IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 16.12.2011 CORAM: THE HONOURABLE MR.JUSTICE ELIPE DHARMA RAO AND THE HONOURABLE MR.JUSTICE R.SUBBIAH Writ Appeal No.3818 of 2002 and WAMP.No.6411 of 2002 V.Bhaskaran ... Appellant Vs. 1.The Special Director of Enforcement, Enforcement Directorate, Ministry of Finance, Lok Nayak Bhawan, 6th Floor, Khan Market, New Delhi-110003. 2.The Director of Enforcement, Shastri Bhavan, 3rd Block, 3rd Floor, 26, Haddows Road, Chennai-600006. 3.The Chief Enforcement Officer, Directorate of Enforcement, Shastri Bhavan, 3rd Block, 3rd Floor, 26, Haddows Road, Chennai-600006. ... Respondents * * * Writ Appeal preferred under clause 15 of the Letters Patent as against the order dated 13.11.2002 made in W.P.No.32693 of 2002 by a learned single Judge of this Court. Writ Petition filed under Article 226 Constitution of India Praying to issue a Writ of Certiorari calling for the records culminating in the “Opportunity Notice” dated 21.05.2002 and bearing Reference No.F.No.T9/130/CHN/56/2002 and quash the same and issue such further or other orders as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case. * * * For appellant : Mr.V.Vijaynarayanan, S.C.for Mr.Syed Mustafa https://hcservices.ecourts.gov.in/hcservices/ For respondents : Mr.M.Dhandapani [Special Counsel for Enforcement] * * * JUDGMENT ELIPE DHARMA RAO, J. The appellant was issued with an 'opportunity notice' contemplated under Section 61(2)(ii) of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as FERA) by the third respondent, alleging that he contravened the provisions of FERA while purchasing a Toyoto Lexus car from London under a fictitious transaction, making use of the name of one Dr.S.Balakrishnan, No.3, Shelley Avenue, Manor Park, London-E126, UK, employed as an anesthetist in the National Health Service of England and said to be a friend of the father-in-law of the appellant. It was also alleged that the vehicle was illegally imported to India, by offering under- valuation of the car for the purposes of payment of import duty. 2. While it is the allegation of the respondents/Department that it is an illegal purchase made by the appellant, it is the case of the appellant that the said car was gifted to him on the occasion of his marriage by the said Dr.S.Balakrishnan, who is the friend of his father-in-law. It is the contention of the Department that the investigation conducted by the officials of the Directorate General of Revenue Intelligence, Chennai by recording the statements of persons associated with Dr.S.Balakrishnan, would, undoubtedly, prove that Dr.S.Balakrishnan cannot afford to purchase such a valuable car from his income from the medical profession and that such cars were owned by wealthy people in England itself. The officers of the Directorate General of Revenue Intelligence also recorded the statement of one T.K.Chandrasekaran, 377/378, Arcot Road, Kodambakkam, Chennai-24, on 15.7.1996, who stated that his brother- in-law Dr.Balakrishnan resides in UK and had studied his MBBS in Madras and he may be drawing £ 2000 per month in his present occupation as an anesthetist. He further stated that his brother-in- law Dr.Balakrishnan is working in a Government Hospital in UK and that he is a non-resident Indian and about five years back, he was using a second hand Benz in UK and that going by the financial background of his brother-in-law, Dr.Balakrishnan could not have owned a Lexus car. 3. When a summon was issued to the said Dr.S.Balakrishnan to appear before the officers of the Enforcement Directorate on 10.1.1997, M/s.Kay and Co., Solicitors, London filed a reply along with a statement of Dr.S.Balakrishnan, vide their letter dated https://hcservices.ecourts.gov.in/hcservices/ 3.1.1997 stating that Dr.Balakrishnan is a British Citizen and ED did not have powers to secure his presence in India. Besides denying the transaction, the appellant has stated that the said car was purchased in the name of Shri O.Kasimayan for Shri V.Bhaskaran and the cost of the car was paid by Sri O.Kasimayan and as there were difficulties in shipment by Kasimayan, he was asked to assist which he duly obliged. But, since the enquiry revealed that the payment towards purchase of the car was paid from the bank account of Dr.S.Balakrishnan, the Department did not believe the version of Dr.S.Balakrishnan, which ultimately culminated into issuance of an opportunity notice, as mentioned above, to the appellant. 4. After receiving the said opportunity notice, dated 21.5.2002, which required the appellant to submit his reply within five days from the date of receipt of the same, and after submitting a reply on 27.5.2002 to the same, and further on receipt of a summon from the Metropolitan Magistrate's Court seeking his personal appearance in connection with the said case registered under Section 8(1), 9(1)(a) of FERA, 1973 and under Section 56(1)(i) and some other provisions of Foreign Exchange Maintenance Act, 1999 (FEMA in short),, the appellant has come forward to file the present writ proceedings in W.P.No.32693 of 2002 before this Court, praying to quash the opportunity notice dated 21.5.2002. Since a learned single Judge of this Court has dismissed the said writ petition, by the order dated 13.11.2002, he has come forward to file this appeal. 