Dismissed

FPA-FE-87/MUM/2017 of Knight Riders Sports Private Limited v/s The Special Director Directorate of Enforcement, Mumbai

ATFP20 Mar 2018FPA-FE-87/MUM/2017

Case brief

AI extract

What is this about?

The Appellate Tribunal held that appeals against a record of personal hearing during pending adjudication proceedings are not maintainable under Section 19(1) of FEMA, as no order imposing penalty has been passed. The Tribunal dismissed the appeals as premature and non-maintainable.

What the court decided

AI extract

FPA-FE-87/MUM/2017 of Knight Riders Sports Private… — Civil Procedure and Limitation | ATFP (2018)

¶1

APPELLATE TRIBUNAL, FOREIGN EXCHANGE MANAGEMENT ACT AT NEW DELHI

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Date of Decision: 20.03.2018

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FPA-FE-87/MUM/2017

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Knight Riders Sports Private Limited … Appellant/Applicant Versus The Special Director Directorate of Enforcement, Mumbai … Respondent & FPA-FE-88/MUM/2017 Knight Riders Sports Private Limited … Appellant/Applicant Versus The Special Director Directorate of Enforcement, Mumbai … Respondent

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Advocates/Authorized Representatives who appeared

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For the Appellants	: Shri Amit Desai, Sr. Advocate Shri Siddharth Luthra, Sr. Advocate Mr. Utsav Trivedi, Advocate Mr. Jaiveer Shergill, Advocate Ms. Aakanksha Munjhal, Advocate Ms. Ruby Singh Ahuja, Advocate Mr. Rustam Mulla, Advocate Mr. Shravan Sahny, Advocate
For the Respondent	: Shri Rajeev Awathi, Advocate Mr. Prashant Pandey, Legal Consultant
CORAM
JUSTICE MANMOHAN SINGH SHRI ANAND KISHORE	: CHAIRMAN : MEMBER

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JUDGEMENT

¶8

The present appeals have been filed u/s 19 of the Foreign Exchange Management Act, 1999 (hereinafter referred to as the Act) against the alleged order dated 30^th October, 2017 and 15^th November, 2017 passed by the Special Director, Enforcement Directorate, Mumbai, the Adjudicating Authority.

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FPA-FE-87/MUM/2017 & FPA-FE-88/MUM/2017

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Page 1 of 59

¶11

As both the orders dated 30^th October, 2017 and 15^th November, 2017 were passed in the same matter, it is felt appropriate that a common order be passed.

¶12

The facts of the case - as they emerge from the records – are that during the Adjudication proceedings before the Adjudicating Authority, cross examination of Shri Mitil Chokshi, Partner of M/s Chokshi & Chokshi, Chartered Accountant, Mumbai (C&C) had been conducted. As per records, the cross examination was recorded on 20^th September, 2017 and the same was conducted upto 6:00 pm and thereafter it was concluded with the approval of Dr. D.K. Sheth, Authorized Representative/CA of the appellant.

¶13

Subsequently, the appellant - vide letter dated 5^th October, 2017 addressed to the respondent - had taken the plea that the cross examination had remained incomplete and requested for next date. The said letter dated 5^th October, 2017 addressed to the Special Director, Directorate of Enforcement, Mumbai, reads as under: -

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5 October, 2017

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Mr. Vineet Agarwal Special Director, Enforcement Directorate, Western Regional Officers, Janambhoomi Chambers, 1^st Floor, Walchand Hirachand Marg, Mumbai-400001.

¶16

Sir,

¶17

Re: Cross enamination of (“the cross examination”) of Mr. Mitil Chokshi – Partner M/s Chokshi LLP, by our Authorised representative/CA, Dr. Dilip K. Sheth on 20^th September, 2017

¶18

We address you in continuation of your letter dated 21^st August 2017 and the cross examination on 20^th September, 2017 and the transcript of the cross examination of your witness Mr. Mitil Chokshi of M/s. Chokshi & Chokshi LLP, Chartered Accountants.

FPA-FE-87/MUM/2017

& FPA-FE-88/MUM/2017

Page 2 of 59

We wish to place on record that the cross examination commenced at 12:30 pm and continued till 6:00 pm continuously in the presence of Your Honour, Mr. Joseph George, Ms. V. Kalyani (Complainant), our Authorised representative/CA, Dr. Dilip K. Sheth, Ms. Saloni Ganesh of M/s. Knight Riders Sports Private Limited, the witness Mr. Mitil Chokshi and his assistant and his lawyers Ms. Divya Bahl and her Associate/Assistant. The cross examination continued with many long interruptions, when the witness took time to consult his lawyers before answering, despite our Authorised representative/CA‟s objections to the same.

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As a result, the cross examination has remained incomplete. When our authorized representative/CA requested for the next date, we were told the same would be communicated to us.

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We are addressing this letter as we have not yet heard in the matter. We also wish to reiterate that we will be making oral arguments and filing written submissions in the matter after the completion of the hearing.

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Please do let us know the next date for continuation of the proceedings.

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Yours faithfully,

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Knight Riders Sports Private Limited

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-Sd(Authorized Signatory)

¶29

In response to the said letter dated 5^th October, 2017, the respondent – while observing that the cross examination of Sh. Mitil Chokshi held on 20^th September, 2017 stood concluded and that a copy had been provided to the authorized representative of the appellant - had fixed 23^rd October, 2017 at 15:30 p.m. as the next date of personal hearing of the matter for the purpose of recording oral arguments/written submissions. The contents of the said letter File No. T-4/01B/SDE(VA)/WR/2017/2418 dated 12.10.2017 reads as under: -

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File No. T-4/01-B/SDE(VA)/WR/2017/2418

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Dated: 12.10.2017

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To,

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M/s. Knight Riders Sports Pvt. Ltd., 8^th Floor, Backstage, Plot no. 612, 15^th Road, Junction of Ramkrishna Mission Road, Santacruz (West), Mumbai-400054.

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Attn: Ms. Saloni Ganesh CFO

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FPA-FE-87/MUM/2017 & FPA-FE-88/MUM/2017

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Page 3 of 59

¶37

Sir(s),

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Sub: Cross examination of Mr. Mitil Chokshi, Partner of M/s Chokshi & Chokshi LLP by Dr. Dilip K. Sheth, Authorised Representative of M/s KRSPL on 20/09/2017-reg.

¶39

This has reference to your letter dated 5^th October, 2017 on the captioned subject wherein you have stated that the cross examination of witness. Mr. Mitil Chokshi, partner of M/s Chokshi & Chokshi, by your Authorised Representative /CA, Dr. Dilip K. Sheth, held on 20^th September, 2017 remained incomplete.

¶40

In this connection, it may please be noted that the cross examination of Mr. Mitil Chokshi held on 20^th September 2017 was concluded on the same day i.e. 20^th September, 2017 which was duly recorded in the transcript of the Cross Examination held on 20.09.2017 has also been provided to your Authorised Representative.

¶41

You may please note that the next date of personal hearing in the matter is fixed for 23^rd October, 2017 at 15:30 Hrs, for the purpose of recording your oral arguments/written submissions, before the Adjudicating Authority. A Call Notice to this effect has been sent to all the noticees in the subject SCN, separately.

¶42

This letter is issued with the approval of the Special Director of Enforcement, Mumbai.

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Yours faithfully,

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-Sd-

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(V. Kalyani) Assistant Director

¶46

In the background of the above facts, the appellant filed an appeal on 30.10.2017 before this Tribunal, wherein the following prayer had been made: -

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i. That the said order dated 12^th October, 2017 bearing File NO. T- 4/01-B/SDE(VA)/WR/2017/2418 passed by the Learned Special Director of Enforcement, be set aside.

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ii. That a further date be fixed for completion of the crossexamination of the witness, Mr. Mitil Chokshi.

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iii. That pending the hearing and final disposal of this Appeal, the subject adjudication proceedings initiated under the said Show Cause Notice, be stayed, and no coercive action be taken against the Appellants.

FPA-FE-87/MUM/2017

& FPA-FE-88/MUM/2017

Page 4 of 59

iv. Pass such other orders as deemed fit and proper in the facts and circumstances in this case.

¶54

The above appeal had been heard and adjudicated upon by this Tribunal and vide order dated 13.11.2017, it was observed as under: -

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1. The present appeal has been filed u/s 19 of the FEMA Act-1999 against the order dated 12^th October, 2017.

¶56

2. It is admitted facts are that before Adjudicating Authority cross examining of Shri Mitil Chokshi partner of M/s Chokshi & Chokshi, Chartered Accountants, Mumbai (C&C) was being conducted. It appears from the cross examination recorded on 20^th September, 2017 that the same was conducted up to 6:00pm. At the end it is mentioned that “cross examination was conducting at 6:00 pm, 20^th September, 2017.

¶57

3. The learned senior counsel argued that so separate order was passed on 20^th September, 2017 after conducted the cross examination. He states that there is also no procedure before the Adjudicating Authority to retain ROJNAMCHA, therefore it is very difficult to find out the exact order if passed.

¶58

According to him, cross examination was not concluded for that day (i.e. 20^th September, 2017). As his client has to confront certain documents to the witness at the time of remaining cross examination, he submits that the final hearing is on 15^th November, 2017 may be adjourned.

¶59

4. The learned senior counsel has referred the letter dated 10^th October, 2017 as well as 12^th October, 2017 as well as letter dated 5^th October, 2017 written by the appellant to the Department. It appears from the letter dated 10^th October, 2017 issued by the Enforcement Directorate where it is mentioned that the next date of hearing was 23^rd October, 2017, thereafter in the letter dated 12^th October, 2017, Enforcement Directorate has specifically informed appellant that has cross examination was also concluded. The learned counsel for the appellant also stated that since there is no specific order passed on 20^th September, 2017 in order sheet file thereafter it cannot be assessed that

FPA-FE-87/MUM/2017

& FPA-FE-88/MUM/2017

Page 5 of 59

cross examination of Mr. Chokshi was concluded. As per his client further cross examination is yet to be conducted.

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5. The said arguments are refuted by the Mr. Rajiv Awasthi, Counsel for the respondent who submits that the said appeal filed by the appellant is not maintainable. He says that the cross has already been concluded. As far as the maintainability of appeals is concerned, I am of the view that the appeal is maintainable against the orders where the valuable rights are decided against the parties passing the orders. As far as prayer made in the appeal is concerned to set-aside the order dated 12^th October, 2017, I am not inclined with but without any expressing any opinion in view the contents mentioned in the letter dated 12.10.2017 counsel for the appellant at this stage seeks liberty to move the application for further cross-examination or recall of witness. The same may be filed as per law and if any such application is filed, the same will be determined by the Adjudicating authority as per on its merits.

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6. The appeal is accordingly disposed of. If any application is filled by the appellant by 15^th November, 2017 the Adjudicating Authority shall consider as per on its merit and decide the same before hearing of the main matter.

¶66

Copy of the order be given dasti to both the parties.”

¶67

In pursuance of the aforesaid Tribunal‟s order dated 13^th November, 2017, the appellant had made an application to the respondent praying that: -

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(i) Mr. Mitil Chokshi be recalled by your Honour for cross-examination;

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(ii) That further dates be fixed by your Honour towards crossexamination of Mr. Mitil Chokshi;

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(iii) That the present application be heard and decided on merits by your Honour and an order be passed on the present application;

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FPA-FE-87/MUM/2017 & FPA-FE-88/MUM/2017

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Page 6 of 59

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(iv) That if your Honour were to rule against this application then the main matter be adjourned by your Honour till such time that an appeal filed by the company from the said order is determined.

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The decision of the respondent - in pursuance of the above mentioned prayer of the appellant vide letter dated 14.11.2017 - was communicated to the appellant vide his letter dated 15.11.2017 and same is re-produced below: -

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“As per the intimation given in the earlier personal hearing held in this case on 30.10.2017, Shri Amit K. Desai, Senior counsel along with Shri Rustom Mulla, Counsel from M/s Desai Desai Carrimjee & Mulla, representing all the three notices in the subject Show Cause notice, appeared for the personal hearing before the undersigned, on 15.11.2017. Shri Venkatesh Mysore, CEO & MD of KRSPL and Mrs. Saloni Ganesh, CFO of KRSPL were also present at the time of personal hearing.

