Manoj Misra,J. - (1.) By this petition the petitioner has sought quashing of a show cause notice dated 30th September 2020 issued by the Assistant Director, Directorate of Enforcement, Zonal Office, Lucknow (first respondent) thereby calling for an explanation from the noticee (the petitioner) as to why adjudication proceeding as contemplated in Section 13 of the Foreign Exchange Management Act, 1999 (for short FEMA) be not held against it in the manner as provided in Rule 4 of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 (as amended), read with rules and regulations made thereunder and as to why penalty as provided under Section 13 (1) of FEMA be not imposed for the contraventions as brought under the complaint.
(2.) Before noticing and addressing the issues raised it would be apposite to briefly notice the background facts of the case, as could be elicited from the petition -- (i) The petitioner is a private limited company incorporated under the Companies Act with its registered office at NOIDA. (ii) The company had been engaged in the business of software development and export of computer and business support services. Initially, the company was incorporated as M/s. Results India Systems Private Limited but as it was acquired by Fiserv Group (based in U.S.A.) in the year 2004, with effect from 24.11.2005, the name of the company was changed to Fiserv India Private Limited. (iii) On 17.08.2017, under Section 37 of FEMA, 1999, read with Section 133(6) of the Income-Tax Act, 1961, a notice was issued to the petitioner requiring it to furnish information along with documentary evidence for not utilising certain export advances within the stipulated period which the petitioner received through its authorised dealer i.e. ICICI Bank Ltd. According to the petitioner, this notice was never served upon it but, subsequently, the petitioner got it as an annexure with the impugned show cause notice. (iv) On 05.12.2017, the first respondent sent another letter to the petitioner requiring the petitioner to furnish information along with documentary evidence in respect of not utilising, within stipulated period, 16 export advances that were received by the petitioner through its authorised dealer during financial years 2003-04 and 2004-05. (v) The petitioner acknowledged the said notice vide letter dated 19.12.2017 and sought two months time to collate relevant documents and information required by the first respondent. (vi) On 07.03.2018, the petitioner received a reminder letter dated 26.02.2018 from the first respondent, by way of last opportunity, to submit the required information/documents to which, vide letter dated 14.03.2018, the petitioner replied by claiming that there were no export advances outstanding in the books of accounts of the petitioner at the end of financial year 2003-04 and 2004-05. However, as the documents and information sought were from a period 13 years ago, further time was sought to substantiate the defence and make further submissions. (vii) Thereafter, on 12.04.2018, the petitioner vide letter to the first respondent reiterated its position that there were no non-utilised advances outstanding in petitioner's books of accounts. The petitioner also submitted that the details sought by the first respondent related to a very old period and as relevant employee/officers of the petitioner were no more in petitioner's employment, hence, the petitioner was handicapped in providing details/information of such old transactions. The petitioner also cited certain judicial pronouncements so as to contend that where no period of limitation is provided for initiation of proceedings, the proceedings could only be initiated within a reasonable time. (viii) On 30.09.2020, in exercise of power under section 16(3) FEMA, a complaint was filed against the petitioner. As per paragraph 2 thereof, the basis of the complaint was a report received from ICICI Bank (authorised dealer) giving details of 10 export advances, amounting to Rs. 1,83,52,635, which were pending utilisation beyond stipulated period and with respect to which inward remittances were received into the account of the petitioner, but requisite documents were not submitted to the authorised dealer to substantiate actual export of goods/ services/ software. In paragraph 5 of the complaint it was mentioned that vide letter dated 18.10.2017 an updated list was provided by the ICICI Bank of 16 export advances (including the 10 reported initially) pending utilisation by the petitioner bringing the total amount of un-utilised advances to Rs.1,96,98,815.67. Thus, alleging that the company had contravened the provisions of FEMA and the person responsible is liable to be punished under section 7(3) of FEMA read with Regulations 10 and 16 of Foreign Exchange Management (Export of Goods and Services) Regulation, 2000, complaint was filed. (ix) On filing of the said complaint, the first respondent issued impugned show cause notice bearing No. T-4/18/FEMA/LKZO/2020/AD(RV)/2717 dated 30.09.2020, annexing the complaint therewith and calling upon the petitioner to show cause in writing, within 30 days from the date of receipt of the notice, as to why adjudication proceedings as contemplated in Section 13 of FEMA should not be held against the petitioner, in the manner as provided in Rule (4) of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 (as amended) read with rules and regulations made thereunder, and as to why penalty as provided under Section 13(1) of FEMA be not imposed on him for the contraventions as set out in the complaint.
(3.) Sri Shashi Nandan, learned senior counsel, assisted by Sri Rahul Agarwal, appearing for the petitioner, urged that although section 7 of FEMA requires every exporter of goods to furnish certain information as specified therein and non furnishing of that information may result in a penalty under Section 13 of FEMA but for initiating proceeding for imposition of such penalty, a complaint has to be filed before the Adjudicating Authority, under Section 16(3) of FEMA, within a reasonable period of such contravention, even though no specific period of limitation for filing such complaint has been provided by FEMA. He submitted that the notice dated 17.08.2017 and the subsequent notice dated 05.12.2017 issued to the petitioner company by the first respondent does not disclose the date as to when the Directorate of Enforcement came to know of non-utilisation of export advances taken by the petitioner company. It has been urged that in absence of disclosure of the date as to when information with regard to non-utilisation of export advances taken by the petitioner company was received by the Directorate of Enforcement, the notice is defective as it fails to disclose as to when the cause of action arose to initiate the proceeding, under the circumstances, considering that the notice deals with alleged contravention that took place more than ten years ago, it is much beyond the reasonable period for commencement of the adjudication proceedings, resulting in serious prejudice to the right of the petitioner to defend itself, hence, the show cause notice, initiating penal proceeding, at such a belated stage, is liable to be quashed.;