IMPORTANT POINT
The court established that the adjudication process under FEMA must be followed, and a show cause notice is not typically subject to judicial review unless jurisdictional errors are evident.

JUDGMENT :

S.M. SUBRAMANIAM, J.

Prayer in W.A. No. 3520/2023: Writ Appeal filed under Clause 15 of Letters Patent, to set aside the order passed in W.P. No. 21102 of 2023 dated 30.11.2023 on the file of High Court of Judicature at Madras.

Prayer in W.A. No. 3521/2023: Writ Appeal filed under Clause 15 of Letters Patent, to set aside the order passed in W.P. No. 21105 of 2023 dated 30.11.2023 on the file of High Court of Judicature at Madras.

Prayer in W.A. No. 3522/2023: Writ Appeal filed under Clause 15 of Letters Patent, to set aside the order passed in W.P. No. 21359 of 2023 dated 30.11.2023 on the file of High Court of Judicature at Madras.

Prayer in W.A. No. 3523/2023: Writ Appeal filed under Clause 15 of Letters Patent, to set aside the order passed in W.P. No. 21100 of 2023 dated 30.11.2023 on the file of High Court of Judicature at Madras.

Prayer in W.A. No. 3524/2023: Writ Appeal filed under Clause 15 of Letters Patent, to set aside the order passed in W.P. No. 21096 of 2023 dated 30.11.2023 on the file of High Court of Judicature at Madras.

1. The Letters Patent Appeal on hand has been instituted questioning the validity of the show cause notice dated 22.12.2021 and the corrigendum issued consequently in proceedings dated 13.03.2023 and the writ order dismissing the writ petition.

2. Since the show cause notice is under challenge, it is necessary for this Court to consider the grounds regarding entertainability of the writ petition at the first instance. Normally, High Court would not entertain a writ petition challenging show cause notice. On exceptional circumstances, show cause notice issued by an incompetent authority having no jurisdiction or tainted with the allegation of mala fides are entertained under Article 226 of the Constitution of India.

3. The noticees on receipt of such show cause notice, has to defend their case before the authority competent by availing the opportunities to be afforded under the provisions of Acts, Rules and procedures contemplated therein. In the present case, the appellants raised grounds regarding the jurisdiction and therefore it becomes necessary for this Court to interpret the scope of the provisions of the Foreign Exchange Management Act, 1999 [hereinafter referred as “FEMA”].

4. Section 2(a) defines “Adjudicating Authority” means an officer authorised under Sub-Section (1) of Section 16.

5. Sub Section (1) to Section 16 contemplates “For the purpose of adjudication under Section 13, the Central Government may, by an order published in the Official Gazette, appoint as many officers of the Central Government as it may think fit, as the Adjudicating Authorities for holding an inquiry in the manner prescribed after giving the person alleged to have committed contravention under Section 13, against whom a complaint has been made under Sub-Section (3), a reasonable opportunity of being heard for the purpose of imposing any penalty.” Therefore, Section 16 confers power on the Adjudicating Authority to hold an inquiry in the manner prescribed after affording opportunity to the person against whom contravention under Section 13 are noticed.

6. Section 2 (cc) defines “Authorised Officer” means an officer of the Directorate of Enforcement authorised by the Central Government under section 37A.

7. Section 37A was inserted by Act 20 of 2015 with effect from 15.10.2019. In order to make Section 37A effective, consequential definition for “Authorised Officer” was inserted by Act 20 of 2015 with effect from 15.10.2019. In other words, it necessitated the legislators to incorporate the definition for “Authorised Officer” under Section 2(cc), in view of insertion of Section 37A under the Act. Thus, the Authorised Officer as defined under Section 2(cc) is with reference to Section 37A of FEMA.

8. Section 37A provides special provisions relating to assets held outside India in contravention to Section 4.

9. Section 4 denotes “Holding of foreign exchange, etc., no person resident in India shall acquire, hold,