2010 Supreme(SC) 949

(2010) 13 Supreme Court Cases 255
B. SUDERSHAN REDDY AND S.S. NIJJAR, JJ.
NATWAR SINGH -Appellant
Versus
DIRECTOR OF ENFORCEMENT AND ANOTHER -Respondents
Civil Appeals No. 8601 of 2010 with No. 8602 of 2010
Decided on : October 5,2010

Headnote:(a) Foreign Exchange Management Act, 1999 – Section 13 r/w Rule 4, Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 – Adjudicating Authority – Bound to follow prescribed procedure under the statute and the Rules – Procedures are well structured – Noticee has to be given opportunity of hearing. (Para 22, 23)

       (b) Administration of Justice – Natural Justice – Application, scope and extent cannot be rigidly laid down – Real flexibility is called for – Extent of applicability depends upon the nature of inquiry, the consequences that may visit a person after such inquiry from out of the decision pursuant to such inquiry. (Para 25, 26, 29)

       R. v. Gaming Board; Lloyd v. McMahon; Wiseman v. Borneman – Relied upon

       (c) Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 – Rule 4(1) – Principles of natural justice are to be read into the rule – Right to fair hearing – Disclosure of evidence to be used against accused – Disclosure, however, does not necessarily involve supply of material – Inspection of the file and taking notes may be sufficient – But there may be exceptions – Fair procedure and the principles of natural justice are in-built into the Rules – All such documents relied on by the authority are required to be furnished to the noticee. (Para 30, 31)

       Dhakeswari Cotton Mills Ltd.; R. v. Seey. of State for Home Deptt. – Relied upon

       (d) Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 – Rule 4(1) – Appellant also demanding copies of documents in possession of adjudicating authority not relied for setting the law into motion – Not permissible. (Para 44)

       Surya Sankaram Karri; Ranu Bhandari; Dwarka Prasad Agarwal; Tribhuvandas Bhimji Zaveri; Chintaman Sadashiva Vaishampayan; R. v. HP/R. v. C – Distinguished

       (e) Legal Interpretation – Interpretation of judgments – Judgments or observations of Courts – Cannot be read as Euclid’s theorems or provisions of the statute – Must be read in the context in which they appear – A line or a word in a judgment cannot be read in isolation or as if interpreting a statutory provision to impute a different meaning to the observations. (Para 44)

       Jagdamba Oil Mills – Relied upon

       (f) Administration of Justice – Natural Justice – Duty of Adequate Disclosure – FEMA Act and Rules – No duty of disclosure of all the documents in possession of the’ adjudicating authority before forming an opinion that an inquiry is required to be held into the alleged contraventions by a noticee (Para 48)

       Mohinder Singh Gill – Relied upon

       (g) 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 which may be relevant to the subject-matter of inquiry – Available only to adjudicating authority while holding an inquiry into allegations of contravention – Not at the stage of forming an opinion as to whether to hold an enquiry or not. (Para 51, 52)

       (h) Practice and procedure – Including list of authorities in the compilation without the leave of the Court – Not cited at Bar – Deprecated. (Para 53)

       Facts of the case:

       A complaint in writing was filed by an officer authorised against the appellants alleging that the appellants along with others, jointly and severally, without general or special permission of Reserve Bank of India dealt in and acquired foreign exchange totaling US $898,027.79 in respect of two oil contracts with SOMa of Iraq. They also made payment and transferred foreign exchange of US $748,550 to the credit of specified account with Jordan National Bank, Jordan i.e. to persons resident outside India, in fulfilment of precondition imposed by SOMa for allocation of oil under aforesaid two contracts, in contravention of the provisions of FEMA. They also transferred foreign exchange of US $146,247.23 being the commission amount in respect of two oil contracts with SOMa to the account with Barclays Bank, London in contravention of the provisions of the Act. Further, they also 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 the Regulations, 2000.

       The adjudicating authority issued a notice to the appellants requiring them to show cause why an inquiry should not be held against them.

       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, including the 83,000 documents allegedly procured by one Virender Dayal from USA in connection with the instant case....

       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.

       The appellants challenged the order of the adjudicating authority declining to supply the documents not relied upon by them in writ petitions which were dismissed.

       Finding of the Court:

       Because of the conduct of the appellants adjudication of the controversy has been delayed.

       Result:

       Appeals dismissed with cost.