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2. The learned counsel, Shri Amit K. Desai submitted the following three applications, for consideration by the Adjudicating Authority -

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i) Application dated 14.11.2017, enclosing copy of the Order dated 13.11.2017 passed by the Hon‟ble ATFE, New Delhi, on their application filed before the Hon‟ble Appellate Tribunal, for recall of Shri Mitil Chokshi, Partner of M/s Chokshi & Choskhi (C&C), Chartered Accountants, for further cross examination;

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ii) Application dated 14.11.2017, enclosing copy of the ATFE order dated 13.11.2017, on their application filed before the Hon‟ble Appellate Tribunal, seeking inspection of the letter / document of ED, mandating M/s. C&C, to give its opinion towards valuation of KRSPL shares „Issued‟;

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iii) Letter dated 15.11.2017, enclosing a copy of letter dated 14.11.2017 from M/s Karanjawala & Co., Advocates, addressed to Mr. Rustom Mulla, Advocates, informing the filing of Appeal No. 87/2017 before the Hon‟ble ATFE, New Delhi, seeking cross

FPA-FE-87/MUM/2017

& FPA-FE-88/MUM/2017

Page 7 of 59

examination of Smt. V. Kalyani, the Complainant and also Shri D. K. Sinha, Assistant Director.

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3. In the 1^st ATFE Order dated 13.11.2017, the Hon‟ble Appellate Tribunal directed the Adjudicating Authority to decide the application „filed by KRSPL, for further cross examination or recall of witness, on its merit, before hearing the main matter.

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4. In the second Order passed by the Hon‟ble ATFE, New Delhi, on the application filed by KRSPL, for the supply of the letter of engagement of C&C on the issue of shares of KRSPL, the Hon‟ble Appellate Tribunal has given a direction that if any such application is filed before the Adjudicating Authority, the same will be decided by the Adjudicating Authority, as per its own merit.

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5. The learned counsel contended that the cross examination of Shri Mitil Chokshi by the Advocate of the Noticee Company held on 20.09.2017 was inconclusive and hence they should be allowed to conduct further cross examination of the said Shri Mitil Chokshi, in the interest of natural justice and fair play. He further submitted that there are questions which are required to be asked to Shri Mitil Chokshi on several glaring ambiguities and contrary statements noticed in the Opinion given by C&C relating to the valuation, principles, methodology adopted by them in evaluating the shares of M/s. KRSPL. There are discrepancies noticed on various assumptions reflected in the work sheet vis-à-vis the discussion in the Opinion which includes the prize money revenue growth, capitalization rate, etc. The ld. Counsel also submitted that he wanted to know about the terms of engagement of C&C and the scope of work mandated to them by the ED. These questions, he wanted to raise because the letter of engagement given by ED showed the appointment of C&C was only for the opinion provided by C&C was in respect of valuation of KRSPL shares „Issued‟.

¶87

6. It was also submitted by the Ld. Counsel that certain clarifications are also required to be obtained from the said Shri Mitil Chokshi regarding the basis and source of assumptions made by C&C in giving their opinion on fairness of valuation of shares of KRSPL. In support of his request for cross examination of Shri Mitil Chokshi, the learned counsel extensively quoted from various judgments including the judgment of Hon‟ble Delhi High Court in

FPA-FE-87/MUM/2017

Page 8 of 59

the case of Shri Shahid Balwa vs. Directorate of Enforcement; the judgment of Hon‟ble Kerala High Court in the case of Fr. Alfred James Fernandez; and the judgment of Hon‟ble Supreme Court of India in the case of State of M.P. vs. Chintaman Sadashiva Vaishampayan and Ayaaubkhan Noorkhan Pathan vs. State Maharashtra. It was submitted by the counsel that all the judgments cited by him emphasize that the cross examination forms an integral part and parcel of the adjudication proceedings for rendering natural justice.

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7. The Ld. Counsel also submitted that the reasons for further cross examination of Shri Mitil Chokshi were enlisted at para 15 of their application dated 14.11.2017 which shall be considered by the Adjudicating Authority. The Ld. Counsel also mentioned the following points to substantiate his request for further cross examination of Shri Mitil Chokshi.

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i) The mandate given by ED for engagement of C&C was for giving opinion on fair valuation of KRSPL shares „Transferred‟ whereas, the Opinion given by C&C relates to the valuation of KRSPL shares „Issued‟ which was beyond the scope of mandate given to them;

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ii) The scope of appointment of C&C was for giving their Opinion on the fairness of valuation done by CAs of KRSPL, whereas the C&C had given the valuation of shares based on their own assessment;

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iii)It is not known from the opinion given by M/s. C&C as to what are the documents/information provided by the ED to enable them to give their opinion on the fairness of valuation of KRSPL shares.

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iv) Various expenses incurred year after year on a recurring basis which are on the books of account were not taken into account by C&C and on the other hand, they had projected various sources of revenues, which did not exist realistically.

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v) The methodology adopted by C&C in arriving at the valuation on the value of KRSPL shares was not in consonance with the requirements of the CCI guidelines.

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vi) The prize money won by KRSPL for one year was taken as income for the subsequent years as well which is unrealistic, as

FPA-FE-87/MUM/2017

& FPA-FE-88/MUM/2017

Page 9 of 59

there is no guarantee for winning the prize money by KRSPL year after year.

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8 . After a careful examination of the contents in the application filed by KRSPL and also the oral submissions made by the learned counsel during the course of personal hearing, I find that the case laws cited by him and the arguments put forth by him are all related to the importance of allowing cross examination of witnesses, in the dispensation of justice. However, in this duly allowed in the interest of natural justice. On 20.09.2017 the counsel representing M/s KRSPL, Shri Dilip K. Sheth, was allowed to cross examine Shri Mitil Chokshi, partner of M/s C&C. In fact as many as 45 questions were put to Mr. Mitil Chokshi and after 5:30 hours of exhaustive cross examination the same was concluded and the same was duly noted in the record of cross examination, countersigned by both Shri Mitil Chokshi and Shri Dilip K. Sheth, Counsel for M/s. KRPSL. In fact, the record of cross examination clearly stated that “The cross examination was concluded at 6:00 p.m. today, 20^th September, 2017”. I, therefore, find that there is no merit in the arguments of the learned counsel that the cross examination of Shri Mitil Chokshi was incomplete.

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9. However, for rendering natural justice, the issue raised by the Ld. Counsel for further cross examination of Shri Mitil Chokshi was examined and on a careful examination, it is found that the issues which the learned counsel wants to clarify with Shri Mitil Chokshi, partner of C& C (listed under para 15 of his application dated 14.11.2017) in the proposed further cross examination have already been addressed by Shri Dilip Sheth, Counsel for KRSPL in the cross examination conducted on 20.09.2017. It is also noticed that the oral submissions made by the Ld. Counsel regarding the issues to be raised in the proposed further cross examination, have already been addressed in the cross examination, have already been addressed in the cross examination held on 20.09.2017. Since there is no new issue, on which further cross examination is now being sought, the request made in the application dated 14.11.2017, for recalling of Shri Mitil Chokshi, for further cross examination, is disallowed.

¶105

FPA-FE-87/MUM/2017 & FPA-FE-88/MUM/2017

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Page 10 of 59

¶107

10. Also, the request made in the said application, seeking adjournment of the main matter till such time the appeal is filed by the company, in the event of rejection of their application by the Adjudicating Authority, is also rejected by the undersigned as the Hon‟ble Appellate Tribunal had already given a ruling on this issue in its order dated 13.11.2017, whereby, the Adjudicating Authority was directed to decide the said application as per merit, before hearing the main matter.

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11. In the second application dated. 14.11.2017, a prayer was made by KRSPL for inspection of letter/documents mandating C&C to give its opinion towards the valuation of shares „Issued‟ and in case, the same is not allowed by the Adjudicating Authority, the matter should be adjourned till such time an appeal is filed against the said order. The Hon‟ble Appellate Tribunal, while disposing of the application filed by KRPSL on this issue, had given a ruling vide its order dated 13.11.2017 directing the Adjudicating Authority to decide the said application as per its own merits. In this regard, it is revealed from records that a copy of the engagement letter dated 26.06.2013 was provided to M/s KRSPL vide this office letter dated 14.08.2017 and there is no scope of any ambiguity regarding supply of engagement letter of C&C to M/s KRSPL. I, therefore, find that there is no merit in the application filed by M/s KRSPL, seeking inspection of the said letter/document. Accordingly, I reject the application made by the KRSPL on this count.

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12. Also, the request made in the said application, seeking adjournment of the main matter till such time the appeal is filed by the company, in the event of rejection of their application by the Adjudicating Authority, is also rejected by me as the Hon‟ble Appellate Tribunal has already given a ruling on this issue in its order dated 13.11.2017, whereby, the Adjudicating Authority was directed to decide the said application as per its own merit.

¶110

13. The 3^rd application dated 15.11.2017 filed by the Ld. Counsel relates to the intimation regarding the filing of appeal by KRSPL before the Appellate Tribunal under Section 19 of FEMA, 1999 against the rejection of the Adjudicating Authority of their request for cross examination of the complainant Mrs. V. Kalyani and the Shri D.K. Sinha, Assistant Director, recorded during the course of personal hearing held on 30.10.2017. On a careful

Page 11 of 59

perusal of this application, I found that there is no direction given by the Hon‟ble Appellate Tribunal in this regard and in fact the two orders dated 13.11.2017 do not have any direction regarding any stay on the proceedings. The present application dated 15.11.2017 appears to be a strategy adopted by the noticees to delay the ongoing adjudicating proceedings I, therefore, decide to proceed with the hearing in the main issue. Accordingly, the Learned Counsel was directed to proceed with his arguments on the main issue relating to the charges alleged in the subject Show Cause Notice.

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14. However, the learned Counsel Shri Amit K. Desai and Shi Rustam N. Mulla, Advocate refused to argue on the main issue by stating that they were not in a position to argue unless the appeal which they propose to file against the dismissal of the above mentioned two applications, are decided by the Hon‟ble Appellate Tribunal. In my view, these are all tactics adopted by the noticee to cause interruption in the proceedings.

¶116

15. It is important to place on record that numerous opportunities of personal haring were given to the noticees to make their submissions and in the relevant Call Notices issued for personal hearing, it was categorically mentioned that in case they fail to appear on the said date, the matter will be decided on the basis of evidence and material available on record. The details of call notices issued posting the case for personal hearing on various dates are given as under:-

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i) Call Notice dt. 20^th July 2017 posting the case for personal hearing on 23.08.2017.

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ii) Call Notice dated 21.08.2017 posting the personal hearing on 20.09.2017.

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(iii) Call Notice dated 20.10.2017 posting the case for personal hearing on 30.10.2017.

¶120

16. During the course of personal hearing held on 30.10.2017 the learned counsel was directed by the Adjudicating Authority to proceed with their arguments on the main charges alleged in the subject SCN, but he refused to proceed with the arguments and sought for further time since the appeal filed by them before the

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¶123

Hon‟ble ATFE, New Delhi was due to be taken up on 13.11.2017. Accordingly, the next of personal hearing was fixed on 15.11.2017.

¶124

17. Since the foresaid two appeals have now been disposed of by the Hon‟ble ATFE, New Delhi on 13.11.2017, the learned counsel, who appeared for the personal hearing on 15.11.2017, was directed to go ahead with the arguments, but he refused to proceed with the arguments by stating that he was not in a position to proceed with the arguments on the main issues, till the decision is taken by the Hon‟ble ATFE on the appeals now proposed to be filed by them before the Appellate Tribunal against the order of rejection of their application passed by the adjudicating Authority. Thus, it is seen that in spite of giving numerous opportunities and granting many adjournment, the advocates of KRSPL are resorting to delaying tactics in spite of fore-warnings given to the effect that the decision will be taken on the basis of available evidence and effect that the decision will be taken on the basis of available evidence and material. In view of the above facts, I have decided to conclude the Adjudicating proceedings in the matter in terms of the provisions of FEM (Adjudication Proceedings & Appeal) Rules, 2000. Reserved for orders.”

¶125

The present appeal has been filed against the aforesaid record of personal hearing held on 15.11.2017 in the office of Special Director, Directorate of Enforcement, Mumbai on following prayers: -

¶126

i. Order dated 15^th November, 2017 passed by the Learned Special Director of Enforcement, be set aside.

¶127

ii. Appellant be permitted to (i) recall Mitil Chokshi as witness and conduct the cross-examination (ii) fully and effectively cross-examine the Complainant Mrs. V. Kalyani and the Investigation Officer Mr. D.K. Sinha.

¶128

iii. Pending the hearing and final disposal of this Appeal, the subject adjudication initiated under the said Show Cause Notice, be stayed, and no orders be passed therein.

¶129

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¶131

iv. Pass such other order(s) as deemed fit and proper in the facts and circumstances in this case.

¶132

SUBMISSIONS OF THE APPELLANT:

¶133

During the course of hearing on 22.11.2017, the appellant reiterated its prayer to be permitted to (i) recall Mitil Chokshi as witness and conduct the cross-examination (ii) fully and effectively cross-examine the Complainant Mrs. V. Kalyani and the Investigation Officer Mr. D.K. Sinha on the ground that the cross examination of Mr. Mitil Chokshi had not been concluded and he be recalled. The request for fully and effectively cross examining the complainant Mrs. V. Kalyani and the Investigation Officer Mr. D. K. Sinha was made for the first time. Apart from placing some decisions on “Right to Recall”, the learned counsel for the appellant submitted that various documents had been produced by the witness at the end of the recording of the cross examination including the documents available at page no. 191 which had been filed in the appeal.

