S Ramakrishna v. Enforcement Directorate & Ors

MANMOHAN, J OCTOBER 04, 2010 kapil/pk

* THE HIGH COURT OF DELHI AT NEW DELHI Judgment Reserved on: 30th September, 2010 % Judgment Pronounced on: 4th October, 2010 + DR. S. RAMAKRISHNA ..... Appellant Through: Mr. C. Mukund with Ms.Firdouse Qutbwani, Advs. versus ENFORCEMENT DIRECTORATE & ORS. ..... Respondents Through: Mrs.Rajdeepa Behura with Mr.M.P. Singh, Advs. CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE MANMOHAN 1. Whether reporters of the local papers be allowed to see the judgment? Yes 2. To be referred to the Reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes DIPAK MISRA, CJ Invoking the jurisdiction of this Court under Clause 10 of the Letters Patent, the appellant/petitioner (hereinafter referred to as "the appellant") has called in question the warrantableness of the order dated 21st April, 2010 passed by the learned Single Judge in WP (C) No. 4311/2007. 2. The facts which are imperative to be exposited are that the Special Director, Enforcement Directorate (ED), as pleaded by the appellant, initiated a proceeding against the appellant on 22nd August, 2002 under the Adjudication Proceedings and Appeal Rules, 1974 (for short "the 1974 Rules") and eventually passed the final order on 17th February, 2005 whereby he imposed a penalty of Rs.50 lakhs for contravention of Sections 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973 (for short "the FERA"). Being grieved by the aforesaid order, the appellant preferred an appeal before the Appellate Tribunal of Foreign Exchange (for short "the tribunal") whereby the tribunal, on 2nd January, 2006, while considering the application for a pre-deposit, passed an order on 7th February, 2006 requiring the appellant to furnish an unconditional bank guarantee of Rs.25 lakhs in favour of the Special Director, ED within 45 days as the condition precedent for hearing of the appeal. The appellant, as set forth, filed an application for modification of the order relating to pre-deposit which was dismissed and eventually, the appeal was dismissed by the tribunal on 19th January, 2007. 3. Before the writ court, it was contended that the initiation of the proceeding under the FERA on 22nd August, 2002 was after the expiry of the "sunset" period on 31st May, 2002 as envisaged under Section 49(3) of the Foreign Exchange Management Act, 1999 (for short "the FEMA") and, therefore, the whole proceeding was vitiated in law and, hence, the condition of pre-deposit as imposed by the tribunal was totally unjustified. It was urged before the learned Single Judge that a notice to show-cause was issued on 28th February, 2000 by the Special Director, ED requiring the appellant to explain why the adjudication proceedings under Section 51 of the FERA should not be held against him for the alleged violation of Section 18(2) read with Section 18(3) of the FERA and to the said show-cause notice, the appellant filed his reply/show-cause on 23rd December, 2000 and, thereafter, on 27th March, 2001, a second show-cause notice was issued requiring the appellant to explain why the adjudication proceedings should not be held against him and eventually, on 22nd August, 2000, a date of hearing was fixed and, therefore, it is to be construed that the proceeding was initiated after the expiry of the "sunset" period on 31st May, 2002 which was impermissible. 4. It was also canvassed that if Rule 3 of the 1974 Rules is scrutinized in proper perspective, it would not remotely convey that there was commencement of proceeding as contemplated under Section 49(3) of the FEMA as there is a reference to Section 51 of the FERA. Before the learned Single Judge, emphasis was laid on the 11th Report of the Standing Committee of Finance (1998-99) on the Bill preceding FEMA, the minutes of the 32nd sitting of the Standing Committee on Finance held on 9th December, 1998 and the Rajya Sabha Debates held on 8th December, 1999 to bolster the contention that the intention of the legislature was not to permit continuance of the