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TMI Blog2024 (8) TMI 1341X X X X Extracts X X X X X X X X Extracts X X X X ..... s trite that Courts exercising powers of judicial review would consider as to whether there was objective and tangible material available with the authorities before any action of effecting seizure was contemplated. A Court exercising writ jurisdiction is not sitting as an appellate court or authority. Thus, we are satisfied that the learned single Judge has exercised the jurisdiction vested, correctly. As urged many facts which cannot be evaluated or considered by a writ Court since the same would require evidence and the evaluation thereof - The issue as to what constitutes capital account transaction and current account transaction and as to how the appellant has transacted its business and by what mode etc. and whether the appellant is connected to the Opera Group and other entities like Mobimagic and HK Fintango, with whom and through whom, it is alleged that financial transactions were made which are alleged to be in violation of the provisions of FEMA, in our considered opinion, are highly disputed questions of fact. Having regard to the fact that the records indicate that there exists an absolutely diametrically opposite and contrary set of disputed facts, it is apparent th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which only 3.75 million unique customers were selected after an assessment of creditworthiness for the loan. It is contended that it is because of the success of the CashBean application that the appellant has a high recovery rate of the loans disbursed and profitable operations. b. It is stated that the appellant had engaged a Hong Kong based Company, namely Hong Kong Fintango Limited for procurement of an IP licence and had entered into a Software Licence Agreement dated 1st October, 2019, with it for providing IP and Digital Lending Software Licence, that is, the CashBean App to the appellant for the Indian digital micro-lending market. c. The appellant further states that another Company, that is, Mobimagic Co. Ltd., provided technical services to the appellant till March, 2020 and, thereafter, the services of HK Fintango were engaged from August, 2020. d. The appellant states that for the Technical fees, the appellant s Board had taken the necessary and proper decisions by considering the comprehensive requirements of the business risk management, which includes the services scope, Software Licence Agreement commitment and responsibility. The Board had also considered and ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition was dismissed by the impugned judgement dated 13th December, 2023. Hence the present appeal. 3. Ms. Vanita Bhargava, learned counsel for the appellant, pointed at the outset that despite the order dated 04th May, 2023 passed by the Supreme Court directing the learned Single Judge to hear the matter on merits, according to her, learned Single Judge had disposed of the said writ petition on the ground that the disputed questions of facts as arising in the petition could not be considered by a writ Court under Article 226 of the Constitution of India. 4. She submits that the Supreme Court had, in the order dated 04th May, 2023, taken note of the fact that the appellant had withdrawn its statutory appeal from the Appellate Tribunal on the ground that all pleadings and documents were already filed and completed before the learned Single Judge and that the High Court could very well decide the entire dispute. She states that the withdrawal of the appeal was predicated on the statement given by the learned Additional Solicitor General of India (for short ASG ) and recorded in the order dated 24th August, 2022 passed in LPA No.487/2022 captioned Directorate of Enforcement vs. PC Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derlying writ petition was pending before the learned Single Judge of this Court, and on the other hand, the learned Single Judge has, without appreciating the tangible material placed alongwith the underlying writ petition, literally relegated the appellant to take its remedies before the Adjudicating Authority. On this basis, she submits that the petitioner has not only been deprived of a proper hearing on merits but also lost out an opportunity of a statutory appeal. 8. She submits that learned Single Judge in para 42 of the impugned order has observed that since substantial hearings have already taken place before the Adjudicating Authority on the complaint filed by the respondent, there arose no need or reason to exercise the discretionary powers under Article 226 of the Constitution of India. She states that the learned Single Judge overlooked the fact that the appellant had a right to challenge the confirmation order of the Competent Authority by way of a statutory appeal and had instead chosen to substantially challenge the same by way of the underlying writ petition, which ought to have been decided on merits instead of being relegated. She states that having regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He states that it was categorically noted in the said order that the learned Senior Counsel appearing for the appellant/petitioner chose not to pursue their appeal pending before the Tribunal subject to the rights being reserved to agitate all questions in the pending writ petition. On this basis, he states that the learned Single Judge had considered all the arguments of the parties and passed the impugned judgment. He states that the scope of proceedings under Article 226 of the Constitution of India are restrictive and cannot be akin to an appellate proceeding. He prays that the present appeal be dismissed. 