¶134

Subsequently, written submissions/synopsis on behalf of the appellant have been filed vide letter dated 06^th December, 2017. The submissions of the appellant briefly, are, as under:

¶135

A. Maintainability of Appeal under Section 19 of the Foreign

¶136

Exchange Management Act, 1999 („FEMA/the Act‟)

¶137

The present Appeal is maintainable under Section 19(1) of FEMA. The present Appeal is in relation to an order which affects the valuable rights of the Appellant in relation to violation of principles of natural justice. Section 19(1) applies to an order passed against the person aggrieved. There is no restriction or limitation to the words “an order” in Section 19(1).

¶138

FPA-FE-87/MUM/2017 & FPA-FE-88/MUM/2017

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¶140

On a perusal of the scheme of Section 19 and Section 35 it is apparent that the words “an order” contained in Section 19(1) is to be given a wide and liberal interpretation to mean any order which affects valuable rights of a person aggrieved or the Central government. It is not limited to a final order passed under Section 13 read with Section 16. When an Appeal is filed against an order levying penalty, there is specific reference to such an Appeal. See the first proviso to Section 19(1) which states as under:

¶141

“Provided that any person appealing against the order of the Adjudicating Authority or the Special Director (Appeals) levying any penalty, shall while filing the appeal, deposit the amount of such penalty with such authority as may be notified by the Central Government;”

¶142

The contradistinction between the words “any person appealing against the order of the adjudicating authority…levying any penalty…” appearing in the first proviso to Section 19(1) is the clearest indication that wide interpretation is to be given to the words “an order” contained in Section 19(1) since a species of “an order” i.e. the final order levying penalty is dealt with separately in the first proviso to Section 19(1).

¶143

Section 19(6) empowers the Appellate Tribunal to suo moto examine the “legality, propriety or correctness of any order” made by the adjudicating authority under Section 16 and make such order as it thinks fit. The phrase “any order” in 19(6) once again clearly indicates that it is not restricted and limited to the final order. Section 16(3) requires the adjudicating authority to hold an inquiry under sub section (1). Section 16(5) deals with the powers of the Adjudicating Authority during such inquiry. Section 19(6) provides for the Inquiry to be disposed of within a

Page 15 of 59

time frame, failing which reasons are to be recorded in writing for not disposing of the complaint within the said period. Thus there are a variety of orders that could be passed under Section 16 and not only a final order. All such orders would be revisable by the Appellate Tribunal in exercise of its powers under Section 19(6) if they effect valuable rights.

¶148

Consequently, the words “any order” in Section 19(6) and “an order” in 19(1) would be given the same meaning.

¶149

Placing further reliance on the observation of this Tribunal in the matter of Knight Riders Sports Private Limited v. Special Director, Enforcement Directorate in Appeal No. 83 of 2017 wherein the following observation has been made that:

¶150

“…As far as the maintainability of appeals is concerned, I am of the view that the appeal is maintainable against the orders where the valuable rights are decided against the parties…” ,

¶151

the appellant has stated that even the instant appeal is maintainable.

¶152

B. Right of the Appellant to recall the witness for further crossexamination

¶153

Mentioning that cross examination of a relevant witness is an essential and necessary facet of natural justice in Adjudication Proceedings, the appellant has referred the case of Commissioner Of Central Excise v/s Parmarth Iron Pvt. Ltd. 2010 [ 2010 (260) ELT514(ALL.)] wherein the High Court of Allahabad highlighted the relevance of cross-examination in Adjudication proceedings and inter-alia, whilst referring to much judicial precedence on the point observed.

¶154

“In Kellogg India Pvt. Ltd. V. Union of India, [2006 (193) E.L.T. 385 (Bom.)], a Division Bench of the Bombay High Court was pleased to hold FPA-FE-87/MUM/2017

¶155

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¶157

that the authority cannot refuse to produce documents only on the perception that the documents are not relevant. The matter was remanded back to enable the petitioner for cross examining the witnesses. Nonproduction of witnesses for cross-examination it was held is violative of principles on natural justice and fair play and need no judgements. We may gainfully refer to the judgement in Arya Abhushan Bhandar V. Union of India [2002 (143) E.L.T. 25 (SC)] . In Sunder Ispat Limited V. Commissioner of Cus. & C. Ex., Hyderabad [2002 (141) E.L.T. 24 (A.P.)], a learned Division Bench of the Andhra Pradesh High Court held that the witnesses examined on behalf of the Department had to be produced for cross-examination in accordance with the principles of natural justice. We may also refer to the judgement of the Supreme Court in Lakshman Exports Limited V. Collector of Central Excise [2002 (143) E.L.T. 21 (SC)] . This also was in respect of proceedings in adjudication proceeding. That cross-examination at the stage of adjudication cannot be denied, is rectified in a large number of judgements. See: Gyan Chand Sant Lal Jain V. Union of India [2001 (136) E.L.T.9 (Bom.)], Swadeshi Polytex Ltd. V. Collector of Central Excise, Meerut [2000 (122) E.L.T. 641 (SC)], Prayagdas Tushinal V. Collector of C. Ex. & Land Customs, Shillong [2000 (125) E.L.T. 377 (Gau.)], Lachmandas Tobacco Dealer V. Union of India and Ors. [1978 ELT J 502] and Kalra Glue Factory V. Sales Tax Tribunal and Ors. [1987 (66) STC 292].

¶158

All these judgments in the matter of cross-examination are at the stage of adjudication. The law, therefore, at that stage, need not be elaborated, as it is the right of an assessee in the event the Revenue seeks to rely on the statements of witnesses recorded by it and whose statements are sought to be relied upon at the stage of adjudication to make available the said witnesses for cross-examination so that it could be established whether the statements recorded from the said witnesses have been voluntarily given and/or are relevant for the issue or based on personal knowledge or hearsay and the like. The object, being that a Tribunal or Court conducting a proceeding either before the Court or quasi judicial tribunal in adjudication, must have the true evidence and shift the evidence to weed out the chaff from the grain. Another reason being to satisfy itself that the person whose statement was recorded had made it voluntarily and based on his personal knowledge or legal records which can come out in cross-examination. This is to ensure the Court or Tribunal or the authority conducting the proceeding arrives at the correct conclusion based on tested evidence before it. The issue also is no longer res intergra in view of the large number of judgements of the Supreme Court.”

¶159

(a) – Relevance of the Witness and Legal provision for Recall :

¶160

Mentioning further that Mr. Mitil Chokshi is a relevant witness for the present adjudication proceedings, the appellant has stated that it is absolutely necessary that the right and approval to continue/further cross-examine Mr. Mitil Chokshi and/or summon or recall Mr. Mitil Chokshi as a witness be granted to the Appellant.

¶161

(b) – Necessity to recall the Witness

¶162

It has also been pleaded by the appellant that “With further reference to paragraph 15(c) of the said Application dated 14^th November, FPA-FE-87/MUM/2017

¶163

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¶165

2017; whilst page 126, Folder III of the Memo of Appeal (internal page 17 of the Opinion) refers to fair value arrived at by PECV method after applying a 15% capitalization rate in the sensitivity analysis to compute the fair value of shares; the work sheets to the said Opinion, which were separately handed over to the Appellant much later, (on 14^th August, 2017), refers to a capitalization rate of 20% being applied and not 15% (see page 816, Folder IIIA of Memo of Appeal), it is inter alia amongst this and other such discrepancies that, Mr. Mitil Chokshi must explain these discrepancies as appearing in his Opinion as against the support work sheets. It is submitted that whilst no prejudice would be caused to the Respondent by the recall of the witness, grave injustice and grave prejudice would be caused to the Appellant if the Appellant was not permitted to recall the witness and satisfactorily cross examine him further.”

¶166

SUBMISSIONS BY THE RESPONDENT

¶167

The above contention of the appellant that the documents were given at the end of hearing was vehemently denied by the learned counsel for the respondent who submitted that he would be filing an affidavit in this regard to the fact that the copy of the said document had been supplied to the Authorised Representative of the appellant conducting the cross examination. It was further deposed by the respondent that certain specific questions relating to the set of papers given to the appellant earlier had also been made and the replies given by the witness included details contained in the said documents.

¶168

Written Submissions of the Respondent: -

¶169

In his written submissions dated 07.12.2017, the Respondent has pleaded that the present appeal is not maintainable under Foreign Exchange Management Act, 1999. Mentioning that under Foreign FPA-FE-87/MUM/2017

¶170

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¶172

Exchange Management Act, 1999 an appeal can be filed against the order of the Adjudicating Authority only after passing an order imposing penalty as contemplated under Section 19(1) of the FEMA, 1999, the respondent has argued that the proceedings before Adjudicating Authority are in the nature of enquiry as detailed under Section 16 of the said Act and conducting of such enquiry during adjudication proceedings cannot be termed as an order during the adjudication proceedings and hence is not appealable.

¶173

Mentioning further that the Hon‟ble Supreme Court in various pronouncements has held that Adjudicating Authority as well as Tribunals are creation of statutes and therefore, have no power to interpret or exceed its jurisdiction and they are strictly bound by the provisions of the Act, the respondent has drawn attention to the decision of the Hon‟ble Supreme Court in Union of India Vs. Devki Nandan Aggarwal 1992 Supp.(1) SCC323 wherein the Apex Court has held as under:

¶174

“…It is not the duty of the court either to enlarge the scope of the legislation or the intention of the legislature when the language of the provision is plain and unambiguous. The court cannot rewrite, recast or reframe the legislation for the very good reason that it has no power to legislate. The power to legislate has not been conferred on the courts. The Court cannot add words to a statute or read words into it which are not there. Assuming there is a defect or an omission in the words used by the legislature the court could not go to its aid to correct or make up the deficiency. Courts shall decide what the law is and not what it should be. The court of course adopts a construction which will carry out the obvious intention of the legislature but could not legislate itself. But to invoke judicial activism to set at naught legislative

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judgment is subversive of the constitutional harmony and comity of instrumentalities....”

¶179

Reference has also been made to the decision of the Hon‟ble Supreme Court wherein similar view which has been expressed by the Hon‟ble Supreme Court in Hintendra Rajeev Pathak and also in case of K.K. Chari Vs. R.M. Seshadri (1973) 1 SCC 761, wherein it has been held:

¶180

¶181

“….A quasi-judicial tribunal acting within jurisdiction may decide rightly or may decide wrongly. If it decides wrongly there are provisions in the Act itself for appeal, revision and ultimately even revision by the High Court under the provisions of Section 115 CPC or even under Article 227 of the Constitution. Of course, by a wrong decision on a jurisdictional fact a quasi-judicial tribunal with a limited jurisdiction cannot confer jurisdiction on itself…..”

¶182

Attention has also been drawn to the fact that the Hon‟ble Supreme Court and High Courts have deprecated the practice of challenging the proceedings at the initial stage on various small issues. Attention has been drawn to the similar view been taken by the Hon‟ble Division Delhi High Court in the Case of Arun Kumar Mishra Vs. UOI & Ors. (2014) 208 DLT 56, wherein the Hon‟ble High Court have held: -

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to S.K. Verma Vs. Mahesh Chandra (1983) 4 SCC 214 deprecating the practice of raising preliminary issues/ objections, to delay and defeat adjudication on merits and to D.P. Maheshwari Vs. Delhi Administration (1883) 4 SCC 293 also laying down that all issues whether preliminary or otherwise should be decided together so as to rule out the possibility of any litigation at interlocutory stage. Attention of the senior counsel for the appellants is also invited to National Council for Cement & Building Materials Vs. State of Haryana (1996) 3 SCC 206 noticing the appalling situation created due to challenge to the decision on preliminary issues in the High Court and during which time the reference is stayed and lies dormant and laying down that the High Court should refuse to intervene in the proceedings before the Tribunals at an interlocutory stage.”

¶188

The respondent had vehemently pleaded that the present appeal, being non-maintainable - is liable to be dismissed.

¶189

The respondent had also challenged the jurisdiction in respect of order dated 13.11.2017 passed by this Tribunal allowing the appellants to move application for recall of witness and directing the Adjudicating Authority to dispose of the same in accordance with law on the ground that the said order has been passed by a Single Member or Chairman whereas as per the mandate of Foreign Exchange Management Act, 1999, Section 20 laid down that if the penalty amount was more than Rs. 5 Lacs then the matter should be heard by the Division Bench, whereas in the present case the enquiry involves crores of rupees.

