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TMI Blog2022 (3) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by an Adjudicating Authority other than those referred to in sub-section (1) (2) of Section 17, or the Special Director (Appeals); and (3) under Section 35 to the High Court against the order of Appellate Tribunal. Though the petitioners complain of not being able to file reply on merits against the impugned show-cause notice, nevertheless there is no reason forthcoming as to why the petitioners have not attended the office of prescribed Authority as indicated in the impugned notice for inspection of documents attached with the complaint. Be that as it may, while responding to the notice dated 28.06.2021 for personal hearing, petitioners are always free to seek the opportunity for inspection of documents and file reply. Petitioners may raise all questions on facts and in law available to them in the context of the enquiry under Rule 4 of 2000 Rules. The Adjudicating Authority shall be well advised to consider the reply during the course of proceedings. Four weeks time, as prayed for, is granted to inspect the documents, if so advised, and file reply. Adjudicating Authority shall complete proceedings within eight weeks thereafter keeping in mind the time bound completion of proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntravention under Section 13, against whom a complaint has been made under sub-section (3), a reasonable opportunity of being heard, may hold an enquiry for the purpose of imposing any penalty. Sub-section (3) of Section 16 provides that no Adjudicating Authority shall hold an enquiry under sub-section (1) except upon a complaint in writing made by any officer authorized by a general or special order by the Central Government. Sub-section (4) provides that the said person may appear either in person or take the assistance of a legal practitioner or a chartered accountant of his choice for presenting his case before the Adjudicating Authority. Sub-section (6) empowers the Adjudicating Authority to deal with the complaint under sub-section (2) and as far as possible within one year from the date of receipt of the complaint. The Adjudicating Authority is required to record reasons periodically in writing for not disposing of the complaint within the said period. Section 17 provides for appeal to Special Director (Appeals) against the orders of the Adjudicating Authority, being an Assistant Director of Enforcement or a Deputy Director of Enforcement. Section 19 provides for appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Opp. Manav Mandir, Drive-in Road, Ahmedabad. The same reads as under: "4. In issuing this Show Cause Notice, reliance is placed, inter-alia on the aforementioned Complaint along with the relied upon documents, as listed in the Annexure to the Complaint. Original of the said relied upon documents shall be made available for inspection to the Noticees, or his authorized representatives at the office of the Joint Director, Directorate of Enforcement, 11th Floor, Satya One, Nr. Helmet Circle, Opp. Manav Mandir, Drive-in Road, Ahmedabad-380052, upon prior appointment, on any working day during office hours. It is further provided under Clause 5 that: 5. The Noticees further informed that in case it is decided to hold adjudication proceedings, as aforementioned, they would be required to appear either in person or through Legal Practitioner/Chartered Accountant, duly authorized by them to explain and produce such documents or evidence, as may be useful for or relevant to the subject matter of enquiry, and in case, the Noticees fail, neglect or refuse to appear before the undersigned on the appointed date and time, the adjudication proceedings shall proceed against them ex- parte." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant duly authorized by him. It is submitted that the formation of opinion by the Authority is not an empty formality. Albeit subjective in nature, nevertheless the same has to be on the basis of relevant material. Learned for the petitioners relies upon the judgment of the Hon'ble Supreme Court to bolster his submissions viz. Barium Chemicals Ltd. and another Vs. Company Law Board and others reported in AIR 1967 SC 295. He further submits that it is only after formation of the opinion upon the cause shown, that for the purpose of enquiry the date is required to be fixed by the Adjudicating Authority to explain to the person or his representative the contravention alleged to have been committed by said person indicating the provisions of the Acts, Rules, Regulations, Notifications, Directions, Orders or any condition as provided for under sub-rule 4. Thereafter, the Adjudicating Authority shall give an opportunity to said person to produce such documents or evidence as he may consider relevant to the enquiry as provided for under sub-rule 5. In the instant case, after issuance of the impugned show-cause notice dated 08.04.2021 though the same was received on 22.05.2021 but r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its that as per the information petitioner-M/s Suruchi Electronics Pvt. Ltd. Bhind opened current account no.0123k26912060 with IndusInd Bank, Gwalior on 26.08.2008. The company was in the business of manufacturing of electrical and electronic products. The company received three remittances as export