Directorate Of Enforcement And Others vs Sandip Basu

In view of the good grounds shown, the marginal delay in preferring the appeal is condoned. CAN 11130 of 2015 is allowed as above. At first blush,

the order impugned dated August 17, 2015 appears to be shocking in its brevity and without there being any preface or any conclusion thereto. The

order impugned dated August 17, 2015 is set out:

“The subject matter of challenge in the instant writ petition is an adjudication order dated 29th May, 2015, passed by the Special Director (ER),

being the Adjudicating Authority, under the Foreign Exchange Management Act. A bare perusal of the adjudication order reveals that a penalty of

Rs.17,00,000,000/- (Rupees seventeen crores) has been imposed upon the writ petitioner without any quantification or reason in support of such

imposition of penalty. On what basis the Adjudicating Authority imposed the penalty of Rs.17,00,00,000/- is not apparent from the face of the order.

“On this ground alone, the impugned order is liable to be set aside and is accordingly set aside. “This order, however, shall not prevent the

Adjudicating Authority to pass fresh order supported with cogent reasons, in accordance with law.â€​

The order is assailed by the Union on diverse grounds, not the least of being that it did not take relevant considerations into account and did not even

refer to the vociferous protest on the Union’s behalf that the writ petitioner ought to be relegated to the appellate forum. However shocking as the

order impugned seems, particularly as it is an order of a High Court, the order of adjudication challenged by way of the proceedings under Article 226

of the Constitution is so unconscionable that the terse treatment thereof in the order impugned can pass muster. The allegation against the writ

petitioner-respondent was that he had illegally dealt with foreign currency and had acted in contravention of the Foreign Exchange Management Act,

1999 and the rules framed thereunder.

The show-cause notice made out that the writ petitioner was in the veritable business of selling foreign currency on the streets of Kolkata and it was

alleged that he had dealt in crores of rupees worth of foreign currency. The writ petitioner responded to the show-cause notice. It does not appear on

a meaningful reading of such reply that the writ petitioner accepted the charges against him or did not contest the allegations levelled. However, the

adjudicating authority had only this to say qua the writ petitioner before imposing a penalty of Rs.17 crore:

“The Noticee no.1, Shri Sandip Basu has been accused of submitting forged documents of his company and fraudulently dealing in sale and

purchase of foreign exchange to the tune of US$ 3380092 equivalent to Rs.15.21 crores (approx.). Incidentally, he has also been charge sheeted in a

criminal case by the Police for cheating and forgery and a case under PMLA, 2002 is also pending investigation against him. There is also evidence in

the form of statements of current account maintained by Shri Sandip Basu with ICICI Bank Ltd., Ballygunge, Kolkata being the source of purchase of

Demand Drafts/Pay Orders in favour of different Full Fledged Money Changers.

 The statement of the executives of M/s. Wesman Engineering Co. Ltd. clearly shows that Shri Sandip Basu committed forgery by falsely using

letter head of M/s. Wesman Engineering Co. Ltd. He is also unable to explain the purchase of Demand Drafts/Pay Orders or subsequent sale of

foreign currencies to the Full Fledged Money Changers by him and as such there remains no doubt that he has contravened the provisions of Section 3

of Foreign Exchange Management Act, 1999 as alleged in the complaint.â€​

As is evident from the findings rendered against the writ petitioner, the fact that a charge-sheet had been filed against him has been found relevant,

the fact that certain others have accused him of forgery has been found relevant and used as the basis for convicting him in quasi-criminal

proceedings without reference to any document or the slightest of material in the adjudication order. It is elementary that reasons are a facet of

natural justice; for a person is entitled to know the grounds for which he was found at fault or has been proceeded against or penalised. The

adjudication order is singularly lacking on such aspect as it merely refers to the allegations and jumps to the conclusion that the writ petitioner had

committed a wrong without discussing any material against the writ petitioner or the evidence against him.

However, as unconscionable as the adjudication order appears to be, it would not do for a court exercising the extraordinary authority under Article

226 of the Constitution to commit the same mistake. An order, particularly an order that allows a petition, has to indicate the reasons for entertaining

the petition, the grounds on which the court finds in favour of the writ petitioner and the nature of the order that the court passes. Any objection by the

respondent has also to be referred to and dealt with.

Though the quality of the adjudication order was such that it was liable to be set aside at the ad interim stage of the writ petition, the writ court ought

to have indicated why the writ petition was liable to be entertained ahead of the appellate remedy available to the writ petitioner, particularly since

such ground appears to have been urged before the writ court. More importantly, since the writ court did not afford the appellants herein an

opportunity to use an affidavit, a more detailed discussion on the quality of the order impugned in the petition under Article 226 of the Constitution was

called for to justify the setting aside thereof.

Judicial orders have to meet the twin tests of ‘why’ and ‘what’. It is on the reasons of ‘why’ that the substance of ‘what’

finds the legs to stand on. In the absence of reasons, a judicial order is just a diktat that falls foul of the majesty that is the rule of law. The order

impugned in this appeal suffered from the same vice as the vicious order that it sought to correct. Since the reasons that ought to have been found in

the order impugned have now been supplied in appeal, as can always be by an appellate court in order to do justice between the parties, the order

impugned herein is not interfered with. However, the appellants will be free to conduct a fresh adjudication on the basis of the show-cause notice

issued to the writ petitioner and the writ petitioner’s reply as long as such adjudication reveals the application of the mind to the matters in issue

and some modicum of reasons, if a finding adverse to the writ petitioner is to be rendered therein.

FMA 1390 of 2018 and CAN 11116 of 2015 are disposed of. It is also made clear that the order dated August 17, 2015 and this order are confined to

the adjudication order qua the writ petitioner and do not affect the adjudication order qua the other persons referred to therein. There will be no order

as to costs. Certified website copies of this order, if applied for, be urgently made available to the parties upon compliance with the requisite

formalities.