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TMI Blog2022 (5) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... essary and thereafter formation of opinion under sub-rule (3) is required before conducting inquiry in terms of other provisions of the Rule. The Hon ble Supreme Court in the matter of State of Uttar Pradesh vs. Singhara Singh and Others [ 1963 (8) TMI 43 - SUPREME COURT] has noted that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all and that other methods of performance are necessarily forbidden. Enforcement Directorate was required to form an opinion after giving notice to the petitioner before issuing the impugned show cause notice dated 06.07.2020 which he has failed to do in the present case. Hence, we dispose of the appeal without interfering in the show cause notice dated 06.07.2020 but by directing the Special Director, Eastern Region, Enforcement Directorate to form his opinion after recording reasons in terms of sub-rule (3) of Rule 4. If the opinion so formed is adverse to the appellant, such opinion along with the reasons so recorded shall be furnished so as to reach the appellant at least 15 days prior to the date of personal hearing as the same would meet the requirement of Rule 4(3). - MA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that a reliance on the judgment of the Hon ble Supreme Court in the matter of State Bank of Patiala and Others vs. S. K. Sharma reported in AIR 1996 SC 1669 for attracting the principle of prejudice, is misplaced and is not applicable in the present case. 5. Learned Counsel for the respondent has supported the order of the learned Single Judge and has submitted that gist in pursuance to the direction of the learned Single Judge has been supplied, therefore, nothing further is required in the matter. 6. We have heard the learned Counsel for the parties and perused the records. 7. Rule 4 of the Rules of 2000 relates to holding of inquiry and sub- Rule (1) to (3) of Rule 4 which are relevant for the present controversy are as under: 4. Holding of inquiry.-( 1) For the purpose of adjudicating under section 13 of the Act whether any person has committed any contravention as specified in that section of the Act, the Adjudicating Authority shall, issue a notice to such person requiring him to show cause within such period as may be specified in the notice (being not less than ten days from the date of service thereof) why an inquiry should not be held against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation whether any person has committed any contravention, the adjudicating authority shall issue a notice to such person requiring him to show cause as to why an inquiry should not be held against him. It is clear from a bare reading of the rule that show-cause notice to be so issued is not for the purposes of making any adjudication into alleged contravention but only for the purpose of deciding whether an inquiry should be held against him or not. Every such notice is required to indicate the nature of contravention alleged to have been committed by the person concerned. That after taking the cause, if any, shown by such person, the adjudicating authority is required to form an opinion as to whether an inquiry is required to be held into the allegations of contravention. It is only then the real and substantial inquiry into allegations of contravention begins. 10. From the above judgment, it is clear that the notice in terms of sub-rule (1) and (2) is necessary and thereafter formation of opinion under sub-rule (3) is required before conducting inquiry in terms of other provisions of the Rule. 11. The Similar issue has been examined by the Division Bench of the Bombay Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceed against persons who are complete strangers to the alleged contravention under the Act. The above provision according to him can have no application where prima facie, the noticee is connected to the alleged contravention such as in the present case and, therefore, the authority has formed the opinion to proceed with the inquiry and, therefore, the impugned notice for personal hearing has been issued on 6 June, 2013. 14. This submission of the learned Additional Solicitor General would require one to read words into Rule 4 of the Adjudication Rules that the objections to the show cause notice would be considered, only if they are of particular type, such as, the noticee is a stranger to the proceedings and no other objection would be considered while deciding whether or not the adjudication must be proceeded with further. Even if one were to proceed on the basis of the submission of the learned Additional Solicitor General that only some type of cases would fall within the mischief of Rule 4(1) and (3) of the Adjudication Rules, yet the fact that the Adjudicating Authority has applied his mind to the objection raised by the noticee would only be evident if the formation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding an opinion of the Adjudicating Authority to proceed further with the adjudication of the notice, but the appeal would only be against the final order. 12. After considering the severe consequences of the proceedings under Section 13 of FEMA, Bombay High Court in the case of Shashank Vyankatesh Manohar (supra) has further held that: 18. In view of such serious consequences which would be inflicted upon the noticee against whom the adjudication order may be passed under section 13 of the Act, the safeguards provided by sub-rules (1), (2) and (3) of Rule 4 of the Adjudication Rules must be rigorously applied by this Court, otherwise the noticee would be presented with dire penal consequences of being imprisoned for six months, apart from other liabilities and adverse consequences. Merely because the imprisonment would be in a civil prison and not in a criminal prison, would be no consolation to the person who was not responsible for contravention of FEMA. 13. After the above judgment of the Bombay High Court the Director of Enforcement had also issued Technical Circular No. 11/2014 stating that the SLP against the judgment of the Bombay High Court was dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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