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TMI Blog2024 (6) TMI 561X X X X Extracts X X X X X X X X Extracts X X X X ..... he procedures, which is otherwise contemplated under the Rules. Inconsistency may also arise in such circumstances which exactly arose in the present case. The inconsistency in interpretation arose on account of the expansion of Rule 4(3) offered by the Bombay High Court. Bombay High Court, while interpreting Rule 4(3), expanded the scope by stating that the term The adjudicating authority is of the opinion that an enquiry should be held, would mean that the opinion formed must be communicated to the person concerned, enabling them to defend the case . Therefore, in the opinion of this Court, it amounts to an expansion, providing an additional opportunity to the person to get the copy of the opinion recorded in writing by the adjudicating authority in the file, which is not contemplated under Rule 4(3). As we examine the spirit and intent of Rule 4(3), on issuance of show cause notice by the adjudicating authority along with the materials relating to contraventions and on receipt of the explanations from the persons/addressee, the adjudicating authority under Rule 4(3) has to consider the cause if any shown by such person.That would indicate that the explanation submitted is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be adjudicated by this Court at this stage and it is for the petitioner to respond to the show cause notice by submitting his explanations and if any opinion is formed to proceed with the enquiry proceedings thereafter, the petitioners have to defend their case in the manner contemplated under the Act and Rules. WP dismissed. - Honourable Mr. Justice S.M. Subramaniam For the Petitioners in W.P.No.30601 of 2023 : Mr.S.L.Sundarsanam For the Petitioners in W.P.Nos.30634 30637 of 2022 : Mr.B.Giridhara Rao For the Respondents in all W.Ps. : Mr.A.R.L.Sundaresan, ASGOI, assisted by Mr.Rajnish Pathiyil, SCGSC COMMON ORDER The writ petitions on hand are instituted questioning the validity of the notice of hearing. 2. The learned Senior Counsel appearing for the writ petitioners would submit that the spirit of Rule 4(3) of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules 2000 (herein after referred to as the Rules ), has not been adhered to and therefore, subsequent proceedings are to be held as null and void. In the event of communicating the reasons recorded for proceeding with the action, the petitioner would be in a position to defend their cases and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement, reported in CDJ 2021 DHC 683. However, in the said judgement the Delhi High Court has scrupulously followed the interpretation offered by the Bombay High Court and therefore, no further discussion on the said judgement may be required. So also the Kolkata High Court in the case of Nillesh Parekh Vs. Union of India, reported in MAT 478 of 2022, also followed the Bombay High Court judgement. When Rule 4(3) has been interpreted by the Bombay High Court, which is followed by the Delhi High Court and the Kolkata High Court, Madras High Court alone need not deviate and the interpretation given by the Bombay High Court and it is to be followed. 8. The learned Additional Solicitor General, assisted by Mr.Rajnish Pathiyil, would submit that the circular issued by the Department in implementation of the Bombay High Court judgement cannot be relied upon. The departmental circulars are not binding on the persons or quasi judicial authorities or Courts and therefore, in that view of the matter, the circulars/instructions issued by the Board would not assist them. The said proposition has been laid down by the Hon'ble Supreme Court in the case of Commissioner of Central Exercise, Bhop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not seen from the report as to whether the provisions of sub-Rule 4 of Rule 4 were considered by the Bombay High Court. 18. As rightly pointed out by the learned Additional Solicitor General of India, such a requirement does not appear on a plain reading of the Rules. We have already extracted sub-Rule 3 of Rule 4 of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000. Sub-Rule 1 of Rule 4 requires the adjudicating Authority to issue a show cause notice for the purposes of adjudicating as to whether any person has committed any contravention of the provisions of the Foreign Exchange Management Act. Sub-Rule 2 of Rule 4 requires the show cause notice issued under sub-Rule 1, to indicate the nature of contravention alleged to have been committed by him. Sub-Rule 3 of Rule 4 provides that if after considering the cause shown by the noticee, the adjudicating Authority is of the opinion that an enquiry should be held, he shall issue a notice fixing the date for appearance of that person either personally or through legal practitioner or a chartered accountant, duly authorised by him. 19. On a plain reading of the provisions, as already stated, we are unable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-Rule 3 of Rule 4 of Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000. We may draw an analogy with the provisions of the Prevention of Money- Laundering Act, 2002. Section 5(1) of the said Act as amended by the Amendment Act, 2012 reads as follows: (1) Where the Director or any other officer not below the rank of Deputy Director authorised by the Director for the purpose of this section, has reason to believe (the reason for such belief to be recorded in writing) on the basis of material in his possession, that# 27. Whenever a statute requires a particular thing to be done in a particular manner, it is a trite position of law that it should be done in that manner alone and not otherwise. The provisions of sub-Rule 3 of Rule 4 in contra distinction to the provisions of the Section 5(1) of the Prevention of Money-Laundering Act, 2002, do not require the reasons to be recorded in writing. If we are to read into the provision, such a requirement, the same in our considered opinion would lead to disastrous results, where notices under various enactments which provide for enquiry on the basis of a subjective satisfaction of the adjudicating Authority or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4(1) indicates that a show cause notice is to be issued by the adjudicating authority within such period as may be specified in the notice stating that, why an enquiry should not be held against the person. 14. Rule 4(2) states that Every notice under sub-rule (1) to any such person shall indicate the nature of contravention alleged to have been committed by him . Therefore, the show cause notice issued to the person would contain the nature of contraventions and the materials based on which the show cause notices were issued. Therefore, the show cause notice cannot be construed as blanket, but the contraventions or the nature of contraventions, which all are intimated to the persons enabling them to respond to the show cause notice. On receipt of the show cause notice, the addressee are at liberty to respond to such show cause notices. On receipt of such explanations/objections, documents if any submitted by the addressee, the adjudicating authority has to invoke Rule 4(3) of the Rules. 15. Rule 4(3) commences by stating that 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 noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the opinion is the point, where the enquiry commences and such an opinion formed would not be a ground to penalize a person. The opinion is formed by the adjudicating authority to proceed with the personal hearing and not for any other purposes. Therefore, intimating such an opinion formed by the adjudicating authority to the persons are unnecessary and not contemplated under Rule 4(3). Therefore, Rule 4(3) cannot be interpreted beyond its scope and the procedures contemplated under Rule 4 in entirety are to be considered holistically to understand whether a fair opportunity has been provided to the persons or not. 19. Rule 4(4) stipulates that 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, allowed to have been committed by such person indicating the provisions of the Act or of rules, regulations, notifications, directions or orders or any condition subject to which an authorisation is issued by the Reserve Bank of India in respect of which contravention is alleged to have taken place. Therefore, the adjudicating authority is duty bound to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and protracting the enquiry proceedings by approaching the High Court at each stage cannot be appreciated. Once the proceedings are commenced, the adjudicating authorities are expected to follow the procedures scrupulously and the persons concerned are bound to cooperate and defend their case by availing the opportunities to be provided in accordance with the Rules in force. 22. In view of the fact that the judgement of the Division Bench of the Madras High Court, in the case of India Cements Limited, sited supra, is the latest judgement, wherein the interpretation of Rule 4(3) offered by the Bombay High Court was considered, this Court is bound by the decision of the Division Bench of High Court of Madras. 23. No Writ against a show cause notice is entertainable in a routine manner. A writ against a show cause notice is entertainable only if it is issued by an incompetent authority, having no jurisdiction, or tainted with allegation of mala fides. The power of judicial review of the High Court, under Article 226 of the Constitution of India, is to ensure the processes through which a decision has been taken but not the decision itself. Therefore, the show cause notice issued in p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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