13. We have heard the learned counsel for the parties, perused the impugned judgment as also the records of the case. 14. At the outset, from the arguments addressed, it appears that there is a controversy in respect of the directions passed by the Supreme Court vide the order dated 04th May, 2023 in Civil Appeal No.3406/2023, PC Financial Services Private Ltd. Vs. Directorate of Enforcement Anr. Though, the learned counsel for the appellant has forcefully submitted that the learned Single Judge has not followed the mandate of the directions of the Supreme Court in the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord that the appellant had filed an application before the Appellate Tribunal seeking withdrawal of the appeal on the ground that the underlying writ petition is pending adjudication. It is observed from the order dated 12th October, 2022 passed by the Appellate Tribunal that the appeal was permitted to be withdrawn with a Caveat that the same is to the risk of the appellant. It is also clear from the said order that the Tribunal was clear in its opinion that the jurisdiction to adjudicate upon such dispute was squarely with the Tribunal. Yet, on the insistence of the appellant, the appeal before the Tribunal was permitted to be withdrawn. For the purpose of clarity, the order dated 12th October, 2022 is reproduced hereunder: ORDER 12.10.2022 MP-FE-115/HYD/2022 (Misc.) In FPA-FE-13/HYD/2022 An application has been filed to seek withdrawal of appeal, though now, the Tribunal has been properly constituted and accordingly, jurisdiction lies with the Tribunal to deal with the appeal arising out of the order passed by the Competent Authority. It is yet submits that a Writ Petition having been filed, the appellant would press the said Writ Petition despite the availability of the remed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... radesh and Ors., 2021 6 SCC 771, concluded that there was enough tangible material before the Seizing Officer as also the Competent Authority to confirm such seizure. Learned Single Judge also took into account that the respondents are basing their allegations on the ground that the huge amounts of foreign currency have been clandestinely transferred by the appellant, in the garb of licence fees and other charges, to the foreign entities which, in fact, were being held by the appellant itself in the bank accounts of such foreign companies and are related to the Opera Group. It is further observed that it was on this basis that the respondents allege violation of Section 4 read with Section 10 (6) of the Act, consequently satisfying the conditions set out in Section 37A of the Act. 19. We also find that in the impugned order, learned Single Judge has observed that though reason to believe must be based on some tangible material, a Court under Article 226 of the Constitution of India cannot act as an Appellate Authority and substitute its own opinion for that of the Competent Authority. Though, the learned Single Judge has concluded as above, yet in para 37 of the impugned order, has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... developed much before its birth. The respondent company failed to show or place on record any evidence when, at what point of time Hongkong Fintango acquired the licence of the app proof of its purchase, what price and proof of its payment. It is shown that the respondent company purchased the app on 01.10.2019 from Hongkong Fintango. It is unbelievable that such a costly app was provided free of cost for nearly 9 months usage and itself shows that app value is overinvoiced. The above facts clinchingly proves that the cashbean app is already in possession of beneficial owner/related companies and Hongkong Fintango has not developed the said app and there was no proof of its purchase in the duration of 04.09.2019 to 30.09.2019. The respondent company utterly failed led to show or demonstrate that the seller Hongkong Fintango is either the developer or acquired licence from the developers or from third party. None of the arguments advance by the respondent answer the fundamental questions of the app developer, licence fee etc. In the absence of any material evidence, the bona fide doubt raised by Enforcement directorate w.r.t. transfer of foreign outward remittances to the tune of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are satisfied that the learned single Judge has exercised the jurisdiction vested, correctly. 22. We have also perused the grounds raised by the appellant in the present appeal and find that the appellant has urged many facts which cannot be evaluated or considered by a writ Court since the same would require evidence and the evaluation thereof. Moreover, the issue as to what constitutes capital account transaction and current account transaction and as to how the appellant has transacted its business and by what mode etc. and whether the appellant is connected to the Opera Group and other entities like Mobimagic and HK Fintango, with whom and through whom, it is alleged that financial transactions were made which are alleged to be in violation of the provisions of FEMA, in our considered opinion, are highly disputed questions of fact. Having regard to the fact that the records indicate that there exists an absolutely diametrically opposite and contrary set of disputed facts, it is apparent that the Court exercising powers of judicial review under Article 226 of the Constitution of India, does not have the necessary wherewithal to render its opinion thereon. 23. So far as the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X
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