¶190

It has also been argued by the respondent that the order dated 13.11.2017 is without jurisdiction because Section 20 has been omitted FPA-FE-87/MUM/2017

¶191

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¶193

by Finance Act, 2017 w.e.f. 01.04.2017 and, therefore, the matter cannot be heard by a Single Member Bench.

¶194

Another contention of the respondent is that the Tribunal is a creature of an Act and hence the appeals could be heard as per the procedure prescribed under the law and since the Tribunal are not vested with the power of Article 226 of the Constitution of India hence cannot give a different meaning or an interpretation to the provisions and under the Act only appeal is prescribed after the order of penalty is made and before that since proceedings are enquiry in nature cannot be termed as an order.

¶195

Mentioning that the interpretation raised by the appellant is that under Section 19(6) of the Foreign Exchange Management Act, 1999 this Tribunal has the power to interfere with any order, the respondent has contended that the reference of any order is the only order of penalty because the language of the Section clearly indicates to examining the legality, propriety or correctness made by the Adjudicating Authority under section 16 and Section 16 of the Act relates to the process to be followed by the Adjudicating Authority and nowhere refers the word „order‟. Mentioning further that even the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules 2000 under Section 4 which mandates holding of enquiry and the entire sub clauses of Section 4 defines the Stages of the enquiry and the manner in which the inquiry should he held and till Section 7 the entire process of enquiry is given and the first time the order comes in existence is under Sub Clause (8) of Section 4 which says “if upon consideration of evidence produced before the Adjudicating Authority, the Adjudicating Authority is satisfied that the person has committed the contravention he may by order in writing impose such penalty as he things fit in accordance with the provisions of

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Section 13 of the Act.” This is the stage where the Appellate Tribunal will have the jurisdiction to entertain the appeal before that during the inquiry the proceedings cannot be termed as an order and hence cannot be challenged.”

¶200

AFFIDAVIT OF THE RESPONDENT

¶201

The respondent has also placed on record an Affidavit dated 1^st December 2017, solemnly affirming as under:

¶202

“1. I state that the present affidavit is filed by the deponent in compliance of the order dated 22.11.2017 passed by this Hon‟ble Tribunal. 2. I state that this Hon‟ble Tribunal in the order dated 22.11.2017 records that “Both the parties have addressed their arguments. One of the submissions, out of many, made by the appellant is that further cross examination is necessary/required as certain documents were produced by the witness at the end of recording the cross examination including the document available at Page No. 191 which has been filed in the Appeal and is available in the Document file…”

¶203

I state that the appellants have not stated the truth before this Hon‟ble Tribunal and made incorrect statement. The true and correct facts and that, the cross-examination of Shri Mitil Chokshi, Partner of M/s Chokshi & Chokshi was held on 20.09.2017, before the Adjudicating Authority by Shri Dilip K. Sheth, CA & Counsel for three noticees in the SCN viz. KRSPL, Smt Gauri Khan and Shri Shah Rukh Khan, in connection with the adjudicating proceedings in respect of Show Cause Notice No. T-4/01-B/SDE(VA)/WR/2017 dated 24.03.2017.

¶204

I state that during the entire course of cross-examination, 45 specific questions were put to Shri Mitil Chokshi by the Counsel for KRSPL and other noticees, which were answered by Shri Mitil Chokshi, as duly recorded in the transcript of cross-examination.

¶205

I state that the question raised by the Counsel were wide ranging

¶206

and covered all aspect, viz. the mandate given by the department to C&C FPA-FE-87/MUM/2017

¶207

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¶209

to conduct such an exercise for giving their opinion on the fairness of valuation of KRSOL shares; the methodology adopted by C&C for the evaluation of KRSOL shares in terms of the prevailing CCI guide lines; the acceptability and supremacy of this methodology against the methodology adopted by the Auditor of KRSPL; the documents analyzed for the purpose of valuation and its legal acceptability, etc.

¶210

I state that under question No. 40, a specific query was raised by the counsel for KRSOL regarding the underlying assumptions made by C&C in their Opinion for the unusual high growth rate of 12% on the total income of KRSPL for the FY 2013-14 as against its income for the FY 2012-12. While answering Question No. 40, Mr. Chokshi referred to an internal paper (i.e. Page 191 of the appeal paper book and as recorded in order dated 22.11.2017). The counsel for KRSPL sought a copy of that paper, which was provided to them as duly recorded in the relevant transcript of the cross examination. Thereafter, the counsel for KRSPL started asking questions from the said sheet of paper provided to him. The question Nos. 41 to 45 relate of this internal reference paper of C&C. With regard to the Question No. 40, It was stated by Sh. Mitil Chokshi that they had identified 11 line items of Income and 61 line items of expenditure from the balance sheet of KRSPL, to justify the increase of 12% growth rate. The question No. 41 is linked up to the „prize money‟ which is at SI No. 2 of the 11 line items of Income, mentioned in the said sheet. The subsequent Question viz. Nos. 42 & 43 pertain to the „participation fee‟, which is figured at SI. No. 9 of the 11 line items of Income, mentioned in the said sheet. Similarly Question No. 44 was linked to the „bad/doubtful debts written off‟ and the „donation‟, which are mentioned at SI. Nos. 41 & 42 respectively of the 61 line items of Expenditure mentioned in the said sheet. Also, the Question No. 45 has a reference to SI. No. 42 of the 61 line items of Expenditure mentioned in the said sheet. It is thus seen that Question Nos. 41 to 45 were all linked to the entries figured in the line

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items of Income & Expenditure listed in the Sheet provided by Shri Chokshi during the course of cross examination and the counsel, thereafter, did not ask any question relating to that sheet (viz. page 191). Hence, the cross examination was concluded as duly recorded by the Adjudicating Authority at the end of the cross examination and counter signed by the counsel of the appellants, without making any request for further cross examination.

¶215

I state that as far as the contention of the appellant that further cross examination is necessary/required as certain documents were produced by the witness at the end of recording the cross examination including the document available at page No. 191 which has been filed in the Appeal and is available in the document file, it is to submit that page No. 191 refers to in Appeal records is the sheet containing the details of 11 line items of Income and 61 line items of Expenditure submitted by Shri Mitil Chokshi, while answering to Question No. 40. Excepting this sheet, no other sheet/document was either produced or taken from the witness Shri Mitil Chokshi, during the course of his entire cross examination. Hence, it is incorrect to say that „certain documents‟ including the sheet i.e. Page No. 191 were given by the witness at the end of his cross examination.

¶216

I state that, it is also noticed that the Sheet produced by Shri Mitil Chokshi during the course of cross examination is not a new document, but an internal paper for reference of C&C, which was neither provided to the department nor relied upon in the Show Cause Notice. No new fact was brought out through this paper and it contains various line items of Income and expenditure, showing and trend of increase/decrease in percentage (%), the details of which are available as figures in the Work Sheet provided to KRSPL earlier. It is also worthwhile to mention that this office, while providing the said work sheet to KRSPL, has informed them that if they required any clarifications on the said documents, the same

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should be communicated on or before 19.08.2017 i.e. before the cross examination. However, no clarification on the documents forwarded under letter dt. 14.08.2017 was sought by KRSPL. The cross examination thus was concluded on 20.09.2017, as duly recorded in the transcript of the cross examination, which was countersigned by the Counsel for KRSPL. The demand for extra time for going through that page was not felt by the Defense Counsel and the cross examination was concluded. The issue is raked-up again for the purpose of delaying the adjudicating process.

¶221

I state that the appellants are making wrong oral statements contrary to the record with a view to mislead and prejudice the mind of this Hon‟ble Tribunal, which reflected from the fact that before commencing the cross examination, appellants were given a letter, specifically mentioning that whatever documents they required for the purpose of cross examination were provided. They were told that in case they require any clarification on the said documents, including the work sheet of C&C pertaining to their Opinion on the fairness of equity shares of KRSPL, should be communicated on or before 19.08.2017. At that point of time, issue of assumption of each line item was not asked for because it was evident from the work sheet of C&C, giving all the calculations.

¶222

I therefore respectfully state that the appellants have made incorrect oral statements contrary to records with a view to prejudice the mind of this Hon‟ble Tribunal and with the purpose to stall the adjudicating as they have already delayed the adjudication for one reason or the order.”

¶223

COUNTER AFFIDAVIT OF THE APPELLANT

¶224

In response to the affidavit dated 01^st December, 2017 filed by the respondent, the appellant filed an affidavit dated 22^nd December, 2017 verified by Ms. Saloni Ganesh solemnly affirming and stating as under:

¶225

“1. I say that I am the Chief Financial Officer ( “CFO” ) of the Appellant. I am also a qualified Chartered Accountant.

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I am familiar with the facts and records of this matter and I am therefore in a position to depose thereto. I am making this affidavit for the limited purpose of setting on record certain true and correct facts. I am making this affidavit in pursuance of the order dated 22^nd November, 2017 passed by this Hon‟ble Tribunal.

¶230

I say that the document appearing at page 191, Folder III of the Memo of Appeal, being the 72 line items/assumption sheet, (hereinafter referred to as the said “Assumption Sheet” ), bearing the initials of Mr. Mitil Chokshi was handed over to the Appellant at the culmination of the day‟s proceedings on 20^th September, 2017.

¶231

I say that on 12^th December, 2017, the Respondent has served upon the Appellant a document entitled as an affidavit, of Mr. Joseph George, Deputy Director, Directorate of Enforcement. I have perused a copy of the said “affidavit”. Ex-facie the “affidavit” travels far beyond the reasons and/or the purpose for which the same was directed to be filed by this Hon‟ble Tribunal.

¶232

By the order dated 22^nd November, 2017, this Hon‟ble Tribunal has inter alia recorded and directed as follows:

¶233

One of the submissions out of many made by the appellant is that further cross examination is necessary/required as certain documents were produced by the witness at the end of recording the cross-examination including the document available at page no. 191 which has been filed in the appeal and is available in the document life. The counsel for the respondent denies the submission of learned counsel for the appellant. He seeks time to file the affidavit in this regard within one week to the effect the copy of the said document was supplied to the counsel much earlier point of time. Let the affidavit be filed within one week with an advance copy to the learned counsel for the appellant who may file the response, if any, within one week thereafter.” (emphasis supplied)

¶234

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¶236

It will therefore be seen that the limited purpose for which the Respondent was to file an affidavit, was to whether the said Assumption Sheet had been handed over on 20^th September, 2017 or on a date prior to that, as submitted by the Respondent at the time of the hearing on 22^nd November, 2017. As aforesaid, I reiterate that the said Assumption Sheet was handed over on 20^th September, 2017 and not on any date prior thereto. This fact is also clearly confirmed in the said “affidavit”. It is submitted that the Appellant‟s contention in this regard therefore stands fully vindicated by the clear admission of the Respondent.

¶237

As aforesaid, since the said “affidavit” travels far beyond the purpose for which it was called upon to be filled, I am compelled and required to respond to various incorrect statements and contentions as contained in the said “affidavit”.

¶238

It is submitted that (i) at the time of arguments on 22^nd November, 2017, and (ii) also in the body of the present Appeal No.88 filed by the Appellant and (iii) also in the body of the Application dated 14^th November, 2017 filed by the Appellant before the Adjudicating Authority; it has always been clearly contended by the Appellant that it is only the document appearing at page 191, Folder III of the Memo of Appeal, (the said Assumption Sheet), which was handed over on 20^th September, 2017, and not any other document. To this end, I reproduce hereunder the text of both the Application and Appeal in this regard.

¶239

In the Application dated 14^th November 2017, the following submission appears at paragraph 15 (e) at internal page 5 of the Application (appearing at page 170 of Folder III of the Memo of Appeal) :

¶240

“15(e) Questions are to be asked about the basis and source of assumptions made by C & C in forming its opinion in as much as

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on 20^th September 2017 at the culmination of that day‟s proceedings, Mr. Chokshi handed over a “Valuation Assumption/Line item Sheet” (which sheet is attached as the last page to the witnesses transcript – Annexure 2 above) . The Company has not had any opportunity to question the witness about the contents of the said sheet since it was handed over at the culmination of proceedings on 20^th September, 2017.

¶245

(emphasis supplied)

¶246

In the present Appeal No.88 of 2017, the following submission appears at Ground H appearing at page 15 of Folder I of the Memo of Appeal :

¶247

“H. The Ld. Special Director erred and failed to consider that the reasons set out in detail in the application for recalling the witness; included a request to question the witness on the „Valuation Assumption/Line Item Sheet‟, which was only provided to the Appellant at the culmination of that day‟s proceedings on 20.09.17 and, as such, the Appellant did not have any opportunity to question Mr. Mitil Chokshi about the contents of the said statements.” (emphasis supplied) 9. It is therefore specifically denied that any false and/or misleading and/or incorrect statements whatsoever, have been made by the Appellant in this regard. The record itself clearly establishes that it was and is the Appellant‟s contention that the said Assumption Sheet was only handed over to the Appellant at the culmination of proceedings on 20^th September 2017. Additionally, it is also submitted that, the Respondent has nowhere denied the said contention of the Appellant as appearing both in the Application dated 14^th November 2017 and in the Memo of Appeal as reproduced hereinabove.