5. Mr.Vijay Narayanan, learned senior counsel appearing for the appellant would argue that in the entire opportunity notice, no specific allegation has been made against the appellant, except saying, at one paragraph, that the car has been purchased for the appellant. He would further argue that FERA has been repealed w.e.f. 31.5.2000, since FEMA came into operation from 1.6.2000 and the impugned opportunity notice under Section 61(2)(ii) of FERA has been issued on 21.5.2002 i.e. just before expiry of two years period from the date of repeal of FERA, only to save limitation, provided under Section 49(3) of FEMA, giving a very short period of five days time for the appellant to reply and this indicates the manner in which the Department has acted in a hurried and vindictive manner, by leaving to winds the avowed principles of natural justice and audi alteram partem, besides indicating their preconceived ideas and views. He has further argued that in spite of request by the appellant, the Department has not furnished the copy of documents, which are very essential for the appellant to make his effective representation and reply to the opportunity notice. He would further argue that Section 51 of FERA talks about 'reasonable opportunity' to be given before instituting adjudication and it does not mention the number of days within which reply and a personal hearing should be given. But, no such opportunity was ever given to the appellant and unfortunately, the learned single Judge has failed to assess these factual and legal aspects in their proper perspective, and has erroneously dismissed https://hcservices.ecourts.gov.in/hcservices/ the writ petition, necessitating the appellant to file this writ appeal. On such arguments, the learned senior counsel would pray to allow the writ appeal, setting aside the order of the learned single Judge and the impugned opportunity notice. 6. On the contrary, Mr.Dandapani, the learned counsel appearing for the respondents, placing strong reliance on the contents of the opportunity notice, would vehemently argue that the entire investigation conducted in an unbiased manner by the authorities, has drawn them to an irresistible conclusion that the entire transaction has been done for the benefit and at the behest of the appellant and therefore, the opportunity notice was issued by the Department to the appellant, for which the appellant has also submitted his reply. The learned counsel would further argue that though Dr.Balakrishnan denies that he did not pay any amount towards purchase of the car, the payments effected for the purchase of the car from out of his bank account would nullify his contention. The other contention raised on the part of Dr.Balakrishnan that he facilitated the export of the car from UK to India and the payment has been made by one O.Kasimaiyan, also found to be an unbelievable story, concocted to evade the proceedings. The learned counsel would argue that though FERA has been repealed, the present proceedings have been initiated against the accused persons within the permitted time limit of two years, provided for under Section 49(3) of FEMA and there is nothing on record to substantiate any of the contentions urged on the part of the appellant. On such arguments, the learned counsel would pray to dismiss the writ appeal. 7. The FERA was passed by the Parliament in 1973 and it came into force with effect from January 1, 1974 in order to 'regulate certain payments, dealings in foreign exchange and securities, transactions indirectly affecting foreign exchange and the import and export of currency, for the conservation of foreign exchange resources of the country.' FERA imposed stringent regulations on certain kinds of payments, the dealings in foreign exchange and securities and the transactions which had an indirect impact on the foreign exchange and the import and export of currency. 8. After economic liberalisation, FERA was repealed in 1999 by the Government and replaced by the Foreign Exchange Management Act (FEMA), which liberalised foreign exchange controls and restrictions on foreign investment. It came into operation w.e.f.1.6.2000. 9. Though FERA was repealed w.e.f. 31.5.2000, Section 49 of FEMA, saved the actions already initiated under FERA, besides granting a time limit of two years from the date of repealing to initiate fresh proceedings under FERA. To better understand the intention of Legislature, we shall now extract hereunder Section 49 of the FEMA: https://hcservices.ecourts.gov.in/hcservices/ "49. Repeal and Saving: (1) The Foreign Exchange Regulation Act, 1973 (46 of 1973) is hereby repealed and the Appellate Board constituted under sub-section (1) of section 52 of the said Act (hereinafter referred to as the repealed Act) shall stand dissolved. (2) On the dissolution of the said Appellate Board, the person appointed as Chairman of the Appellate Board and every other person appointed as Member and holding office as such immediately before such date shall vacate their respective offices and no such Chairman or other person shall be entitled to claim any compensation for the premature termination of the term of his office or of any contract of service. (3) Notwithstanding anything contained in any other law for