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TMI Blog2025 (2) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... . HELD THAT:- Merely, because a Subordinate Officer of 3rd respondent has sworn affidavit and filed it on behalf of the second respondent also in some of the writ petitions, it cannot be concluded that the second respondent has made up his mind. Further under the scheme of the Act, the order passed by the second respondent is not final and the same is subject to the appeal before the Appellate Tribunal under Section 19(1) and also subject to further appeal before this Court under Section 35 of FEMA. In view of the appellate remedy available before Tribunal as well as before this Court, it cannot be said that relegating the party to submit his explanation before the second respondent would violate natural justice principles. First of all, the second respondent has not signed the counter affidavit and in some of the cases, counter affidavit was filed only for respondents 1 and 3 and no counter affidavit was filed on behalf of the second respondent. In some of the writ petitions, the counter affidavit was sworn by one of the Subordinate Officers in the Cadre of Assistant Director working in the office of the third respondent and the same is not binding on the Superior Officer namely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Court emphasizing the importance of exhausting statutory appeals.
Petition dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... nsal and Shri Binny Bansal, Directors of noticee No.1 holding 100% equity shares of the said company. It was also stated that noticee No.1 sold goods exclusively to noticee No.10, who in turn sold the goods in retail to the ultimate customer. The noticee Nos.1 and 10 belonged to the same group of companies and controlled by same persons. It is also stated that noticee No.10 was created and continued as a corporate entity to bifurcate the business to customer transactions (of noticee No.1 to retail customers) into business to business (of noticee No.1 to noticee No.10) transactions and business to customer (of noticee No.10 to retail customers) transactions. Thus the noticees were said to have contravened the above mentioned provisions of FEMA, 1999 r/w Regulations 3, 4 and 5 and para-3 and para 9(1) (B) (i) of Schedule 1 of TISPRO Regulations 2000. 5. The complaint of the 3rd respondent was preferred to the second respondent on 28.06.2021 and pursuant to the same, the second respondent issued impugned show cause notice dated 01.07.2021 to the petitioners and other noticees directing them to show cause as to why an adjudication proceedings as contemplated under Section 16 of FEMA s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve Milk Producers Union Limited reported in (2007) 11 SCC 363; (iv) The judgment passed in W.A.No.1517 of 2021 and batch cases by Division Bench of this Court in Commissioner of Income Tax and others Vs. Roca Bathroom Products Limited and others. II. The impugned communication was made without authority of law as the relevant provision of FEMA namely, Section 6(3) of said Act was omitted by Section 139 of Finance Act of 2015, w.e.f 15.10.2019 and hence on the date of complaint as well as impugned show cause notice, Section 6 (3) (b) of FEMA was not available in Statute Book and hence the impugned notice issued by second respondent alleging contravention of Section 6(3) (b) is untenable in law. It is submitted by the learned counsel appearing for the petitioners that omission of a provision in Statute Book would completely obliterate the effect of the omitted provision even during its existence in the Statute Book. In other words, he would submit that Section 6 of General Clauses Act is not applicable to provisions which are omitted by the legislation and the same is applicable only to the provisions which are repealed by the legislation. Therefore, it is submitted that no procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y objection as regards the maintainability of writ petitions by contending that no writ petition is maintainable against mere show cause notice when the petitioners are having the option of submitting their explanation to the show cause notice and participating in the adjudicatory process as contemplated under Section 16 of FEMA. The learned Additional Solicitor General further submitted that against the order passed by the adjudicating authority under Section 16 of FEMA, an appeal shall lie before the Appellate Tribunal under Section 19 of said Act. Against the order passed by the Appellate Tribunal, a further appeal will lie before this Court under Section 35 of FEMA. In view of the effective alternative remedy available to the petitioners including the remedy of appeal before this Court under Section 35 of FEMA, the writ petitions filed by the petitioners without exhausting alternative remedy are not maintainable. 9. The learned Additional Solicitor General by taking this Court to the counter affidavit filed by the 3rd respondent in W.P.Nos.18630 and 18682 of 2021 submitted that the common counter affidavit was sworn by the 3rd respondent and the same is filed only on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... General that TISPRO provisions were saved by Section 47(3) of FEMA introduced by Finance Act 20 of 2015. 