advance in the said account, out of which two export advances aggregating to ₹ 277.14 lacs during the period 2010, remained unutilized. The bank asked the company to submit export documents against outstanding export advances but there was no response which raised the suspicion about the source of funds and genuineness of the purpose. Thereafter, a detailed enquiry was held with summons to the representatives of the company. Statement of Mr. Vishal Chand Bothra, one of the directors of the company who was in charge of and responsible for the export business of the company, was recorded as detailed in para 6(i) to 6(xi) of the return. For want of explanation and satisfactory evidence, it was found that M/s Suruchi Electronics Pvt. Ltd., Bhind failed to make the shipment of goods within one year from the date of receipt of advance payment amounting to US $ 8,49,916 (₹ 3,88,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failure to maintain time limit casts an obligation upon the Adjudicating Authority to assign reasons for not disposing of the complaint within said period. As such, the Adjudicating Authority has to bear in mind the period of limitation for completion of the proceedings. In view of the aforesaid facts and circumstances, neither there is illegality nor jurisdictional error in issuance of the impugned notices. Almost eight months' period has already come to an end ever since the issuance of notice dated 08.04.2021 with no progress in proceedings as the same are coiled in the litigation before this Court on unsustainable pleas intended to frustrate the proceedings before the Adjudicating Authority. Referring to the judgment of Hon'ble Apex Court in the case of Special Director And Another Vs. Mohd. Ghulam Ghouse And Another reported in (2004) 3 SCC 440, learned counsel submits that the Hon'ble Supreme Court has taken strong exception to the interference made by the High Court under Article 226 of the Constitution entertaining the writ petitions, questioning legality of the show-cause notice and stalling enquiry as proposed retarding investigation process to find factual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned showcause notice dated 08.04.2021 and the notice for personal hearing dated 28.06.2021 is not on either of the counts; instead, with the complaint that the show-cause notices are not in compliance with the procedure prescribed under Rule 4 of 2000 Rules. It has been contended that first, the impugned show-cause notice dated 08.04.2021 is without any basis and secondly the impugned notice for personal hearing dated 28.06.2021 is polluted with illegality as neither the reply dated 17.06.2021 of the petitioner is considered nor there is relevant material available to form an opinion before issuance of the said notice under sub-rule 3 of Rule 4 of 2000 Rules. Besides, the petitioners are being subjected to a stale enquiry. Such arguments, in fact and in effect, are in despair and devoid of substance, besides being de hors the facts on record. A bare perusal of the impugned show-cause notice dated 08.04.2021 clearly suggests that a detailed complaint under Section 16(3) of FEMA with supporting documents has been filed by the Authorized officer. Upon careful perusal of the complaint, the Adjudicating Authority prima facie found it to be a case of contravention of the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 Rules in the matter of enquiry. At this stage, it shall be appropriate to quote paras 32 to 34 of judgment of Hon'ble Apex Court in Natwar Singh (supra) dealing with the provisions of sub-rule 3, 4 and 5 of Rule 4 of 2000 Rules under the head Part V: Duty of Adequate Disclosure: "32. The real question that arises for consideration is whether the adjudicating authority even at the preliminary stage is required to furnish copies of all the documents in his possession to a noticee even for the purposes of forming an opinion as to whether any inquiry at all is required to be held. 33. 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. A bare 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he orders of the Adjudicating Authorities, being an Assistant Director of Enforcement or a Deputy Director of Enforcement; (2) under Section 19 to the Appellate Tribunal against the order made by an Adjudicating Authority other than those referred to in sub-section (1) & (2) of Section 17, or the Special Director (Appeals); and (3) under Section 35 to the High Court against the order of Appellate Tribunal. Though the petitioners complain of not being able to file reply on merits against the impugned show-cause notice, nevertheless there is no reason forthcoming as to why the petitioners have not attended the office of prescribed Authority as indicated in the impugned notice for inspection of documents attached with the complaint. Be that as it may, while responding to the notice dated 28.06.2021 for personal hearing, petitioners are always free to seek the opportunity for inspection of documents and file reply. Petitioners may raise all questions on facts and in law available to them in the context of the enquiry under Rule 4 of 2000 Rules. The Adjudicating Authority shall be well advised to consider the reply during the course of proceedings. Four weeks' time, as prayed for, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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