- (1.) The central question of law arising on the appeal before this Court is whether a noticee served with show cause notice under Rule 4(1) of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 (hereinafter referred to as 'the Rules') is entitled to demand to furnish all the documents in possession of the Adjudicating Authority including those documents upon which no reliance has been placed to issue a notice requiring him to show cause why an inquiry should not be held against him The Adjudicating Authority's refusal to supply all the documents as demanded by the appellants led to filing of writ petitions by the appellants in Delhi High Court which were heard and dismissed.
(2.) In order to consider and decide the issue that arises for our consideration, it is just and necessary to briefly notice the relevant facts: PART I : BACKGROUND FACTS A complaint in writing has been filed by an officer authorized against the appellants under sub-section (3) of Section 16 of the Foreign Exchange Management Act, 1999 (hereinafter referred to as 'FEMA' or 'the Act') in which certain serious allegations have been levelled against the appellants which we are not required to notice in detail. The gravamen of the complaint is that the appellants along with others, jointly and severally, without general or special permission of the Reserve Bank of India dealt in and acquired Foreign Exchange totaling US $ 8,98,027.79 in respect of two oil contracts with SOMO of Iraq. Out of the said amount, the appellants and others jointly and severally, without the required permission of the Reserve Bank of India made payment and transferred Foreign Exchange of US $ 7,48,550 to the credit of specified account with Jordan National Bank, Jordan i.e., to persons resident outside India, in fulfillment of precondition imposed by SOMO for allocation of oil under aforesaid two contracts, in contravention of the provisions of FEMA. It is further alleged that the appellants and others, jointly and severally, without the required permission of the Reserve Bank of India transferred Foreign Exchange of US $ 1,46,247.23 being the commission amount in respect of two oil contracts with SOMO to the account with the Barclays Bank, London in contravention of the provisions of the Act. The appellants together with others jointly and severally failed to take all reasonable steps to repatriate the aforesaid Foreign Exchange within the stipulated period and in the prescribed manner, in contravention of the provisions of FEMA read with Regulations, 2000. In addition to the above, some other allegations also levelled against appellant No. 2. The Adjudicating Authority having received the said complaint, set the law in motion and accordingly issued a notice to the appellants under the provisions of FEMA read with the Rules, requiring them to show cause why an inquiry should not be held against them.
(3.) The appellants having received the show cause notice, instead of submitting their reply, required the Adjudicating Authority to furnish "copies of all the documents in ... possession in respect of the instant case, including the 83000 documents allegedly procured by one Virender Dayal from USA in connection with the instant case..." This seemingly innocuous request ultimately turned out to be the origin of this avoidable litigation. The fact remains that the copies of all such documents as relied upon by the Adjudicating Authority were furnished. The Authority, however, declined to furnish copies of other documents and decided to hold an inquiry in accordance with the provisions of FEMA and the Rules.;