017, which mainly relates to interest waiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. Then, there is a reference made to a receipt of bribe and illegal gratification of ₹ 5000 crores by Shri. P. Chidambaram in the 2G scam as reported by the CBDT secret records and another ₹ 1,200 crores paid to Shri. P. Chidambaram by M/s. GE Corporation of USA in the ₹ 24,000 crores Dabhol Enron Scam, where he stands already indicted. It is alleged that Shri.Chidambaram received these payments through the conduit of M/s. NDTV Ltd. and its subsidiaries, such as M/s.NDTV Network Plc, U. K., M/s. NDTV Network BV, Holland, M/s. NDTV Lifestyle Holdings Pvt. Ltd. etc. and then there are names of some complicit IRS officers. It is stated that Shri.Chidambaram exerted pressure on one IRS officer Shri. Srivastava, who traced US $ 427 million laundered by M/s. NDTV Ltd. and which has been held to be correct in statutory proceedings under the Income Tax Act, 1961. However, two serving officers have filed PIL before the Hon'ble Supreme Court and reference is made to these Hon'ble Supreme Court proceedings. The letter then proceeds to allege that the mischievous litigation under public interest before the Hon'ble Supreme Court by two serving IRS officers, who a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xus or connection of the petitioner with the alleged payments. How the above entities obtained the monies and whether they are proceeds of any crime and hence the investigation is being carried out about the process or activity connected therewith and hence this is a case of a serious contravention suspected of money laundering is not spelt out at all. 104. Then, what the record contains is a chart and the chart of the alleged violations of FEMA in relation to which, a show cause notice has already been issued. Based on all this, there is a note prepared of 8 pages by the Deputy Director of Enforcement, New Delhi and a perusal of that note would indicate that the petitioner was not named as an accused in the charge-sheet in 2G spectrum case and particularly Aircel Maxis case. This note refers to the same allegations and says that certain entities stated to be companies connected with Shri. Dayanidhi Maran were benefited and that investigation under the PMLA from a company called South Asia FL revealed that a group company of NDTV Ltd. called NDTV News Ltd. purchased the primary equity shares of SAFL for an amount of ₹ 5.1 crores. These shares were subsequently acquired by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneral in nature and based on no material or on such material which has no relation with the compounding proceedings. The compounding proceedings pertain to a contravention of the provisions of the FEMA. It is the FEMA which permits a compounding application to be considered by the RBI and confers specific power in that behalf in the RBI by section 15. If the RBI is not allowed to proceed and exercise its statutory power, which is also is discretionary, only because the Enforcement Directorate has communicated a view in general and vague terms, then, as is rightly urged before us, the Enforcement Directorate would on every occasion intervene and interfere with the RBI's powers and take it over. It would then be possible for the Enforcement Directorate to control the exercise of the power vesting in the RBI and this would totally defeat the object and purpose of the FEMA. Secondly, the RBI being the apex bank, its authority and position in terms of the FEMA and the RBI Act, 1934 will be undermined completely. Bearing in mind its position as an apex bank and the trust and confidence reposed in it by the public and the Parliament, as is apparent from at-least two parliamentary sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity of the proviso, particularly by reading it in the manner noted above, we are in agreement with Mr.Dwarkadas that in the facts of this case, the RBI was not bound to put an end to the compounding proceedings. We are of the opinion that the compounding proceedings initiated vide the compounding applications of the petitioner and pending before the RBI should proceed, but strictly in accordance with law. 108. In the view which we have taken, it is not necessary to decide as to whether the amendment brought to the Compounding Rules by insertion of the proviso by the notification dated 20th February, 2017 has come into force or not. Mr.Dwarkadas fairly argued that it has not come into force because of non-compliance with section 48 of the FEMA, whereas, Mr. Venegaonkar, relying upon the judgment of the Division Bench of this court, rendered at Aurangabad and urging that the provisions of section 48 are directory, urged further that this court should proceed on the footing that the proviso has come into force and could have been invoked. Mr. Venegaonkar fairly stated that even if this court proceeds on the footing that there is compliance with section 48 or that the provisions ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shtra has not discharged its burden of showing facts constituting the urgency, which impelled it to give declarationscum- directions under section 17(4) of that Act dispensing with the inquiries under section 5A of the Land Acquisition Act, 1894. The High Court took a view that the declarations under section 17(4) are invalid and liable to be quashed and set aside. They were accordingly quashed. It was that view which was assailed in the Hon'ble Supreme Court. The observations in para 10 of this judgment, far from assisting Mr. Venegaonkar, would militate against his arguments. The formation of an opinion may be a subjective matter, nevertheless that opinion has to be based on some relevant material in order to pass the test, which courts do impose. Para 10 of this decision reads as under:- 10. It is true that, in such cases, the formation of an opinion is a subjective matter, as held by this Court repeatedly with regard to situations in which administrative authorities have to form certain opinions before taking actions they are empowered to take. They are expected to know better the difference between a right or wrong opinion than courts could ordinarily on such matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e complete details regarding the issuance of the step up coupon bonds by NNPLC and guaranteed by NDTV were submitted during the original assessment proceedings under section 143 of the Act. The Department stressed that there had been suppression and to the extent permitted by law, they can reassess the income if that is found to have escaped the tax. Thus, this was not a case of mere change of opinion. It is in that context that all the observations have been made by the Division Bench. We do not see how de-hors the factual background and the context in which the issue under the provisions of a distinct law, that these observations are relevant for our purpose. The ambit and scope of the powers to reassess the income was in issue and whether the facts justify the same or otherwise. Hence, this judgment is of no assistance. 117. In conclusion, we will be failing in our duty if we do not note other arguments of Mr.Dwarkadas learned senior counsel appearing for the petitioner. He submitted that the statutory position and status of the authorities and high functionaries like the RBI, Enforcement Directorate and the CBI is being undermined and compromised. These institutions, accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... betray public trust and confidence. By its very name, it is the Directorate of Enforcement and it enforces stringent laws like the FEMA and the PMLA. Such institutions are the custodians of our foreign exchange resources, they safeguard and protect them by properly managing and administering them. They ensure that there is balance, much less in payment. If they are looked upon as guardians of citizens' rights, then, it is time that those in power and opposition realise that they should not act in a manner which gives the public at large an impression that these vital institutions are but puppets in the hands of politicians. 119. These institutions protect our constitutional framework. Every law, which is made and the authority therefrom is but a product of our constitution and the entries in the fields of legislation (Schedule 7 Lists I, II and III) have given us the CBI, the RBI and the Enforcement Directorate together with an independent and impartial judiciary, free-press. The agencies like RBI etc. are also pillars of our democracy. The earlier we realise that in their meaningful existence lies our safety and of our legal rights the better it would be. We pray that herei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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