¶248

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¶250

In fact, at the time of the hearing on 22^nd November 2017, it is the Respondent who orally submitted that the said Assumption Sheet was furnished to the Appellant under cover of letter dated 14^th August 2017; and which submission has been recorded in the order dated 22^nd November 2017 as; “He seeks time to file the affidavit in this regard within one week to the effect the copy of the said document was supplied to the counsel much earlier point of time .” (emphasis supplied). By reason of the clear admission of the Respondent made in the said “affidavit” particularly at paragraphs 6 and 7 thereof, it is now clearly established that the said Assumption Sheet was only handed over to the Appellant at the culmination of the day‟s proceedings on 20^th September 2017 and not on any date prior thererto as incorrectly submitted at the time of the hearing on 22^nd November 2017.

¶251

As aforesaid, the said “affidavit” travels far beyond what was directed by this Hon‟ble Tribunal, wherein much has also been made out about the fact as to whether or not, the cross examination of Mr. Mitil Chokshi had concluded on 20^th September, 2017. In this regard, it is submitted that, „that issue‟, is not a matter before this Hon‟ble Tribunal in the present appeal. The prayers in the present appeal in fact require that, Mr. Mitil Chokshi be recalled as witness towards conducting his cross examination. Whether the cross examination of Mr. Mitil Chokshi on 20^th September, 2017 was concluded or not, is not something this Hon‟ble Tribunal is called upon to determine in the present appeal and the submissions made in that regard in the said “affidavit” are therefore without reason. That was an issue in Appeal No. 83 of 2017 before this Hon‟ble Tribunal, which was disposed off by a final order dated 13^th November, 2017 and which has worked itself out. The deponent of

¶252

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¶254

the said “affidavit” cannot by the said “affidavit” seek to re-agitate the final order in Appeal No. 83 of 2017.

¶255

Under paragraph 8 of the said “affidavit” there is also an incorrect contention by the Respondent that no new fact was brought out by the said Assumption Sheet (appearing at page 191 of Folder III of the Memo of Appeal) and that the various line items of income and expenditure as appearing therein are such that, the details thereof were already available as figures in the “Working Sheets” (appearing at page 815-817 of Folder III A of the Memo of Appeal). I submit that this is an incorrect statement and is not borne out upon an assessment of both the said Working Sheets and the said Assumption Sheet. For ease of reference, I am attaching the said Working Sheets and the said Assumption Sheet as “ Exhibits-1 and 2” hereto respectively.

¶256

From a perusal of the Working Sheets and the Assumption Sheet, it is evident that of the 11 income/revenue line items appearing in the said Assumption Sheet, other than line item no. 11 “ other nonoperating income”; no specific amounts attributable to any of the other line item Nos. 1 to 10 can be discerned and/or individually identified from the Working Sheets. Additionally, the percentage variation attributable to none of these 11 income/revenue items is mentioned/indicated in the Working Sheets.

¶257

Similarly, of the 61 expenditure line items, appearing in the said Assumption Sheet other than line item Nos. 1 (Franchise Fee), 2 (Cost of Players) and 61 (Depreciation/Amortization); no specific amounts attributable to any of the other 58 items can be discerned and/or individually identified from the Working Sheets. Additionally, the percentage variation attributable to none of these 61 expenditure items is mentioned/indicated in the Working Sheets.

¶258

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¶260

I say that, inter alia under paragraphs 6 & 7 of the said “affidavit”, the Respondent has also sought to wrongly allude that, Q.41 to 45 of the cross-examination of Mr. Mitil Chokshi, (held on 20^th September, 2017), were questions which the authorized representative of the Appellant had asked, whilst referring to the said Assumption Sheet. I submit that this contention by the Respondent is incorrect. I state that questions 41 to 45 put forth by the Appellant‟s authorized representative were with a reference to the audited accounts of the Appellant and the C&C Working Sheets provided to the Appellant by the Respondent under cover of their letter dated 14^th August, 2017. A copy of the relevant extracts from the audited accounts of the Appellant for F.Y. 2012-2013 of the Appellant are annexed hereto and marked as “Exhibit- 3” collectively, (these audited accounts form part of the record before the Adjudicating Authority). Questions 41 to 45 were not asked from the Assumption Sheet. The context of these questions 41 to 45 is as follows, which clearly demonstrates that the questions were not and could not have been asked from the Assumption Sheet as suggested by the deponent of the said “affidavit”:

¶261

Q. 41 – this is with reference to the audited accounts of the Appellants for F.Y. 2012-2013. “Revenue from Prize money” which appears as the 6^th line item in Note 13: “Revenue from Operations of the audited accounts for F.Y. 2012-2013”. From the answer to Question 41, it is apparent that it was culled out from the audited accounts. The Assumption Sheet makes no reference to the sum of Rs. 10 Crore nor to the sum of Rs. 4.98 Crore. This clearly shows that the question was not asked from the Assumption Sheet.

¶262

Q. 42 – “Revenue from Participation fee” appears as the 5^th line item in Note 13: “Revenue from Operations of the audited accounts for F.Y. 2012-2013”. This question on the “estimate” was not asked

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from the Assumption Sheet. Also, the question was not about the percentage increase based on the revenue from this fee.

¶267

Q. 43 – this is a statement made on the basis of the audited accounts. This was a follow up question based on the answer to question no. 42. The answer to question no. 43 is with a reference to the actual numbers till 31^st March 2013 contained in the audited accounts and not from the Assumption Sheet. This question was not asked from the Assumption Sheet.

¶268

Q. 44 – this is with reference to the audited accounts of the Appellant for F.Y. 2012-2013 read with one of the Working Sheets providing to the Appellant under cover of the letter dated 14^th August 2017. The answer is also from the audited accounts of F.Y. 2012-2013 and not from the Assumption Sheet. In fact, the Assumption Sheet makes no reference to “Administrative & Other Expenses”. This question was not asked from the Assumption Sheet.

¶269

Q. 45 - this is a follow up question to Q. 44. It was asked with a reference to the audited accounts of March 2012, March 2013 and not asked from the Assumption Sheet.

¶270

As quoted by me (from the Application dated 14/11/2017 and the present Appeal), in paragraph 8 hereinabove, I reiterate that, the Appellant did not have any opportunity to question the witness about the contents of the said Assumption Sheet, since it was handed over at the culmination of proceedings on 20^th September 2017. I reiterate that questions 14 to 15 put to the witness were not raised from the Assumption Sheet.

¶271

In paragraph 8 of the said “affidavit” it is also wrongly contended that, although called upon to do so, the Appellant did not seek clarifications to the documents forwarded by the Respondent to the Appellant under cover of their letter dated 14^th August 2017. This

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statement is false and incorrect to the knowledge of the Respondent. The Appellant in reply to the said letter of 14^th August 2017, sent a letter dated 18^th August 2017, which was duly accepted and acknowledged by the Respondent on 18^th August 2017. By the said letter, the Appellant sought various clarifications including a specific clarification relating to the underlying assumptions made by M/s. Chokshi and Chokshi in the Working Sheets pertaining to the C&C Opinion. For ease of reference, a copy of the said covering letter dated 14^th August 2017 and the letter dated 18^th August 2017 are annexed hereto and marked as “Exhibit- 4 and 5” respectively, (these documents will also be found at pages 802 and 818 respectively of Folder III A of the Memo of Appeal) – see in particular paragraph ii, (a to c), at page 819 of Folder III A of the Memo of Appeal. The Respondent by its letter dated 21^st August 2017 in response to the letter of 18^th August 2017 did not provide any clarifications, but fixed the next date of hearing. A copy of the Respondent‟s letter dated 21^st August 2017 is annexed thereto and marked as “Exhibit- 6” .

¶276

Without prejudice to the aforesaid, I am advised to submit that the said “affidavit”, as sought to be filed by the Respondent and which is being responded to herein, is not an affidavit since it is not affirmed and/or sworn before a person authorized to administer oath and consequently no reliance can be placed upon the same.

¶277

SUPPLEMENTARY WRITTEN SUBMISSIONS ON BEHALF OF THE

¶278

APPELLANT:

¶279

The appellant vide letter dated 09^th January, 2018 submitted as under:

¶280

“These Supplementary Written Submissions are filed in addition to the Written Submissions filed by the Appellant on 6^th December 2017

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pursuant to the order dated 22^nd November 2017 passed in the matter. The necessity towards the filing of these Supplementary Written Submissions is to set on record the correct position in view of certain incorrect statements and assertions made by the Respondent in their Written Submissions filed before this Hon'ble Tribunal on 7^th December 2017.

¶285

A. Jurisdiction of this Hon'ble Tribunal and the ability to constitute a bench with a single member.

¶286

The Respondent under paragraphs 6 and 7 of their written submissions, has wrongly contended that this Hon'ble Tribunal did not have jurisdiction when sitting singly and when it passed an Order dated 13^th November 2017 in Appeal No. 83 of 2017, also filed before this Hon'ble Tribunal. It is submitted that this contention is both mischievous and ex-facie incorrect. Whilst it is admitted that the erstwhile Section 20 of Foreign Exchange Management Act, 1999 (“ FEMA ”), specifically provided for the constitution of a single member bench in the Appellate Tribunal and this Section has been omitted by the Finance Act, 2017; Section 18 of FEMA was also amended in the year 2017 whereby, the constitution of the Appellate Tribunal under FEMA is now to be the same as the Appellate Tribunal constituted under sub-Section (1) of Section 12 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976. The constitution of the Appellate Tribunal under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 is under Section 12 of that Act. Amendment to Section 12(6A) effective from 1^st June 2016 specifically provides that where the Chairman considers it necessary for the expeditious disposal of appeals he may constitute a bench

¶287

with one or two members and the bench so constituted may exercise FPA-FE-87/MUM/2017

¶288

¶289

and discharge the powers and functions of the Appellate Tribunal. Section 12(6A) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 is reproduced hereunder:

¶290

"( 6A)Notwithstanding anything contained in sub-section (6), where the Chairman considers necessary so to do for the expeditious disposal of appeals under this section, he may constitute a Bench with one or two members and a Bench so constituted may exercise and discharge the power and function of the Appellate Tribunal:

¶291

Provided that if the members of a Bench so constituted differ on any point or points, they shall state the point or points on which they differ and refer the same to a third member (to be special by the Chairman) for hearing on such point or points and such point or points shall be decided according to the opinion of that member ."

¶292

By reason of the clear provisions of Section 12(6A) it is both mischievous and dishonest for the Respondent to contend that this Hon'ble Tribunal did not have jurisdiction when it sat singly in Appeal No. 83 of 2017. In any event it is further submitted that that appeal was disposed off by final order on 13^th November 2017, and accordingly, the Respondent cannot seek to reopen and reagitate that matter in the present appeal. It is submitted that such practices by litigants should be deprecated in the strongest possible manner.

¶293

B. Reliance by the Respondent on the judgement passed by the Delhi High Court in the case of Arun Kumar Mishra vs Union of India 208(2014) DLT 56 (“Arun Kumar”) .

¶294

FPA-FE-87/MUM/2017 & FPA-FE-88/MUM/2017

¶295

Page 36 of 59

¶296

Under paragraph 5 of the Written Submissions filed by the Respondent, the Respondent has selectively picked out paragraph 9 from the captioned judgement in order to create a prejudice against the Appellant in context of the power and ability of this Hon'ble Tribunal to interfere with any order of the adjudicating authority, (not being an order levying any penalty).

¶297

By and under the Written Submissions filed by the Appellant on 6^th December 2017, the Appellant has set-out in detail its submissions relating to the maintainability of an appeal under Section 19 of FEMA arising from an order passed by an Adjudicating Authority, (not being an order levying any penalty). The Appellant reiterates the same.

¶298

Additional thereto, it is also submitted that the judgement passed by the Delhi High Court in the case of Arun Kumar is not applicable to the facts of the present case for the following reasons amongst others, each of which is without prejudice to one another:

¶299

i. The judgement of Arun Kumar is in the context of Prevention of Money Laundering Act, 2002 (" PMLA ") and the various analysis under that judgement is in the context of PMLA. As against this the present Appeal has been filed under FEMA and under the provisions of Section 19 thereof. The scheme of the statutes is entirely different. As aforesaid, the Appellant has filed detailed Written Submissions in the matter relating to the maintainability of the present Appeal under Section 19 of FEMA. With respect it is submitted that the appeal provisions of PMLA cannot simplicitor be made applicable to the appeal provision of FEMA which are different.