12. Discussion on Preliminary Objection raised by the respondents: Since the learned Additional Solicitor General raised preliminary objection with regard to the maintainability of the writ petitions by pointing out the effective alternative remedy available under FEMA, the learned counsel appearing for the petitioners advanced arguments on the preliminary objection raised by the Additional Solicitor General. The learned Additional Solicitor General by taking this Court to Section 19 and 35 of FEMA submitted that any person aggrieved by the order passed by the adjudicatory authority under Section 16 of FEMA can file an appeal before Appellate Tribunal under Section 19 of the said Act. Any person further aggrieved by the order passed by the Appellate Tribunal may file an appeal before High Court under Section 35 of FEMA. Therefore, the learned Additional Solicitor General submitted that the Act provides for effective remedy including appeal remedy before this Court and hence the petitioners are not entitled to invoke the extraordinary remedy of writ. 13. The learned Senior Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime Section 6 (3) (b) was available. In Rayala Corporation case while discussing the difference between repeal and omission, the Apex Court observed as follows: "17. Reference was next made to a decision of the Madhya Pradesh High Court in State of M.P. v. Hiralal Sutwala but, there again, the accused was sought to be prosecuted for an offence punishable under an Act on the repeal of which Section 6 of the General Clauses Act had been made applicable. In the case before us, Section 6 of the General Clauses Act cannot obviously apply on the omission of Rule 132-A of the DIRs for the two obvious reasons that Section 6 only applies to repeals and not to omissions, and applies when the repeal is of a Central Act or Regulation and not of a rule. If Section 6 of the General Clauses Act had been applied, no doubt this complaint against the two accused for the offence punishable under Rule 132-A of the DIRs could have been instituted even after the repeal of that rule." 17. The above said decision was reiterated by the subsequent decision of the Apex Court in Kolhapur Cane Sugar Works Limited and another Vs Union of India reported in (2000) 2 SCC 536, wherein, it was held as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment so repealed and in operation at the time of such repeal." 33. A reading of this Section would show that a repeal by an amending Act can be by way of an express omission. This being the case, obviously the word "repeal" in both Section 6 and Section 24 would, therefore, include repeals by express omission. The absence of any reference to Section 6-A, therefore, again undoes the binding effect of these two judgments on an application of the per incuriam principle. (emphasis supplied) 34.Thirdly, an earlier Constitution Bench judgment referred to earlier in this judgment, namely, State of Orissa v. M.A. Tulloch & Co. has also been missed. The Court there stated: (SCR pp. 483-84 : AIR pp. 1294-95, para 21) "… Now, if the legislative intent to supersede the earlier law is the basis upon which the doctrine of implied repeal is founded could there be any incongruity in attributing to the later legislation the same intent which Section 6 presumes where the word 'repeal' is expressly used. So far as statutory construction is concerned, it is one of the cardinal principles of the law that there is no distinction or difference between an express provision and a provision whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Court in Shree Bhagwati Steel Rolling Mills Vs Commissioner of Central excise and another reported in (2016) 3 SCC 643. 21. The relevant observation of the Apex Court reads as follows: "15. It is clear, therefore, that when this Court referred to Section 6-A of the General Clauses Act in Fibre Board case and held that Section 6-A shows that a repeal can be by way of an express omission, obviously what was meant was that an amendment which repealed a provision could do so by way of an express omission. This being the case, it is clear that Section 6-A undisputedly leads to the conclusion that a repeal would include a repeal by way of an express omission. (emphasis supplied) ..........23.Fibre Board case is a recent judgment which, as has correctly been argued by Shri Radhakrishnan, learned Senior Counsel on behalf of the Revenue, clarifies the law in holding that an omission would amount to a repeal. The converse view of the law has led to an omitted provision being treated as if it never existed, as Section 6 of the General Clauses Act would not then apply to allow the previous operation of the provision so omitted or anything duly done or suffered thereunder. Nor may a lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) came for consideration before the five-Judge Bench of Supreme Court in Kolhapur Canesugar Works Ltd. v. Union of India (2000) 2 SCC 536. wherein the Apex Court dealt with the definitions of 'Central Act', 'enactment', 'regulation', 'rule' as defined in Sections 3(7), 3(19), 3(50) and 3(51) respectively in the General Clauses Act and held that Section 6 only applies to Central Act and regulations. The Apex Court further stated that: "When the Legislature by clear and unambiguous language has extended the provision of Section 6 to cases of repeal of a 'Central Act' or 'regulation', it is not possible to apply the provision to a case of repeal of a 'rule' .... Section 6 is applicable where any Central Act or Regulation made after commencement of the General Clauses Act repeals any enactment. It is not applicable in the case of omission of a "rule"." The aforesaid judgment neither deals with the distinction between the terms omission and repeal, nor were any arguments regarding the same were raised before the Bench. It simply dealt with the applicability of Section 6 of the General Clauses Act in context of the rules and upholds Rayala Corporation judgment. But reading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the distinction between the two terms, nor they considered Section 6-A of the General Clauses Act. It was further argued that the "use of the words 'repeals by express omission, insertion or substitution' will cover different aspects of repeal; that this is a further legislative indication that 'omission' also amounts to a 'repeal' of an enactment." However, the Court rejected the argument in light of the above two five-Judge Bench judgments of the Supreme Court and also refused to refer the matter to a larger Bench. 