the time being in force, no court shall take cognizance of an offence under the repealed Act and no adjudicating officer shall take notice of any contravention under section 51 of the repealed Act after the expiry of a period of two years from the date of the commencement of this Act. (4) Subject to the provisions of sub-section (3) all offences committed under the repealed Act shall continue to be governed by the provisions of the repealed Act as if that Act had not been repealed. (5) Notwithstanding such repeal,— (a) anything done or any action taken or purported to have been done or taken including any rule, notification, inspection, order or notice made or issued or any appointment, confirmation or declaration made or any licence, permission, authorization or exemption granted or any document or instrument executed or any direction given under the Act hereby repealed shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act; (b) any appeal preferred to the Appellate Board under sub- section (2) of section 52 of the repealed Act but not disposed of before the commencement of this Act shall stand transferred to and shall be disposed of by the Appellate Tribunal constituted under this Act; (c) every appeal from any decision or order of the Appellate Board under sub-section (3) or sub-section (4) of section 52 of the repealed Act shall, if not filed before the https://hcservices.ecourts.gov.in/hcservices/ commencement of this Act, be filed before the High Court within a period of sixty days of such commencement : Provided that the High Court may entertain such appeal after the expiry of the said period of sixty days if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period. (6) Save as otherwise provided in sub-section (3), the mention of particular matters in sub-sections (2), (4) and (5) shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 (10 of 1897) with regard to the effect of repeal." 10. Therefore, under sub-section (3) of this Section, no Court shall take cognizance of an offence under the repealed Act and no Adjudicating Officer shall take notice of any contravention under section 51 of the repealed Act after the expiry of a period of two years from the date of the commencement of this Act. 11. In the case on hand, the undisputed fact is that the present FERA proceedings have been initiated against the appellant and others on 21.5.2002, by issuing the opportunity notice, before expiry of the two years limitation period prescribed under Section 49(3) of FEMA. (FERA being repealed on 31.5.2000, the two years period was to expire on 31.5.2002). Therefore, it cannot be said that the proceedings initiated are hit by limitation. But, a strenuous argument has been advanced on the part of the appellant that only to save the limitation period, the opportunity notice has been issued to him, giving only a time of five days for him to reply. But, it is seen from the records that the appellant has submitted his reply to the opportunity notice on 27.5.2002 and only thereafter the case was filed before the concerned criminal court. 12. Section 51 of FERA contemplates 'reasonable opportunity' to be afforded to the delinquent before instituting adjudication and as has been admitted on the part of the learned senior counsel for the appellant himself, this Section does not mention the number of days of time to be given to the delinquent for submitting his reply. When that is the case, the time of five days afforded to the delinquent in the opportunity notice by the Department cannot, under any stretch of imagination, could be called as bereft of opportunity to the delinquent, particularly after the appellant had made use of the opportunity and submitted his representation within the prescribed time limit of five days i.e. on 27.5.2002 itself. 13. Regarding the other ground urged on the part of the appellant that he was not provided with the documents he has sought for from the Department, it is to be mentioned that when the appellant was required to show whether he got any permission for such https://hcservices.ecourts.gov.in/hcservices/ transaction, had it been a case of permission, there would not have been any hesitation for the appellant to submit the same and it cannot be said that the appellant is completely ignorant of these things. Notice under Section 61 of FERA do not decide anything against the appellant and it merely sets out the grounds based on which the appellant allegedly violated the provisions of FERA. For this purpose, we draw support from the judgment of the Honourable Apex Court in STANDARD CHARTERED BANK vs. DIRECTORATE OF ENFORCEMENT [(2006) 4 SCC 278], wherein a Three Judge Bench of the Honourable Apex Court has held as follows: "10. Before proceeding further it is necessary to point out that the notices issued under Section 61 of FERA are merely notices of enquiry, giving an opportunity to the appellants of showing that they had the necessary permission from the authority concerned under FERA in respect of the particular transaction. These notices, therefore, do not in any manner decide anything against the appellants and they merely set out the grounds based on which the appellants allegedly violated the provisions of FERA and since one of the ingredients of the offence is absence of