¶300

FPA-FE-87/MUM/2017 & FPA-FE-88/MUM/2017

¶301

Page 37 of 59

¶302

ii. It is to be noted that Section 19(6) of FEMA empowers the Appellate Tribunal to suo-moto examine the "legality, propriety or correctness of any order" made by an adjudicating authority under Section 16 and make such order as it thinks fit. The phrase "any order" in Section 19(6) once again clearly indicates that it is not restricted and limited to the final order. Section 16(3) requires the adjudicating authority to hold an enquiry under Section 16(1). Section 16(5) deals with the powers of the adjudicating authority during such enquiry. Section 16(6) provides for the enquiry to be disposed of within a timeframe, failing which reasons are to be recorded in writing for not disposing of the complaint within the said period. Thus, there are a variety of orders that could be passed under Section 16 and not only a final order. All such orders would be revisable by the Appellate Tribunal in exercise of its power under Section 19(6) if they effect valuable rights. Consequently, the words "any order" in section 19(6) and an order in 19(1) would be given the same meaning.

¶303

iii. Pertinently it is also to be noted that the Order passed by the Adjudicating Authority on 15^th November 2017 from which the present appeal arises is clearly a final order since the same records that the adjudication proceedings are concluded albeit without any hearing. By paragraph 17 of the said Order dated 15^th November 2017, the Adjudicating Authority has specifically recorded that he has decided to conclude the adjudication proceedings in the matter and has thereafter reserved the same for orders. Whilst the present appeal and the grounds of appeal clearly deal with the illegality of passing such order without any hearing, without prejudice to the rights and contentions of the Appellant, it is submitted that if

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indeed the said Order dated 15^th November 2017 is upheld by this Hon'ble Tribunal, then and in those circumstances the Appellant would have no further opportunity to re-agitate the matter before the Adjudicating Authority since he has concluded the proceedings. The case and facts of Arun Kumar is very far away from these facts and for this reason also cannot be relied upon by the Respondent in the present matter.

¶308

It is pertinent to note that in the case of Shahid Balwa vs Directorate of Enforcement 201 (2013) DLT 211 (DB) [Page 271-283 Folder III to the Memo of Appeal], passed on 29^th May 2013, a Division Bench of the Delhi High Court dealing with the an appeal arising from a Writ Petition filed under the provisions of FEMA has permitted and granted to the appellant therein, the right to cross-examine the witnesses relied upon by the Directorate of Enforcement. It is emphasised that this judgement is in context of FEMA and passed by the Division Bench of the Delhi High Court on 29^th May 2013.”

¶309

FURTHER SUBMISSIONS OF THE APPELLANT

¶310

In view of the order of this Tribunal dated 09^th January, 2018 both the parties were allowed to file the written synopsis. The appellant vide letter dated 16^th January, 2018 submitted as under:

¶311

“These Written Submissions are being filed on behalf of the Appellant pursuant to the order dated 9^th January 2018, passed in the matter.

¶312

A. ADOPTION OF WRITTEN SUBMISSIONS DATED 6^TH DECEMBER 2017 AND SUPPLEMENTARY WRITTEN SUBMISSIONS DATED 9^TH JANUARY 2018 FILED BY THE APPELLANT IN APPEAL NO.

¶313

88 OF 2017 .

¶314

FPA-FE-87/MUM/2017 & FPA-FE-88/MUM/2017

¶315

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¶316

i. The Appellant relies upon and adopts in their entirety, the Written Submissions and Supplementary Written Submissions filed by this Appellant in this Hon'ble Tribunal on 6^th December 2017 and 9^th January 2018 in Appeal No. 88 of 2017.

¶317

ii. Appeal No. 88 of 2017 is primarily in context of the recall/crossexamination of the witness on behalf of the Respondent, Mr. Mitil Chokshi.

¶318

iii. The present appeal is primarily towards seeking the crossexamination of the other witnesses on behalf of the Respondent,i.e. the Complainant Mrs. V. Kalyani and the Investigating Officer, Mr. D.K. Sinha. All submissions made, case laws relied upon and documents relied upon by the Appellant in context of, the reasons, rationale, justification and necessity,towards cross-examining the witness in Appeal No. 88 of 2017, are fully adopted by this Appellant in these Written Submissions as if the same were set-out herein seriatim.

¶319

B. RELEVANCE OF THE WITNESS, MR. D. K. SINHA (INVESTIGATING OFFICER) AND THE NEED TO CROSS – EXAMINE HIM.

¶320

i. By an application dated 30^th October 2017, the Appellant requested the Ld. Adjudicating Authority to grant to them the right to crossexamine the Complainant, Smt. V. Kalyani and the Investigating Officer, Mr. D.K. Sinha ( see page 237&238 Folder III of the Memo of Appeal ).

¶321

ii. By and under the Impugned Order dated 30^th October 2017, the Ld. Adjudicating Authority summarily rejected the application of the Appellant towards cross-examining the said Smt. V. Kalyani and Mr.

Page 40 of 59

D.K. Sinha. The impugned order of rejection was passed without giving any reasons.

¶326

iii. Subsequently, in the Order dated 15^th November 2017, (which is the Impugned Order in Appeal No. 88 of 2017), by and under paragraph 13 thereof, the Ld. Adjudicating Authority inter alia recorded that in his view, the application/request towards cross-examination of the said Smt. V. Kalyani and Mr. D.K. Sinha was a delaying tactic adopted by the Appellant and therefore the Ld. Adjudicating Authority had decided to proceed with the main matter without granting to the Appellant the right to cross-examine the said two officers.

¶327

iv. It is submitted that the foundation for the cross-examination of Mr. D. K. Sinha was laid in question nos. 19 – 21 of the crossexamination of Mr. Mitil Chokshi ( See pages 221 & 222 Folder III of the Memo of Appea l) and para 8 of the reply dated 5^th June 2017 filed by the Appellant.

¶328

v. It is submitted that, the primary foundation of the present adjudication proceedings is the Investigation Report dated 10^th August 2012, made by Mr. D.K. Sinha. It is on the basis of this report that the private agency of M/s. Chokshi & Chokshi, (chartered accountants), were engaged on mutually agreed commercial terms by the Enforcement Directorate to give their opinion on the valuation of shares, (albeit the mandate from the ED was in relation to “transfer” of share to a non-resident and not in relation to "issuance” of shares to a non-resident).

¶329

vi. The Opinion on valuation issued M/s. Chokshi & Chokshi, in or about October 2014, although expected to be an “independent opinion”, ex-facie relies heavily upon the conclusions drawn in the said Investigation Report dated 10^th August 2012.

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vii. In the course of his part cross-examination held on 20^th September 2017, Mr. Mitil Chokshi had inter alia been unable to explain as to how and why the said Investigation Report was made available to M/s. Chokshi & Chokshi towards giving their “independent” opinion on valuation to be based on the erstwhile CCI Guidelines (only); and not to be based upon any other conclusions or findings. In Q.19 to Q.21 of his cross-examination, Mr. Chokshi confirms that M/s. Chokshi & Chokshi had not asked for the said Investigation Report but the same had been made available to them, ( See pages 221&222 Folder III of the Memo of Appeal ).

¶334

viii. In giving their Opinion in October 2014, the said Investigation Report is marked as „Exhibit 7‟ to the said Opinion by M/s. Chokshi and Chokshi. It is therefore an admitted position that the Opinion of M/s. Chokshi & Chokshi relies upon the said Investigation Report.

¶335

ix. It therefore becomes very essential to cross-examine Mr. D.K. Sinha, the Investigating Officer.

¶336

x. The Investigation Report also contains numerous incorrect assertions, although relevant documentation in that regard had been provided to the Investigating Officer. Inasmuch as the Investigation Report and correspondingly its conclusion are inter alia erroneous, since various premises and assertions contained therein are factually incorrect and belied by the documents on record. By way of illustration only, one such glaring error is as follows;

¶337

In paragraph 56 of the report the Investigating Officer inter alia states the „Franchise Agreement‟ had not been reviewed by the valuer, who made the Valuation Report on behalf of the Appellant, prior to issuance of shares to a non-resident. This statement is patently incorrect. The concerned Chartered Accountant, Mr. R. Ajgaonkar who issued the Valuation Report, (dated 28^th February 2009), during his statement given to the Enforcement Directorate

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on 10^th January 2012 has clearly stated that he had reviewed a copy of the Franchise Agreement in making his valuation report.

¶342

xi. It is submitted that it is inter alia also for this amongst other such discrepancies that the Investigating Officer, Mr. D.K. Sinha, must be cross-examined to explain his Investigation Report, particularly since the Opinion of M/s. Chokshi & Chokshi relies on this Investigation Report, and, in turn and consequently, the Complaint filed by Mrs. V. Kalyani relies on both the Investigation Report and the Opinion of M/s. Chokshi & Chokshi.

¶343

xii. It is submitted that whilst no prejudice would be caused to the Respondent by reason of the cross-examination of Mr. D.K. Sinha; grave injustice and grave prejudice would be caused to the Appellant if the Appellant is not permitted to cross-examine Mr. D.K. Sinha.

¶344

Detailed further grounds in this regard, are duly set out in the memo of Appeal . ”

¶345

FURTHER SUBMISSIONS OF THE RESPONDENT

¶346

As stated earlier, as per the order of this Tribunal dated 09^th January, 2018 both the parties were allowed to file the written synopsis. The respondent - vide letter dated 17^th January, 2018 - has submitted as under:

¶347

“These Written Submissions are being filed on behalf of the Respondent pursuant to the order dated 9^th January 2018, passed in the matter.

¶348

The present appeal filed by the appellant is not maintainable under Foreign Exchange Management Act, 1999.

¶349

FPA-FE-87/MUM/2017 & FPA-FE-88/MUM/2017

¶350

Page 43 of 59

¶351

That under Foreign Exchange Management Act, 1999 only appeal can be filed with the Adjudicating Authority passes an order imposing penalty as contemplated under Section 19(1). Since the proceedings before the Adjudicating Authority are in the nature of enquiry as detailed under Section 16 of the Act and during enquiry the proceedings cannot be termed as an order as enquiry does not contemplate passing any order during the adjudication.

¶352

That the respondents is relying on the written submission filed in Appeal 88 of 2017 and are not repeated herein for the sake of brevity, however the present written submissions are filed to respond to the factual matrix raised in the present appeal.

¶353

The following payers were made by the applicant in the subject Appeal:-

¶354

a. Set aside the order dated 30.10.2017 passed by the Adjudicating Authority, rejecting the request for cross examination of the above officials of ED.

¶355

b. Allowing Cross- examination of the above officials.

¶356

c. Stay of the adjudication proceedings till the disposal of the subject Appeal.

¶357

Justification given by the appellant in the appeal filed before ATFE for cross examination of the above officials are given as under:-

¶358

(A) Shri D. K. Sinha, AD

¶359

The valuation report prepared by M/s Chokshi & Chokshi CA was reportedly based on the investigation report prepared by Shri D.K.Sinha, which was forwarded to C&C.

¶360

The complaint filed by the complainant heavily relies this report prepared by C&C.

¶361

Hence, the cross-examination of Shri D.K. Sinha was warranted.

¶362

(B) Smt. V. K. Kalyani, AD (Complainant)

¶363

FPA-FE-87/MUM/2017 & FPA-FE-88/MUM/2017

¶364

Page 44 of 59

¶365

The complaint filed by the complainant heavily relies valuation report prepared by C&C.

¶366

Hence, the cross-examination of Smt. V.K. Kalyani was warranted.

¶367

The request for cross –examination of the above officials was made by the Advocate of Shri Lalit Kumar Modi during the course of personal hearing held on 30.10.2017. The said request was rejected by the Adjudicating Authority during the personal hearing itself and the same has been duly noted in the record of personal hearing held on 30.10.2017.

¶368

Various documents shown as Annexures to the Appeal filed by KRSPL were verified with the case records. These documents are fully documented and recorded and available in the relevant case file.

¶369

It is submitted that in Para (A) under the title 'Grounds' in the Appeal No. 87 of 2017, the Appellant has made a submission that "there has been an apparent contact amongst the Investigation officer, Mr. Chokshi and the Complainant in the preparation of the Chokshi Valuation Report". The above submission is totally baseless and contrary to the facts. The service of M/s C&C was roped in by the Department to secure their opinion on the fairness of valuation of shares done by the auditors of M/s KRSPL. To enable M/s C&C to discharge this specific task, certain inputs were provided by the then Investigating officer (viz. Sh. D.K.Sinha, AD) to get an overview of facts related to the enquiries. This cannot be termed as a 'contact' between the Investigation Officer, Mr. Chokshi and the Complainant, as wrongly made out in the aforesaid Para in the Appeal. Hence, this wrongful averment is whehemently denied and it shows that the appellant has habit to make wrong averments to mislead this

¶370

Hon‟ble tribunal.

