Shirish Harshavadan Shah vs Deputy Director, E.D.

V.C. Daga, J.—Petitioner is seeking a Writ of Certiorari or a Writ in the nature of Certiorari and/or appropriate direction to quash and set aside the memorandum dated 18th March, 1991 and notice dated 1st January, 2004. The petitioner is facing adjudication proceedings under the provisions of Foreign Exchange Regulation Act, 1947, Foreign Exchange Regulation Act, 1973 and Foreign Exchange Management Act, 1999 for the alleged acts and omissions alleged to have been committed in the year 1980.

Factual Backdrop:

The petitioner was a non-executive Director of a company known as M/s. Shah Construction Co. Ltd. ("the said company" for short). The said Company was reconstituted, with the result, petitioner ceased to be an associate of the said Company after 1996.

The factual matrix reveal that in or about 1980-81, the Ministry of Defense in Oman had issued a tender for carrying out work of residential and office building known as Saiq Package, at Muscat, Oman. Due to certain financial and other difficulties, the contract awarded to the Company of which petitioner was a Director came to be terminated by the Ministry of Defence. The amounts due to the said Company and its machinery were appropriated by the Ministry of Defence on termination of the contract.

It appears that when the petitioner became the Managing Director of the company in the month of June, 1984, he took all necessary permissions; post-facto, to effect recovery of all their outstandings in respect of all the projects in Oman and Iraq. In the month of March, 1990, respondents searched the premises of the Company and recorded the statement of the petitioner. Petitioner had furnished relevant information in respect of the Oman Project which was also furnished to the Reserve Bank of India. According to the petitioner, the project in Oman was of the value of less than Rs. One Crore therefore, permission from Reserve Bank of India was not required. The facts remained that the dues of the Company were not settled and the contract was terminated prematurely. Consequently, no proceeds of foreign exchange could be brought by the petitioner in the account. It appears that some time in the year 1991, the memorandum dated 18th March, 1991 relating to the acts and omission chargeable under various Legislations referred to in the opening part of this order arising out of the work partly carried out by the said Company in the year 1982 was drawn. For the first time, respondent No. 1 issued a notice of hearing in respect of the said memorandum to the said Company and its Directors in the month of January, 2004 were issued.

The petitioner is contending that reopening of the matter at the present stage after more than 22 years would cause serious detriment and prejudice to the petitioner. It is submitted that the Department has failed and neglected to explain as to why they took 13 years from the date of alleged issuance of the said memorandum to commence adjudication proceedings. In the interregnum, not a single notice was issued to the petitioner, the proceedings according to the petitioner are, thus, barred by the latches.

The reliance is placed on the judgment of this Court in the case of Bhagwandas S. Tolani Vs. B.C. Aggarwal and others, and the Division Bench judgment of this Court in the case of Cambata Industries Pvt. Ltd. and Ors. v. The Additional Director of Enforcement and Am. in W.P. No. 2558 of 2008 decided on 18th January, 2010 (unreported). In addition to these judgments, the reliance is also placed on the judgment of this Court in the case of Universal Generics Pvt. Ltd. Vs. Union of India, . Heavy reliance is placed on the judgment of the Apex Court in the case of Abdul Rehman Antulay Vs. R.S. Nayak and another etc. etc., which sets out the concerns which underline the right to a speedy trial.

In nutshell, challenge is to the adjudication proceedings sought to be conducted by respondent No. 1 against the petitioner, after the lapse of more than 12 years from the alleged date of issuance of the memorandum dated 18th March, 1991, relating to the acts and omissions resulting from the part of the work carried out by the said Company in Oman during the period 1980 to 1982. According to the petitioner, in the facts and circumstances of the case it has become next to impossible for him to remember the relevant facts or access documents relating to the work done by the company almost 30 years before as such he would not be able to effectively defend himself in the said adjudication proceedings. Consequently, prayer is made to quash and set aside the adjudication proceedings.

Per contra, Mr. A.J. Rana, learned Senior Counsel appearing with Mr. Bhate for the respondent urged that absence of any specific period of limitation in the statute to complete the adjudication proceedings, no objection can be taken to the action of the respondents notwithstanding revival of the proceedings after a lapse of 12 years. He also pressed into service the judgment of the Apex Court in the case of Standard Chartered Bank and Others Vs. Directorate of Enforcement and Others, in support of his submission and prayed for dismissal of the petition.

Consideration:

Having heard rival parties, it is not in dispute that the respondent No. 1, by the impugned action is seeking to adjudicate upon the matters which took place in the year 1980-82 and for the first time, the notices were issued after lapse of more than 12 years.

It is no doubt true that no period of limitation in the Statute to complete the adjudication proceeding is prescribed. But the Apex Court in the case of Government of India Vs. Citedal Fine Pharmaceuticals, Madras and Others, was pleased to rule that in absence of any period of limitation, it is settled that every Authority is to exercise the power within a reasonable period. What would be reasonable period would depend upon the facts of each case. No hard and fast rules can be laid down in tins regard as the determination of the question will depend upon the facts of each case.

Having taken survey of the law holding the field, the factual matrix of the case in hand, unequivocally go to show that the impugned action is sought to be taken after lapse of period of more than 12 years to adjudicate upon acts and omissions alleged to have been committed in the year 1982. No justification is placed on record to justify inaction for such a long period of 12 years for which petitioner is definitely not responsible.

Almost for a period of 12 years, no steps were taken by the respondents to proceed with the adjudication proceedings. No fault can be attributed to the petitioners for this delay and inaction on the part of the respondents. The respondents are not alleging any malice on the part of the petitioner. It is not the case of the respondents that the petitioners are responsible for delaying the proceedings. No justification is to be found in the explanation tendered for causing such enormous delay in the adjudication process. The absence of relevant record due to lapse of more than 12 years is also a factual aspect which needs to be taken into account. In our view, the respondents cannot be allowed to re-open the proceedings at such a belated stage. If allowed, it would cause serious detriment and prejudice to the petitioner. The Department is not entitled to re-open old matters in this manner. As rightly observed in the earlier Judgment of this Court, if the Department''s contention as to limitation were to be accepted, it would be mean that the department can commence adjudication proceedings 20 years, 25 years or 30 years after the original show cause notice which cannot be permitted. In the peculiar facts and circumstances of this case and for the reasons recorded by us in the case of Cambata Industries Pvt. Ltd. (supra), petition is liable to be allowed based on the facts of this case.

In the result, rule is made absolute in terms of prayer Clauses (a) & (b) with no order as to costs.