19. The matter was however finally dealt in length by a two-Judge Bench judgment of the Hon'ble Apex Court in Fibre Boards (P) Ltd., Bangalore v. Commissioner of Income Tax, Bangalore,[(2015) 10SCC 333] where the view was that Rayala Corporation supra needs a reconsideration for omission of a provision results in abrogation or obliteration of that provision in the same way as it happens in repeal. The Court discussed the two terms and concluded that "it is clear that repeals may take any form and so long as a statute or part of it is obliterated, such obliteration would be covered by the expression "repeal" in Section 6 of the General Clauses Act." The Apex Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese words repeal, omission and substitute will convey more or less the same meaning - that it is a form of 'amendment'. 23. A close scrutiny of the above mentioned judgments would make it clear that there is no real difference between the word 'repeal' and 'omission' especially in the light of Section 6 (A) of General Clauses Act. Therefore, this Court has no difficulty in coming to the conclusion that the word repeal includes the word omission. Therefore, omission of Section 6 (3) of FEMA by Finance Act 20 of 2015 can be treated as a repeal and as a necessary consequence Section 6 of General Clauses Act comes into play. Once we have come to the conclusion that Section 6 of General Clauses Act is applicable in case of omission of Section 6(3) of FEMA, the second respondent is entitled to issue notice for alleged contravention of Section 6(3) (b) that existed at the relevant point of FDI transactions in the years 2009-2011. Hence, I hold omission of Section 6 (3) by Finance Act 20 of 2015 will not make the impugned show cause notice issued by the second respondent as the one without sanctity of law. Therefore, the said submission made by the learned counsel appeari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the scheme of the Act, the order passed by the second respondent is not final and the same is subject to the appeal before the Appellate Tribunal under Section 19(1) and also subject to further appeal before this Court under Section 35 of FEMA. 27. In view of the appellate remedy available before Tribunal as well as before this Court, we cannot say that relegating the party to submit his explanation before the second respondent would violate natural justice principles. First of all, the second respondent has not signed the counter affidavit and in some of the cases, counter affidavit was filed only for respondents 1 and 3 and no counter affidavit was filed on behalf of the second respondent. In some of the writ petitions, the counter affidavit was sworn by one of the Subordinate Officers in the Cadre of Assistant Director working in the office of the third respondent and the same is not binding on the Superior Officer namely the second respondent. Therefore, I am not impressed by the arguments advanced on behalf of the petitioners that the second respondent has already made up his mind regarding the delay in issuing show cause notice and the contravention of provisions of FEMA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26 of Constitution of India especially when the petitioners failed to make out a case that they come under one of the exceptions to the General rule regarding availability of alternative remedy as held in Whirlpool Corporation Vs. Registrar of Trade Marks, cited supra. 30. In view of the discussions made earlier, I uphold the preliminary objection raised by the learned Additional Solicitor General regarding maintainability of the writ petitions. 31. The learned counsel appearing for the petitioners vehemently contended that when there is no limitation prescribed under the Act for initiating proceedings under Section 16, the show cause notice should have been issued within reasonable time as held in Union of India and others v. Citi Bank, reported in 2022 SCC OnLine SC 1073 and State of Punjab and others v. Bhatinda District Coop. Milk Producers Union Ltd., reported in (2007) 11 SCC 363. 32. A close scrutiny of Citi Bank case would suggest in the said case, the petitioners submitted a reply to the show cause notice and not satisfied with the same, the adjudicatory authority proceeded with the adjudicatory process and challenging the same, writ petitions were filed. In the case on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... governing the companies in that country, the records of the company need to be preserved only for a period of seven years. Since the show cause notice being issued beyond the said period, the petitioners find it difficult to offer the explanation to the show cause notice. 38. It is not in dispute that noticee No.6, the petitioner in W.P.No.23231 and 23237 of 2021 acquired shares of noticee No.1. When the fact of acquisition of shares by petitioner in W.P.No.23231 and 23237 of 2021 is not disputed, the alleged prejudice argued by the counsel for the petitioner is not appealable to this Court. In any event, this Court is not inclined to give any categorical finding on that aspect and it is open to the petitioner to raise objections and give its explanation before the adjudicatory authority and whose order is liable to be scrutinized by this Court in a regular appeal under Section 35 of FEMA. 39. In view of the discussions made earlier, all the writ petitions are dismissed with liberty to the petitioners to file their explanation/objections before the second respondent within 30 days from the date of receipt of copy of this order. If any such objection is received by the second res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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