Mmc Exports Limited & Ors. vs Director, Directorate Of Enforcement & Ors.

A show cause notice dated November 1, 2017 issued by the Enforcement Directorate is under challenge in the present writ petition. Learned

Advocate appearing for the petitioners submits that, the show cause notice dated November 1, 2017 is a repetition of the earlier show cause notice

dated July 6, 2015. The impugned show cause notice does not disclose any basis on which, the authorities are seeking to proceed against the

petitioners. He submits that, the earlier show cause notice dated July 6, 2015 has not been decided upon by the authorities concerned despite two

orders of the High Court. He refers to the first order in this regard dated August 20, 2015 and submits that, the petitioners were afforded an

opportunity of submitting a reply and the authorities were directed to decide upon such reply. The petitioners did submit a reply to the show cause

notice. It appears that by a writing dated September 24, 2015, the authorities purported to dispose of such show cause notice. Such writing was

challenged in the second writ petition where such decision of the authorities were set aside by the order dated December 1, 2015. The authorities

were asked to re-visit the issue.

The authorities thereafter had issued a letter dated December 18, 2015. The petitioners had replied thereto by its writing dated January 20, 2016

contending that, the writing dated December 18, 2015 was not the disposal of the show cause notice dated July 6, 2015. According to the petitioners,

such fact was accepted on behalf of the respondents and that, the same will, inter alia, appear from the queries raised by the respondents as contained

in the writing dated January 20, 2016. Learned Advocate for the petitioners refers to the subsequent correspondence exchanged between the parties

and submits that, in any view of the matter, it cannot be contended that, the show cause notice dated July 6, 2015 stood disposed of.

Consequently, the authorities could not issue the impugned show cause notice dated November 1, 2017. Moreover, according to him, no ground exists

in the show-cause notice issued. The impugned show cause notice is bereft of any material particulars and that, the same does not constitute any

ground to proceed against the petitioners. The authorities cannot invoke the provisions of the Foreign Exchange Management Act, 1999. The action

taken by the authorities are mala fide and in colourable exercise of power and therefore, the impugned notice dated November 1, 2017 should be set

aside.

The respondents are represented. Learned Advocate appearing for the respondents submits that, the impugned show cause notice was issued on

November 1, 2017 and that, the petitioners had submitted a reply thereto. Consequently, the writ Court should not interfere at the show cause stage.

The petitioners should be asked to contest the proceedings before the adjudicating authority, in accordance with law, if the petitioners so choses. The

adjudicating authority need not be interdicted by the writ Court from proceeding with the adjudication proceedings. Moreover, the show cause notice

dated July 6, 2015 stood disposed of by the order dated December 18, 2015.

As noted above, a show cause notice dated November 1, 2017 issued by the Enforcement Directorate is under challenge. The impugned show cause

notice quotes various provisions of the Act of 1999. It goes on to require the petitioners to appear in person to explain and to produce such documents

or evidence as may be required. Apparently, the authorities had received a complaint under Section 16 of the Act of 1999. Section 16 of the Act of

1999 allows the adjudicating authority to hold an enquiry with regard to a complaint received. The complaint is of contravention of Section 13 of the

Act of 1999. It is for the department to establish before the adjudicating authority that, the petitioners as the delinquents, in such proceedings, is guilty

of contraventions of Section 13 of the Act of 1999. The records disclose that, the petitioners had replied to the impugned show cause notice by a

writing dated December 4, 2017.

The records of the present case disclose that, the authorities had invoked Section 37 of the Act of 1999 and issued a show cause notice dated July 6,

2015. Such show cause notice had received the consideration of the High Court in the first writ petition filed by the writ petitioners. By the order dated

August 20, 2015, the writ petitioners were allowed to reply to such show cause notice and the authorities were allowed to decide thereon. The

authorities by the writing dated September 24, 2015 had decided upon the show cause notice dated July 6, 2015 subsequent to the reply given thereto

by the petitioners. Such decision was assailed by the writ petition in their second writ petition. The decision of the authorities dated September 24,

2015 was set aside by the order dated December 1, 2015. Subsequent thereto, the authorities had issued another letter dated December 18, 2015. This

the authorities contend to be a decision on the show cause notice dated July 6, 2015. The petitioner contend otherwise and refers to various

correspondences exchanged between the parties in support of the contention that, the show cause notice dated July 6, 2015 remains inconclusive.

At this stage, I am not called upon to decide as to whether the show cause notice dated July 6, 2015 remains inconclusive or not. It appears from the

provisions of the Act of 1999 that, the authorities can invoke the provisions of Section 16 for contravention of Section 13 of the Act of 1999,

independent of exercise of powers under Section 37 of such Act. Apparently, the authorities have invoked Section 16 for the alleged contravention of

Section 13 of the Act of 1999. At this stage, it would be premature for the writ Court to arrive at a finding that, the authorities have no material before

it to invoke such provisions assuming that, the exercise of powers under Section 37 of the Act of 1999 remains inconclusive and that, such exercise did

not bring forth any materials in support of the case of the authorities. It is for the adjudicating authority envisaged under Section 16 of the Act of 1999

to arrive at such a finding.

The petitioners have replied to the impugned show cause notice. It has dealt with the show cause notice in detail. Therefore, it would be premature on

my part to arrive at a finding that, the petitioners are not aware of the charges made against it. In any event, it would be open for the petitioners to

contend such ground before the adjudicating authority. In such circumstances, I am not minded to interfere any further in the present writ petition. WP

No.30891(W) of 2017 is disposed of. No order as to costs. Interim orders, if any, stand vacated. Urgent certified website copies of this order, if

applied for, be made available to the parties upon compliance of the requisite formalities.