¶371

FPA-FE-87/MUM/2017 & FPA-FE-88/MUM/2017

¶372

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¶373

That respondent with a view to explain a complete picture of all the

¶374

proceedings taken place before Adjudicating Authority to dislodge the repeated wrong submissions and averments a synopsis is prepared and is given below;-

¶375

(Adjudication Proceedings in SCN No. T-4/01-B/SDE(VA)/WR/2017 dated 24.03.2017 issued to M/s KRSPL & 2 others.

¶376

Sr . N	Date	Description of Events
o.
1	24.03.2017	Show Cause Notice (SCN) bearing No. T-4/01- B/SDE(VA)/WR/2017 was issued to (i) M/s KRSPL (ii)Mrs. Gauri Shah Rukh Khan, Director of KRSPL and (iii) Sh. Shah Rukh Khan
2	30.03.2017	SCNserved on KRSPL and Smt.GauriShah Rukh Khan
3	11.04.2017	Separate letters dated 11.04.2017 received from Smt. Gauri Shah Rukh Khan and Sh. Shah Rukh Khan seeking time upto 15.06.2017tofile their reply to the SCN
4	15.05.2017	Letter received from KRSPL requesting for copies of all the Exhibits (1-11) to the opinionof M/s Chokshi& Chokshi
5	08.06.2017	Letter sent to KRSPL forwarding therewith copies of Exhibits (1- 11) to the opiniongivenbyM/s Chokshi& Chokshi
6	05.06.2017	Letter filed by KRSPL as reply to the SCN, refuting the charges in the SCN and further seeking the Adjudicating Authority to formanopinionbased oncause shownby them inthereply
7	09.06.2017	Letter filed by Smt. Gauri Shah Rukh Khan as reply to the SCN refuting the charges alleged againsther
8	09.06.2017	Letter filed by Sh. Shah Rukh Khan as reply to the SCN refuting the charges alleged againsthim
9	28.06.2017	Letter received from KRSPL requesting for copy of letter dated 26.06.2013 by the department addressed to M/s Chokshi & Chokshi and also copy of letter dated 05.07.2013 filed by M/s Chokshi & Chokshi which were found mentioned in the Exhibit to the opiniongivenby C&C.
10	19.07.2017	After considering the cause shown by all the three notices in their respective replies to the SCN, the Adjudicating Authority formed an Opinion in terms of Rule 4(3) of FEM (Adjudication proceedings and Appeals) Rules, 2000 in respect of charges alleged against allthe threenoticeesinthe ShowCauseNotice.
11	20.07.2017	Call notice issued by the department posting the personal hearing on 23.08.2017 was sent to all the noticees informing thereunder that the Adjudicating Authority was of the opinion that an enquiry should held in accordance with the procedure laid down under Rule 4(3) of the Foreign Exchange Management (Adjudication ProceedingandAppeals)Rules 2000
12	03.08.2017	Letter from KRSPL, seeking copies of documents sought under their earlier letter dated 28.06.2017 viz. (i) Terms of engagement of Chokshi & Chokshi (ii) Calculation made by C&C to arrive at thefair valueofequityshareof KRSPL(i.e.Rs.70toRs.86)
13	03.08.2017	Letter from KRSPL, seeking cross-examination of the partner of Chokshi & Chokshi on 23.08.2017( i.e. the next date of personal hearing )
14	09.08.2017	Letter issued by the department to Sh. Mitil Chokshi, the partner of Chokshi & Chokshi requesting for the copy of documents sought by KRSPL viz. Calculation sheet/ working sheetfor arrivingat thefair value of KRSPL atRs. 70-86 per

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15	11.08.2017	share Letter received from Chokshi & Chokshi with reference to Letter dated 09.08.2017 sent by the department, enclosing therewith the copies of (i) Projected Profit & Loss Account of KRSPL (ii) The valuation working and Sensitivity analysis for the shares of KRSPL
16	14.08.2017	Letter sent by the department to KRSPL forwarding the copies of documents viz. (a) Letter dated 26.06.2013 to C&C (b) Letter of C&C dated 05.07.2013 (c) Letter dated 30.10.2014 from C&C, containing the terms of engagement and (d) Working sheet by C&C pertaining to opinion on fairness of equity shares of KRSPL. In the said letter, KRSPL was also informed that their request for cross-examination of the partner of C&C was allowed on the date of personal hearing fixed on 23.08.2017. In the said letter, KRSPL was also informed that if they require any clarification on the said documents, the same should be communicatedonorbefore19082017
17	18.08.2017	... Letter from KRSPL, seeking adjournment of the personal hearing fixed on 23.08.2017 due to non-availability of their Counsel on the stipulated date and also for scrutinizing various figures in the working sheet of C&C which were provided to them under letter dated 14.08.2017
18	21.08.2017	Letter issued to KRSPL by the department, granting their request for adjournment of personal hearing scheduled on 23.08.2017and adjourning the personal hearing to 20.09.2017.
19	21.08.2017	Letter by the department to the partner, M/s Chokshi & Chokshi informing the reschedule of the cross-examination to 20.09.2017
20	20.09.2017	Cross-examination of Sh. Mitil Chokshi, partner of M/s C&C by Sh. Dilip K. Sheth, Counsel for KRSPL was held as detailed in the affidavit of the IO files in appeal 88 of 2017.
21	29.09.2017	Letter from KRSPL, seeking copy of ED letter of engagement regarding C&C opinion on issue of shares of KRSPL, sought by them under their earlier letters dated 28.06.2017, 03.08.2017 and18082017
22	05.10.2017	.. Letter by KRSPL stating that the cross-examination held on 20.09.2017 was incomplete. They also stated that they would be making further oral arguments and written submission after completion of the hearing and further sought for next date for continuationofthe proceedings.
23	10.10.2017	Call notice sent by the department to KRSPL informing the next date of personal hearing fixed on 23.10.2017. In the said call Notice, it was informed that in case they fail to appear before the Adjudicating Authority on the said date, he may proceed to decide the case in their absence, on the basis of material evidenceavailablebeforehim
24	12.10.2017	. A letter sent to KRSPL as reply to their letter dated 05.10.2017 informing there under that the cross-examination of Sh. Mitil Chokshi, Partner of C&C held on 20.09.2017 was concluded on the same day, as duly noted in the recording of cross- examination.
		In the said letter, KRSPL was also informed of the next date of personal hearing fixed on 23.10.2017 for the purpose of recording their oral arguments / written submission before the adjudicating authority.

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25	12.10.2017	In the same letter, KRSPL was informed regarding the issue of a separate call noticefor PHon23.10.2017. Letter sent by the department to KRSPL as reply to the letter dated 29.09.2017 informing that all the relevant documents sought by them under their two letters dated 28.06.2017 and 03.08.2017 were already provided to them vide this office letter dated 14.08.2017. In the same letter KRSPL was also informed that their third letter dated 18.08.2017 pertains to the request for adjournment of the personal hearing was also responded by the department vide letter dated 21.08.2017, wherein the adjournment sought by them was granted.
		In the same letter, it was informed that the next date of personal hearing was fixed on 23.08.2017 for recording their arguments.
26	18.10.2017	Letter filed by KRSPL, seeking adjournment of personal hearing posted on 23.10.2017 to any convenient future date, due to the non-availability oftheirCounselonthe stipulated date.
27	20.10.2017	Call notice / Letter sent by the department to KRSPL, granting their request for adjournment of PH posted on 23.10.2017. In the same letter, KRSPL was also informed about the next date of personal hearing fixed on 30.10.2017. In this call Notice also, it was informed that in case they fail to appear before the Adjudicating Authority on the said date, he may proceed to decide the case in their absence, on the basis of material evidence available before him.
28	30.10.2017	Personal hearing was held. During the course of hearing, the advocates of KRSPL submitted a letter dated 30.10.2017 informing their filing of an Appeal before the ATFE, challenging the Order dated 12.10.2017 refusing their right to complete the cross-examination of Sh. Mitil Chokshi, partner of C&C. An e- mail print out dated 30.10.2017 received from their Counsel regarding the lodging of an Appeal No. 83/2017 before the ATFE was also enclosed along with the letter.
		In the same letter, the advocate also sought for cross- examination of Smt. V. Kalyani, the Complainant and Mr. D.K.Sinha, the signatory of ED investigation report dated 10.08.2012. The advocate for KRSPL made a submission that the final hearing in the matter could not be proceeded without closing the evidence, which included further cross-examination of Sh. Mitil Chokshi. The Adjudicating Authority rejected their demand for cross- examination of Smt. V. Kalyani, the complainant and Sh. D.K.Sinha, Assistant Director, as being unjustifiable. It was also observed by the Adjudicating Authority that the cross- examination of Sh. Mitil Chokshi, partner of C&C was concluded on 20.09.2017 as duly noted in the record of cross- examination and the advocate of KRSPL was directed by the Adjudicating Authority to proceed with his arguments in the matter. In response, the advocate sought for time since the Appeal filed before theATFE,was to come upfor hearing on

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13.11.2017. The advocate was directed by the Adjudicating Authority to file a written submission to this effect, which he undertook to submit. The matter was accordingly adjourned to 15.11.2017 for further hearing.

¶389

29 31.10.2017 Letter from KRSPL informing their filing of two separate Appeal Nos. 83 of 2017 & 84 of 2017 before the Hon‟ble ATFE which were posted for hearing on 13.11.2017.

¶390

That the appellant has not approached this Tribunal with clean hands and made all attempts to mislead and misguide this tribunal by making wrong submissions and improving the case by raising pleas which are not substantiated from the record of the Adjudicating Authority.”

¶391

FINDINGS/DECISION

¶392

Before one goes into the merits of the appeal, the main issue that has to be examined relates to the admissibility of the appeal. As stated earlier, the applicant has made an appeal to this Tribunal u/s 19 of the FEM Act-1999. In order to examine the admissibility of the instant appeal, it is imperative to re-produce/examine the provisions of Section 19 of the said section, which reads as under: -

¶393

“19. Appeal to Appellate Tribunal

¶394

(1) Save as provided in sub-section (2), the Central Government or any person aggrieved by an order made by an Adjudicating Authority, other than those referred to in sub-section (1) of section 17, or the Special Director (Appeals), may prefer an appeal to the Appellate Tribunal:

¶395

Provided that any person appealing against the order of the Adjudicating Authority or the Special Director (Appeals) levying any penalty, shall while filing the appeal, deposit the amount of such penalty with such authority as may be notified by the Central Government:

¶396

Provided further that where in any particular case, the Appellate Tribunal is of the opinion that the deposit of such penalty would cause undue hardship to such person, the Appellate Tribunal may dispense with such deposit subject to such conditions as it may deem fit to impose so as to safeguard the realization of penalty.

¶397

FPA-FE-87/MUM/2017 & FPA-FE-88/MUM/2017

¶398

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¶399

(2) Every appeal under sub-section (1) shall be filed within a period of forty-five days from the date on which a copy of the order made by the Adjudicating Authority or the Special Director (Appeals) is received by the aggrieved person or by the Central Government and it shall be in such form verified in such manner and be accompanied by such fee as may be prescribed:

¶400

Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period.

¶401

(3) On receipt of an appeal under sub-section (1), the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against.

¶402

(4) The Appellate Tribunal shall send a copy of every order made by it to the par-ties to the appeal and to the concerned Adjudicating Authority (or the Special Director (Appeals) as the case may be.

¶403

(5) The appeal filed before the Appellate Tribunal under sub-section (1) shall be dealt with by it as expeditiously as possible and endeavor shall be made by it to dispose of the appeal finally within one hundred and eighty days from the date of receipt of the appeal:

¶404

Provided that where any appeal could not be disposed off within the said period of one hundred and eighty days, the Appellate Tribunal shall record its reasons in writing for not disposing off the appeal within the said period.

¶405

(6) The Appellate Tribunal may, for the purpose of examining the legality, propriety or correctness of any order made by the Adjudicating Authority under section 16 in relation to any proceeding, on its own motion or other-wise, call for the records of such proceedings and make such order in the case as it think fit. ”

¶406

A perusal of the above said provision authorizes\entitles any person aggrieved by an order by the Adjudicating Authority to prefer an appeal to this Tribunal. In the instant case, it is an admitted case that this appeal has been made against the record of personal hearing held on 15.11.2017 in the office of Special Director, Directorate of Enforcement, Mumbai. In the said record, the Special Director has dealt with three applications submitted by the counsel of the appellant for consideration by the Adjudicating Authority. After consideration of the said three applications,

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the Adjudicating Authority has decided to conclude the Adjudication proceedings in the matter in terms of provisions of FEMA, 1999 and “reserved for orders”.

¶411

The above observation of the Adjudicating Authority would clearly show that hearing was conducted by him as part of adjudication proceedings and no order has been passed by him.

