2014 Supreme(Bom) 288

High Court of Judicature at Bombay
S.J. VAZIFDAR & B.P. COLABAWALLA, JJ.
Lalit Kumar Modi
Versus
Special Director, Directorate of Enforcement Government of India, Ministry of Finance, Department of Revenue & Another
Writ Petition No. 1703 of 2013
Decided On: 06-02-2014

Headnote:FOREIGN EXCHANGE MANAGEMENT ACT, 1999 - Section 13 - Foreign Exchange Management Rules, 2000, Rule 4 - Inquiry. - Holding of inquiry without affording opportunity to inspect documents relied on by authorities, improper. - The petitioner was denied the copies or even inspection of the documents referred to in paragraph 3 of the letter. The respondents have now, during the course of this hearing, agreed to furnish all the documents except those relating to the franchisees referred to in paragraph 3(f) of the said letter and the statements referred to in paragraph 3(k) of the said letter. The petitioner is entitled to those documents as well. It must follow therefore, that the decision to proceed to the inquiry is liable to be set-aside, as the petitioner had no opportunity of showing cause against the respondents conducting the inquiry. Respondent No. 1 would be entitled to proceed with the proposed inquiry only in the event of his furnishing the documents referred to in paragraph 3 of the letter dated 22.08.2011. Alternatively, the respondents would be entitled to issue a fresh show cause notice and proceed accordingly. They are at liberty to do so even now afresh.

       In the circumstances, rule is made absolute in terms of prayers (a), (aa) and (b). The respondents shall be entitled to either issue a fresh show cause notice and proceed afresh on the basis thereof in accordance with law or to furnish the documents in paragraph 3 of the letter dated 22.8.2011 and thereafter form an opinion afresh under Rule 4 after affording the petitioner a fresh opportunity to show cause as contemplated under Rule 4.

       FOREIGN EXCHANGE MANAGEMENT ACT, 1999 - Section 13 - Foreign Exchange Management Rules, 2000, Rule 4 - Letter of opinion for inquiry. - Letter of opinion under Rule 4(3) of Rules, 2000, for conducting an inquiry, not containing any reasons for said opinion, deserves to be quashed. - The purported "opinion" of respondent No. 1 under Rule 4(3) that an enquiry should be held against the petitioner as stated in the letter is liable to be quashed and set aside, as it contains no reasons is well founded. That there are no separate reasons for the opinion even on the files of the respondents on the basis of which the inquiry is sought to be held under Rule 4(3). The letter merely states that after considering the cause shown by the petitioner, respondent No. I was of the opinion that the adjudication proceedings, as contemplated in Section 13 of the Act should be held against him in accordance with the procedure laid down in Rule 4 of the Adjudication Rules. The letter thereafter merely fixes the date of the hearing and permits the petitioner to appear himself or through a legal practitioner/chartered accountant.

       The letter says nothing more except that if the petitioner fails to appear, the matter will be proceeded with on the basis of the material and evidence available. The letter therefore, is merely a communication of an opinion. The opinion is admittedly not in writing. There admittedly are no reasons recorded in respect of the opinion.

       FOREIGN EXCHANGE MANAGEMENT ACT, 1999 - Section 13 - Foreign Exchange Management Rules, 2000, Rule 4 - Notice of inquiry. - Notices are entitled to inspect only documents "relied upon" by authorities and not all documents "referred to" in show cause notice.

       FOREIGN EXCHANGE MANAGEMENT ACT, 1999 - Section 13 - Foreign Exchange Management Rules, 2000, Rule 4 - Notice of inquiry. - Where notices sought inspection of documents therefore every document relied upon by authorities must be furnished to noticees.

       FOREIGN EXCHANGE MANAGEMENT ACT, 1999 - Section 13 - Foreign Exchange Management Rules, 2000, Rule 4 - Show cause notice for inquiry. - Since complaint refers to other documents requisitioned and examined during investigation hence notices entitled to inspect such other documents also. - The statement of Andrew Wildblood by itself contains nothing regarding the contents of paragraph 2.10 of the complaint. The statement affirms the contents of the statements of Paul Manning, John Loffhagen and Peter Griffiths and is therefore, expressly incorporated by him therein. It is clear therefore, that what respondent No. 1 relied upon was the statement not merely of Andrew Wildblood but the statements of Paul Manning, John Loffhagen and Peter Griffiths referred to in Wildblood’s statement.

       In the circumstances, the petitioner is entitled to be furnished the documents referred to in paragraph 3(k) of the letter dated 22.8.2011.