Auro Logistics Ltd Vs Assistant Director (SRO) (Madras High Court)
An inquiry to be continued by Adjudicating Authority as per Notification dt. 27.9.2018 was in vogue and not under superseded notification
Conclusion: The contention of assessee-company that the person issuing the show cause notice i.e., Special Director was “the” Adjudicating Authority and all proceedings pursuant to the show cause notice issued by him should be continued and concluded by the person issuing the show cause notice and no other was rejected. Show cause notice issued under Rule 4(1) of the Rules of 2000 before issuance of the said notification dated 27.9.2018 was saved. The further proceedings could not proceed before the person who was an Adjudicating Authority under the notification already superseded. The inquiry would have to be continued by the Adjudicating Authority as per the notification in vogue and not the Adjudicating Authority under the superseded notification.
Held: In the instant case, on the basis of a complaint lodged under Section 16(3) of the Foreign Exchange Management Act, 1999, by the Assistant Director (AD), Directorate of Enforcement, Hyderabad, the Special Director, Directorate of Enforcement, Southern Regional Office, Chennai, issued a show cause notice to assessee under Section 7 of the Act of 1999, read with Regulations 8, 9(1), and 13 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, for non-repatriation of the export proceeds. Subsequent to the issuance of the show cause notice, Assistant Director (SRO), Directorate of Enforcement, Southern Regional Office, Chennai, directed assessee to appear on 19.2.2020 before the Additional Director for adjudication proceedings. Thereafter, assessee-company sought further time and copies of the documents relied upon by the respondents. There was an exchange of communication between the parties, and, ultimately, by the notice issued by Assistant Director (SRO), Directorate of Enforcement, Southern Regional Office, Chennai, assessee-company were required to be present for a hearing before the Additional Director, Directorate of Enforcement. During the interregnum period, i.e., from the date of issuance of show cause notice dated 23.2.2018 till the date of issuance of the letter dated 6.2.2020, directing assessee to appear before the Additional Director, the notification dated 27.9.2018 was issued enhancing the pecuniary jurisdiction of the Adjudicating Authorities. The notification enhanced the pecuniary limits of the Adjudicating Authorities and empowered them to be Adjudicating Authorities to hold inquiry for the purpose of adjudicating under Section 13 of the Act of 1999. Assessee submitted that the notification dated 27.9.2018 issued by Central Government exercising the power under Section 16 of the Act of 1999, revising the pecuniary jurisdiction of the Officers of the Enforcement Directorate and transferring the cases was prospective in nature, but in the case on hand the said notification was given retrospective effect and the Special Director issued notice way back on 23.2.2018, to writ, prior to the issuance of notification revising the pecuniary jurisdiction, and hence the savings clause contained in the notification to the effect that “except as respects things done or omitted to be done before such supersession…” came to the aid of assessee. The substratum of the contentions was that the person issuing the show cause notice i.e. Special Director was “the” Adjudicating Authority and all proceedings pursuant to the show cause notice issued by him should be continued and concluded by the person issuing the show cause notice and no other. Much emphasis was laid on the use of the word “the” Adjudicating Authority. According to him, the use of the word “the” specifies a particular person. It was held that the contention of assessee-company that the person who issued the show cause notice under Rule 4(1) of the Rules of 2000 would alone be the Adjudicating Authority till the culmination of the proceedings could not be comprehended and need to be rejected. The phrase “except as respects things done or omitted to be done before such supersession…” would mean that whatever acts were done till the date of issuance of the notification superseding the earlier notification were saved. The show cause notice issued under Rule 4(1) of the Rules of 2000 before issuance of the said notification dated 27.9.2018 was saved. The further proceedings could not proceed before the person who was an Adjudicating Authority under the notification already superseded. The inquiry would have to be continued by the Adjudicating Authority as per the notification in vogue and not the Adjudicating Authority under the superseded notification. The court stated that the single judge has not committed any error while dismissing the writ petitions.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Calling into question the judgment and order dated 5.1.2024 passed by the learned Single Judge, the unsuccessful writ petitioners have filed these appeals.
2.1. The facts leading to the filing of these appeals, in a nutshell, are as follows: On the basis of a complaint dated 29.1.2018 lodged under Section 16(3) of the Foreign Exchange Management Act, 1999 [for brevity, “the Act of 1999”] by the Assistant Director, Directorate of Enforcement, Hyderabad, the Special Director, Directorate of Enforcement, Southern Regional Office, Chennai, issued a show cause notice dated 23.2.2018 to the appellants under Section 7 of the Act of 1999 read with Regulations 8, 9(1) and 13 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 for non-repatriation of the export proceeds.
2.2. Subsequent to the issuance of the show cause notice, the Assistant Director (SRO), Directorate of Enforcement, Southern Regional Office, Chennai, vide letter dated 6.2.2020, directed the appellants to appear on 19.2.2020 before the Additional Director for adjudication proceedings. Thereafter, the appellants sought further time and copies of the documents relied upon by the respondents. There was exchange of communication between the parties and, ultimately, by the notice dated 9.9.2020 issued by the Assistant Director (SRO), Directorate of Enforcement, Southern Regional Office, Chennai, the appellants were required to be present for
2.3. It is the case of the appellants that the show cause notice having been issued by the Special Director, Directorate of Enforcement, he is “the Adjudicating Authority” and the further proceedings are required to be conducted by him alone and not by the Additional Director. Therefore, the appellants filed writ petitions, inter alia, praying for issuance of a writ of certiorari and seeking quashment of the notice dated 9.9.2020.