¶412

In case of the instant appellant, it is also observed that the four appeals have been filed. The details of the appeals and the prayer therein are as under:

¶413

1) Appeal No. FPA-FE-83/MUM/2017

¶414

In the said appeal filed before this Tribunal on 30.10.2017, the appellant has prayed as under:

¶415

(i) That the said order dated 12^th October, 2017 bearing File No. T-4/01-B/SDE(VA)/WR/2017/2418 passed by the Learned Special Director of Enforcement, be set aside.

¶416

(ii) That a further date be fixed for completion of the crossexamination of the witness, Mr. Mitil Chokshi.

¶417

(iii) That pending the hearing and final disposal of this Appeal, the subject adjudication proceedings initiated under the said Show Cause Notice, by stayed, and no coercive action be taken against the Appellants.

¶418

(iv) Pass such other orders as deemed fit and proper in the facts and circumstances in this case.

¶419

2) Appeal No. FPA-FE-84/MUM/2017

¶420

In the said appeal filed before this Tribunal on 30.10.2017, the appellant has prayed as under:

¶421

FPA-FE-87/MUM/2017 & FPA-FE-88/MUM/2017

¶422

Page 51 of 59

¶423

(i) That the said order dated 12^th October, 2017 bearing File No. T-4/01-B/SDE(VA)/WR/2017/2417 passed by the Learned Special Director of Enforcement, be set aside.

¶424

(ii) That the Special Director of Enforcement be directed to provide Appellants full, fair and complete inspection and discovery of documents as requested.

¶425

(iii) That pending the hearing and final disposal of this Appeal, the subject adjudication proceedings initiated under the said Show Cause Notice, by stayed, and no coercive action be taken against the Appellants.

¶426

(iv) Pass such other orders as deemed fit and proper in the facts and circumstances in this case.

¶427

3) Appeal No. FPA-FE-87/MUM/2017

¶428

In the said appeal filed before this Tribunal on 17.11.2017, the appellant has prayed as under:

¶429

(i) That the said Order dated 30^th October, 2017 passed by the Learned Special Director of Enforcement, be set aside.

¶430

(ii) That the Appellants be permitted to fully and effectively crossexamine the Complainant Mrs. V. Kalyani and the Investigation Officer Mr. D. K. Sinha.

¶431

(iii) That pending the hearing and final disposal of this Appeal, the subject adjudication proceedings initiated under the said Show Cause Notice, be stayed, and no coercive action be taken against the Appellants.

¶432

(iv) Pass such other orders as deemed fit and proper in the facts and circumstances.

¶433

4) Appeal No. FPA-FE-88/MUM/2017

¶434

In the said appeal filed before this Tribunal on 17.11.2017, the appellant has prayed as under:

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(i) Order dated 15^th November, 2017 passed by the Learned Special Director of Enforcement, be set aside.

¶439

(ii) Appellant be permitted to (i) recall Mitil Chokshi as witness and conduct the cross-examination (ii) fully and effectively cross-examine the Complainant Mrs. V. Kalyani and the Investigation Officer Mr. D. K. Sinha.

¶440

(iii) Pending the hearing and final disposal of this Appeal, the Subject adjudication proceedings initiated under the said Show Cause Notice, be stayed, and no order be passed therein.

¶441

(iv) Pass such other order(s) as deemed fit and proper in the facts and circumstances in this case.

¶442

A perusal of item (iii) of the said prayers of the appellant in all the 4 appeals filed reads as under:

¶443

“ That pending the hearing and final disposal of this Appeal, the subject adjudication proceedings initiated under the said Show Cause Notice, be stayed and no coercive action be taken against the Appellants .”

¶444

which clearly indicates that the appellant accepts that the Adjudication proceedings have been initiated and no order has been passed therein. The perusal of the hearing on 15.11.2017 also indicates that Special Director, Enforcement Directorate, Mumbai - in pursuance of this Tribunal‟s order dated 13.11.2017- has examined the issue regarding further cross examination and has come to the conclusion that the issue raised in the proposed further cross examination had already been addressed in the cross examination held on 20^th October, 2017 and also pointed out that the fact of the records of the cross examination clearly stated that “the cross examination was concluded at 6.00 p.m. today, 20^th September,

2017.”

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The submissions of the appellant as well as the respondent and the facts on record clearly establish the fact that the personal hearing held on 15.11.2017 in the office of the Special Director of Enforcement, Mumbai was a part of the enquiry/adjudication proceedings which would lead to the passing of final „order‟ by the Adjudicating Authority. The same stands confirmed by the last 3 words of the Adjudicating Authority in the said hearing/record where he has observed “Reserved for Orders”

¶450

The procedure of filing the appeal before this Tribunal has already detailed in Section 19 of FEMA-1999. The said provision entitles the appellant to prefer an appeal to this Tribunal against an order passed by the Adjudicating Authority. In the instant case, the order has yet to be passed by the Adjudicating Authority.

¶451

Attention is also invited to the first and second Provisos to Section 19(1) of the Act dealing with “Appeal to Appellate Tribunal” which is as under:-

¶452

“Provided that any person appealing against the order of the Adjudicating Authority or the Special Director (Appeals) levying any penalty, shall while filing the appeal, deposit the amount of such penalty with such authority as may be notified by the Central Government:

¶453

¶454

In view of the above Provisos to Section 19(1) of the Act, an appeal can be maintained/heard only when the issue of pre-deposit of penalty has been examined/addressed.

¶455

In the instant case, the conditions for filing Appeal has not been satisfied as no „penalty‟ has been imposed in the absence of „an order‟. As

¶456

FPA-FE-87/MUM/2017 & FPA-FE-88/MUM/2017

¶457

Page 54 of 59

¶458

the provisions laid down in Section 19(1) of the Act have not been fulfilled, the appeal filed by the appellant is pre-mature and hence nonmaintainable.

¶459

As stated earlier, the instant appeal has been filed by the appellant against “record of personal hearing” held on 15.11.2017 in the office of the Special Director of Enforcement, Mumbai.

¶460

It may be mentioned that as per item (ii) in the 4 appeals filed by the appellant, a prayer has been made to this Tribunal for directing the Adjudicating Authority to follow a particular course of action in the Adjudication process, which is summarized as under:

¶461

1) Appeal No. FPA-FE-83/MUM/2017

¶462

That a further date be fixed for completion of the cross-examination of the witness, Mr. Mitil Chokshi.

¶463

2) Appeal No. FPA-FE-84/MUM/2017

¶464

That the Special Director of Enforcement be directed to provide Appellants full, fair and complete inspection and discovery of documents as requested.

¶465

3) Appeal No. FPA-FE-87/MUM/2017

¶466

That the Appellants be permitted to fully and effectively cross-examine the Complainant Mrs. V. Kalyani and the Investigation Officer Mr. D. K. Sinha.

¶467

4) Appeal No. FPA-FE-88/MUM/2017

¶468

Appellant be permitted to (i) recall Mitil Chokshi as witness and conduct the cross-examination (ii) fully and effectively cross-examine the Complainant Mrs. V. Kalyani and the Investigation Officer Mr. D. K. Sinha.

¶469

As would be observed from the above, appeals have been filed at various stages during the course of Adjudication proceedings praying this

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Tribunal to pass certain directions to the Adjudicating Authority. Even the instant appeal has not been filed against an „order‟ of the Adjudicating Authority. The provisions of Section 19 of FEMA entitles the appellant to prefer an appeal only once the „order‟ is passed and not against hearings conducted by Adjudicating Authority in adjudication proceedings.

¶474

Further, the contention of the appellant that Section 19(6) empowers the Tribunal to suo moto examine the “legality, propriety or correctness of any order” made by the Adjudicating Authority is not restricted and limited to the final order and that the words “any order” in Section 19(6) and “an order in Section 19(1) has to be given the same meaning is misconceived and misleading. This could not have been the intent of the legislature as every notice issued by Adjudicating Authority or hearing/enquiry conducted by Adjudicating Authority in the process of adjudication so as to enable him to pass an „order‟ could become a subject matter of appeal.

¶475

As stated earlier, attention is invited to the Provisos to Section 19(1) of the Act dealing with “Appeal to Appellate Tribunal” which is as under:-

¶476

¶477

¶478

In view of the above Provisos to Section 19(1) of the Act, an appeal can be maintained/heard only when the issue of pre-deposit of penalty has been examined/addressed.

¶479

FPA-FE-87/MUM/2017 & FPA-FE-88/MUM/2017

¶480

Page 56 of 59

¶481

In the instant case, the conditions for filing Appeal has not been satisfied as no „penalty‟ has been imposed in the absence of „an order‟. As the provisions laid down in Section 19(1) of the Act have not been fulfilled, the appeal filed by the appellant is pre-mature and hence nonmaintainable.

¶482

The above observation finds support from the decision of the Division Bench of Hon‟ble Delhi High Court in the case of Arun Kumar Mishra Vs Union of India & Ors. (2014) 208 DLT 56 wherein in Paras 9 and 13 the Hon‟ble High Court has held as under:

¶483

“9. We have however invited the attention of the senior counsel for the appellant to Cooper Engineering Ltd. Vs. P.P Mundhe (1995) 2 SCC 661 laying down that there is no justification for a party to stall the final adjudication of the dispute by questioning the decision on preliminary issues and to S.K. Verma Vs. Mahesh Chandra (1983) 4 SCC 214 deprecating the practice of raising preliminary issues/ objections, to delay and defeat adjudication on merits and to D.P. Maheshwari Vs. Delhi Administration (1883) 4 SCC 293 also laying down that all issues whether preliminary or otherwise should be decided together so as to rule out the possibility of any litigation at interlocutory stage. Attention of the senior counsel for the appellants is also invited to National Council for Cement & Building Materials Vs. State of Haryana (1996) 3 SCC 206 noticing the appalling situation created due to challenge to the decision on preliminary issues in the High Court and during which time the reference is stayed and lies dormant and laying down that the High Court should refuse to intervene in the proceedings before the Tribunals at an interlocutory stage.

¶484

FPA-FE-87/MUM/2017 & FPA-FE-88/MUM/2017

¶485

Page 57 of 59

¶486

13. The Adjudicating Authority is currently seized of and in seisin of the complaints. We, at this stage, do not know as to which way the order of the Adjudicating Authority will go. It cannot also be said at this stage whether the Adjudicating Authority even if deciding against the appellants will rely upon the material before it qua which the appellants claim a right of cross-examination. All this can be known only when the Adjudicating Authority passes an order and qua which if the appellants are aggrieved, the appellants shall have their statutory remedy.”

¶487

Attention is also drawn to the decision dated 09.01.2004 of the Apex Court in the case of „The Special Director & Anr. Vs. Mohd. Ghulam Ghouse & Anr. (Appeal (crl.)35 of 2004) wherein

¶488

the observations in para 4 and 5 of the said decision are as under:

¶489

“4. This Court in a large number of cases has deprecated the practice of the High Courts entertaining writ petitions questioning legality of the show cause notices stalling enquiries as proposed and retarding investigative process to find actual facts with the participation and in the presence of the parties. Unless, the High Court is satisfied that the show cause notice was totally non est in the eye of law for absolute want of jurisdiction of the authority to even to investigate into facts, writ petitions should not be entertained for the mere asking and as a matter of routine, and the writ petitioner should invariably be directed to respond to the show cause notice and take all stands highlighted in the writ petition. Whether the show cause notice was founded on any legal premises is a jurisdictional issue which can even be urged by the recipient of the notice and such issues also can be adjudicated by the authority issuing the very notice initially, before the aggrieved could approach the Court. Further, when the Court passes an interim order it should be careful to see that the statutory functionaries specially and specifically constituted for the purpose are not denuded of powers and authority to initially decide the matter and ensure that ultimate relief which may or may not be finally granted in the writ petition is accorded to the writ petitioner even at the threshold by the interim protection, granted.

¶490

5. In the instant case, the High Court has not indicated any reason while giving interim protection. Though, while passing interim orders, it is not

¶491

FPA-FE-87/MUM/2017 & FPA-FE-88/MUM/2017

¶492

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¶493

necessary to elaborately deal with the merits, it is certainly desirable and proper for the High Court to indicate the reasons which has weighed with it in granting such an extra ordinary relief in the form of an interim protection. This admittedly has not been done in the case at hand.”

¶494

In view of the above mentioned facts, it would not be prudent for this Tribunal to entertain the appeal against the „record of personal hearing‟ in the office of Adjudicating Authority during the course of Adjudication proceedings. Needles to reiterate, it would also not be prudent for this Tribunal to advice/direct/instruct the Adjudicating Authority to follow a specific or particular course of action in adjudication proceedings as the same would amount to interference in the functioning of the Adjudicating Authority.

¶495

The appellant has full liberty to file an appeal before this Tribunal once the order is passed by the Adjudicating Authority in accordance with the provisions of FEMA-1999.

¶496