IMPORTANT POINT
There is no duty of disclosure of all the documents in possession of the Adjudicating Authority before forming an opinion.
Practice and procedure of inclusion of list of judgments in compilations not cited at the bar disapproved.

Headnote:(a) Natural Justice – It is not possible to lay down rigid rules as to when the principles of natural justice are to apply; nor as to the scope of extent – Everything depends on the subject matter – Even in the application of the doctrine of fair play there must be real flexibility – There must also be some real prejudice to the complainant – There is no such thing as a merely technical infringement of natural justice – Right to fair hearing is a guaranteed right – However there are exceptions to this right. (Paras 19 and 23)
        (1970) 2 QB 417; [1987] AC 625; [1971] AC 297; (1955) 1 SCR 941; [1995) QB 43 – Relied upon
        (b) Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 – Rule 4(1) – Concept of fairness may require the Adjudicating Authority to furnish copies of those documents upon which reliance has been placed by him to issue show cause notice under Section 16 of the FEMA – To this extent, the principles of natural justice and concept of fairness are required to be read into rule 4(1) – Fair procedure and the principles of natural justice are inbuilt into the Rules. (Para 24)
        (c) Natural Justice – 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. (Para 25)
        [1962] AC 322; (2008) 17 SCC 348 – Relied upon
        (2006) 7 SCC 172; (2003) 6 SCC 230; AIR 1961 SC 1623 – Distinguished
        (d) Interpretation of Judgment – Observations of the Courts are not to be read as Euclid’s theorems nor as provisions of the statute – The observations must be read in the context in which they appear. (Para 32)
        (2002) 3 SCC 496; [2004] UKHL 3 – Relied upon
        (e) Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 – Rule 4(1) – There is no duty of disclosure of all the documents in possession of the Adjudicating Authority before forming an opinion – Even the principles of natural justice and concept of fairness do not require the statute and the Rules to be so read. (Para 36)
        (1969) 2 SCC 262; (1978) 1 SCC 405 – Relied upon
        (f) Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 – Rule 4(6) – Power to summon and enforce attendance of any person acquainted with the facts and circumstances of the case to give evidence or to produce any document is only available to the Adjudicating Authority while holding an inquiry into allegations of contravention – Such power cannot be invoked for merely forming an opinion as to whether an inquiry should be held into allegations of contraventions – A person facing an inquiry can invoke such jurisdiction of the Adjudicating Authority but such request may have to be considered upon its own merits. (Para 37)
        (g) Practice and procedure – Inclusion of list of judgments in compilations not cited at the bar – Disapproved. (Para 38)
       Facts of the case:
        1. A complaint in writing was filed by an authorized officer against the appellants under sub-section (3) of Section 16 of the Foreign Exchange Management Act, 1999 that the appellants along with others, without general or special permission of the Reserve Bank of India dealt in and acquired Foreign Exchange
        2. The Adjudicating Authority having received the said complaint, issued a notice to the appellants requiring them to show cause why an inquiry should not be held against them.
        3. The appellants instead of submitting their reply, required the Adjudicating Authority to furnish “copies of all the documents in ... possession in respect of the instant case.
        4. The Authority declined to furnish copies of other documents (not relied upon by it) and decided to hold an inquiry in accordance with the provisions of FEMA and the Rules.
        5. The Adjudicating Authority made it clear that the provisions of FEMA and the Rules provide for supply of the grounds, nature of contravention and copies of relied upon documents only in order to enable the noticee to make effective representation and the said requirement has been met.
        6. The appellants promptly challenged the impugned order of the Adjudicating Authority in writ which were rejected by the High Court.
       Finding of the Court:
        Request of the appellant was unreasonable.
       Result : Appeal dismissed with cost.

JUDGMENT

B. Sudershan Reddy, J. —

1. The central question of law arising on the appeal before this Court is whether a noticee served with show cause notice under Rule 4(1) of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 (hereinafter referred to as ‘the Rules’) is entitled to demand to furnish all the documents in possession of the Adjudicating Authority including those documents upon which no reliance has been placed to issue a notice requiring him to show cause why an inquiry should not be held against him?

The Adjudicating Authority’s refusal to supply all the documents as demanded by the appellants led to filing of writ petitions by the appellants in Delhi High Court which were heard and dismissed.

2. In order to consider and decide the issue that arises for our consideration, it is just and necessary to briefly notice the relevant facts:

PART I : BACKGROUND FACTS

A complaint in writing has been filed by an officer authorized against the appellants under sub-section (3) of Section 16 of the Foreign Exchange Management Act, 1999 (hereinafter referred to as ‘FEMA’ or ‘the Act’) in which certain serious allegations have been levelled against the appellants which we are not required to notice in detail. The gravamen of the complaint is that the appellants along with others, jointly and severally, without general or special permission of the Reserve Bank of India dealt in and acquired Foreign Exchange totaling US $ 8,98,027.79 in respect of two oil contracts with SOMO of Iraq. Out of the said amount, the appellants and others jointly and severally, without the required permission of the Reserve Bank of India made payment and transferred Foreign Exchange of US $ 7,48,550 to the credit of specified account with Jordan National Bank, Jordan i.e., to persons resident outside India, in fulfillment of precondition imposed by SOMO for allocation of oil under aforesaid two contracts, in contravention of the provisions of FEMA. It is further alleged that the appellants and others, jointly and severally, without the required permission of the Reserve Bank of India transferred Foreign Exchange of US $ 1,46,247.23 being the commission amount in respect of two oil contracts with SOMO to the account with the Barclays Bank, London in contravention of the provisions of the Act. The appellants together with others jointly and severally failed to take all reasonable steps to repatriate the aforesaid Foreign Exchange within the stipulated period and in the prescribed manner, in contravention of the provisions of FEMA read with Regulations, 2000. In addition to the above, some other allegations also levelled against appellant No. 2. The Adjudicating Authority having received the said complaint, set the law in motion and accordingly issued a notice to the appellants under the provisions of FEMA read with the Rules, requiring them to show cause why an inquiry should not be held against them.

3. The appellants having received the show cause notice, instead of submitting their reply, required the Adjudicating Authority to furnish “copies of all the documents in ... possession in respect of the instant case, including the 83000 documents allegedly procured by one Virender Dayal from USA in connection with the instant case...” This seemingly innocuous request ultimately turned out to be the origin of this avoidable litigation. The fact remains that the copies of all such documents as relied upon by the Adjudicating Authority were furnished. The Authority, however, declined to furnish copies of other documents and decided to hold an inquiry in accordance with the provisions of FEMA and the Rules.

4. Aggrieved by the communications so sent by the Authority, the appellant No.1 filed writ petition in Delhi High Court which was disposed of with direction extending time to file reply to the show cause notice. As regards the prayer for supply of copies of the documents, the Court gave liberty to demand such copies but left th

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2010 Supreme(SC) 952

IMPORTANT POINT There is no duty of disclosure of all the documents in possession of the Adjudicating Authority before forming an opinion. Practice and procedure of inclusion of list of judgments in compilations not cited at the bar disapproved.

Cases Referred (9)

IMPORTANT POINT
There is no duty of disclosure of all the documents in possession of the Adjudicating Authority before forming an opinion.
Practice and procedure of inclusion of list of judgments in compilations not cited at the bar disapproved.