2.4. The learned Single Judge dismissed the writ petitions holding that the case was transferred from the Special Director to the Additional Director in view of the enhancement of pecuniary jurisdiction and the same is well within the provisions of the Act of 1999. Aggrieved thereby, the present appeals.
3.1. Mr. Jayant Mehta, learned Senior Counsel appearing on behalf of Mr. B. Thiyagarajan, learned counsel for the appellants, eruditely canvassed his submissions. He submits that by virtue of Rule 4(3) of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000, [for brevity, “the Rules of 2000”], the authority who issues the show cause notice under Rule 4(1) of the Rules of 2000 alone is competent to adjudicate the case of the appellants. In the case on hand, the show cause notice was issued by the second respondent/Special Director and, hence, no other authority can adjudicate the case of the appellants.
3.2. Learned Senior Counsel for the appellants further submits that the notification dated 27.9.2018 issued by the Central Government exercising the power under Section 16 of the Act of 1999, revising the pecuniary jurisdiction of the Officers of the Enforcement Directorate and transferring the cases is prospective in nature, but in the case on hand the said notification is given retrospective effect. He pointed out that the Special Director issued notice way back on 23.2.2018, to wit, prior to the issuance of notification revising the pecuniary jurisdiction, and hence the savings clause contained in the notification to the effect that “except as respects things done or omitted to be done before such supersession…” comes to the aid of the appellants.
3.3. Learned Senior Counsel for the appellants submits that the “adjudication” under Section 13 of the Act of 1999 is by an “Adjudicating Authority” appointed under Section 16 of the Act of 1999, which speaks of “the” “Adjudicating Authority”. The use of the word “the” clearly indicates specificity of the Adjudicating Authority, which, in the present case, is admittedly the second respondent/Special Director, Directorate of Enforcement. Once “the” Adjudicating Authority is fixed and issues a show cause notice, as the second respondent did in the present case, any other authority cannot adjudicate the notice. The third respondent did not issue any show cause notice to the appellants. That being so, the authority, to wit, the second respondent, who issued the show cause notice to the appellants, is “the” Adjudicating Authority who can conduct inquiry under the Rules of 2000.
3.4. Learned Senior Counsel for the appellants further submits that, as contemplated under Rule 4(3) of the Rules of 2000, the Adjudicating Authority can only be “the” authority who issues the show cause notice under Rule 4(1) of the Rules of 2000. The second respondent, who is the Special Director and had issued the show cause notice, is “the” Adjudicating Authority. Learned Senior Counsel relies upon the judgment of the Apex Court in the case of Canon India Private Limited v. Commissioner of Customs, (2021) 18 SCC 563, so also the judgments in the cases of (i) Tata Chemicals Limited v. Commissioner of Customs (Preventive), Jamnagar, (2015) 11 SCC 628; and (ii) Shashank Vyankatesh Manohar v. Union of India and another, 2014 (1) Mh. L.J. 838.
3.5. Learned Senior Counsel also submits that when a statute requires a particular thing to be done in a particular manner, it must be done in that manner or not at all.
4. We have considered the submissions and have also perused the judgment delivered by the learned Single Judge.
5. It appears that on the basis of the complaint dated 29.1.2018 lodged under Section 16(3) of the Act of 1999 by the Assistant Director, Directorate of Enforcement, the Special Director, Directorate of Enforcement, issued a show cause notice dated 23.2.2018 to the appellants under Section 7 of the Act of 1999 read with Regulations 8, 9(1) and 13 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 for non-repatriation of the export proceeds. The appellants sought relied upon documents and further time.
6. On or about 6.2.2020, the Assistant Director, SRO, Directorate of Enforcement, directed the appellants to appear on 19.2.2020 before the Additional Director (Adjudicating Authority) for adjudication proceedings. During the interregnum period, i.e., from the date of issuance of show cause notice dated 23.2.2018 till the date of issuance of the letter dated 6.2.2020, directing the appellants to appear before the Additional Director, the notification dated 27.9.2018 was issued enhancing the pecuniary jurisdiction of the Adjudicating Authorities. The notification enhanced the pecuniary limits of the Adjudicating Authorities and empowered them to be Adjudicating Authorities to hold inquiry for the purpose of adjudicating under Section 13 of the Act of 1999. The notification dated 27.9.2018 reads thus:
“S.O.4990(E) – In exercise of the powers conferred by section 16 of the Foreign Exchange Management Act, 1999 (42 of 1999) and in supersession of the notification of the Government of India in the Ministry of Finance, Department of Revenue, published in the Gazette of India, Extraordinary, Part-II, section-3, sub-section (ii) vide number S.O. 2564(E), dated the 30th September, 2014, except as respects things done or omitted to be done before such supersession, the Central Government hereby appoints the following officers of the Directorate of Enforcement specified in Column (2) of the Table below as adjudicating authorities to hold an inquiry for the purpose of adjudication under section 13 of the said Act, involving an amount or value as specified in column (3) of the said Table.