permission from the authority concerned, they are intended only to give an opportunity to the appellants to show that they had the necessary permission and hence, there was no violation of the relevant provision or provisions of FERA as sought to be made out in the notice. As pointed out by the learned Additional Solicitor General, on the failure of the appellants to show that they had the requisite permission, a complaint will have to be lodged before the Magistrate concerned—here it has been launched with the permission of this Court pending these appeals—and the Magistrate will consider whether the process should issue on the basis of the complaint made before him. In view of the fact that sufficient opportunities will be available to the appellants to put forward their contentions before the criminal court concerned, it cannot be said that there is any merit in the challenge to the notices issued under Section 61 of FERA. The said notices are really in terms of Section 61 of FERA and their scope and ambit is also controlled by Section 61 of FERA and on receipt of those notices, it was open to the appellants to show that they had the necessary permission from the authority concerned under the Act. Of course, if they do not have such permission, apparently, in the case on hand, there was no such permission, they have necessarily to put forward their defences before the criminal court in the prosecutions that have been launched in that behalf. 11. It is argued that the issue of a notice under Section 61 is not a mere formality and that it is a real right given to a person accused of an offence to establish that the proceedings are being initiated without jurisdiction or https://hcservices.ecourts.gov.in/hcservices/ wholly in violation of the provisions of FERA. Article 20(3) of the Constitution is referred to and it is submitted that many rights including the right against self-incrimination is available to a person accused of an offence. Section 61 (2) of FERA makes it clear that no court can take cognizance of an offence except upon a complaint by the officer referred to therein. The proviso to Section 61(2) of the Act provides that no complaint regarding the offences referred to in that section shall be made unless an opportunity is given to the person concerned to show that he had the requisite permission where the offence charged is an act which requires permission under the Act. We think that if the notice sets out the alleged contravention, (an act which could have been done with permission) and calls upon the person accused of the offence whether he had the requisite permission for the transaction, that will satisfy the requirement of the section." "14. At this stage, we cannot ignore the argument on behalf of the respondents that if the appellants are not able to show any permission, complaints have to be filed before the Magistrate concerned and that the Magistrate will issue process only on being satisfied that a case has been made out for such issue and that the attempt of the appellants to block the prosecution should not be countenanced. The object of the present notice, submitted the counsel, is limited and the arguments attempted on behalf of the appellants can be raised before the criminal court when the occasion arises. We find merit in this submission. Obviously, it is open to the appellants to put forward all their defences to the prosecution at the appropriate stage." 14. Like the case before the Honourable Apex Court, here also, the appellant is not able to point out any permission obtained by him, so as to say that the alleged transaction does not fall within the ambit and scope of FERA. When the material on record would suggest that Dr.Balakrishnan has no means to purchase such a luxurious car and that the contention of Dr.Balakrishnan that one O.Kasimaiyan alone has made payment to the car also has not been supported by any material and in fact, the material on record undoubtedly suggested that the payments have been made from the bank account of Dr.Balakrishnan, who himself was possessing only a second hand car, we have no hesitation to hold that there is prima facie material to proceed against the appellant in accordance with law by the concerned authorities. The learned single Judge has analysed the facts and circumstances of the case in their proper perspective and has arrived at an unerroneous conclusion of rejecting the prayer of the appellant. We find no illegality or irregularity in the said order passed by the learned single Judge. Accordingly, this appeal is https://hcservices.ecourts.gov.in/hcservices/ dismissed. No costs. Consequently, connected Miscellaneous Petition is also dismissed. Sd/ Assistant Registrar /True Copy/ Sub Assistant Registrar Rao To 1.The Special Director of Enforcement, Enforcement Directorate, Ministry of Finance, Lok Nayak Bhawan, 6th Floor, Khan Market, New Delhi-110003. 2.The Director of Enforcement, Shastri Bhavan, 3rd Block, 3rd Floor, 26, Haddows Road, Chennai-600006. 3.The Chief Enforcement Officer, Directorate of Enforcement, Shastri Bhavan, 3rd Block, 3rd Floor, 26, Haddows Road, Chennai-600006. + 1 C.c. To Mr. R. Syed Mustafa Advocate Sr.No.76873/11 Judgment in W.A.No.3818/2002 KGK[CO] KS 05/01/2012 https://hcservices.ecourts.gov.in/hcservices/