bsb IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY O.O.C.J. O.O.C.J. O.O.C.J. WRIT WRIT WRIT PETITION NO. 116 OF 2009 PETITION NO. 116 OF 2009 PETITION NO. 116 OF 2009 Pradeep Hirani & ors. ... Petitioners v/s Union of India & ors. ... Respondents Mr.Vikram Nankani i/by M.R.Baya for petitioners. Mr.R.V.Desai with Mr.A.S.Rao and Ms.Bharati Mahant for respondents. CORAM: CORAM: CORAM: SMT. RANJANA DESAI & SMT. RANJANA DESAI & SMT. RANJANA DESAI & J. J. J. P. DEVADHAR, JJ. P. DEVADHAR, JJ. P. DEVADHAR, JJ. DATED: DATED: DATED: 2ND MARCH, 2009 2ND MARCH, 2009 2ND MARCH, 2009 P.C. P.C. P.C.: 1. The petitioners claim to be the Directors of M/s.Kimaya Fashion Pvt. Ltd. They claim to have a 49% business interest in M/s.Kimaya LLC Dubai. Investigation was started against the petitioners in respect of the alleged violation of the provisions of Foreign Exchange Management Act, 1999 ("FEMA" for short). Show cause notice dated 28.2.2006 came to be issued against the petitioners. The petitioners filed their reply. Order in Original dated 24.5.2007 came to be passed against the petitioners imposing penalty. Against that order, the petitioners preferred appeals to 2 the Appellate Tribunal for Foreign Exchange ("the Tribunal" for short). 2. It is the case of the petitioners that the appeals were heard by the Bench of two Members on 3.3.2008 and 20.3.2008. According to the petitioners, on 16.6.2008, the petitioners were informed about a hearing of appeals on 3.7.2008. Vide letter dated 28.6.2008 the petitioners informed that the appeals may be disposed off on the basis of the written submissions already filed. 3. By an order dated 29.4.2008 O.P.Nahar, Chairperson, while dismissing appeal held that the amount recovered/seized be confiscated to the Government under the provisions of Section 13(2) of the FEMA. 4. The other Member of the Bench i.e. Ms.Vijay Laxmi, by an order dated 10.6.2008 agreed that the appeals are liable to be dismissed but disagreed regarding confiscation on the ground that the penalty cannot be enhanced when no appeal is filed by the Enforcement Directorate. 5. On 11.6.2008, in view of difference of opinion, Member Ms.Vijay Laxmi formulated the points of 3 difference. They are as under:- (i) Whether the order of this Tribunal about the confiscation of the subject amount in 5 bank accounts, subject foreign equity as well as the foreign currency recovered and seized from the appellant Pradeep Hirani amounts to enhancement of the penalty which cannot be done by this Tribunal where the Enforcement Directorate has not preferred any appeal and no notice has been given to the appellants against the release of the said amount by the Adjudicating Officer ? (ii) Whether under the circumstances of this matter, the enhancement of penalty against the appellants without giving notice to this effect is not maintainable ? 6. Pursuant to the formulation of the points of difference by Ms.Vijay Laxmi, the matter was heard by third Member Shri R.N.Poddar. Shri Poddar formulated two more points. It appears that by his order dated 3.10.2008 he concurred with Member Shri O.P.Nahar. On 23.10.2008 the appeals were listed before the Bench of Shri O.P.Nahar and Ms.Vijay Laxmi and the following order was passed:- "These appeals are dismissed having no merits but the amount recovered and seized from appellant Pradeep Hirani in Appeal No.128/2007, excluding US dollars 2000 and the foreign currency found in 5 bank accounts at Dubai as well as the foreign equity purchased out of these bank accounts be confiscated to the Central Government under the provisions of Section 13(2) Foreign Exchange Management Act, 1999. The Enforcement Directorate may take appropriate action to bring into effect this forfeiture." 4 7. The said order dated 23.10.2008 quoted hereinabove is challenged before us in this petition. The grievance of the petitioners is that the points of difference formulated by Member Ms.Vijay Laxmi were not served on them and correct procedure laid down under Section 31 of the FEMA was not followed. 8. Section 31 of the FEMA states that, if the Members of the Bench consisting of two members differ in opinion on any point, they shall state the point or points on which they differ, and make a reference to the Chairperson who shall either hear the point or points himself or refer the case for hearing on such point or points by one or more of the other Members of the Appellate Tribunal and such point or points shall be decided according to the opinion of the majority of the Members of the Appellate Tribunal who have heard the case, including those who first heard it. In view of the clear language employed in Section 31 of the FEMA, there can be no doubt that the Tribunal has not followed the correct procedure. We are of the opinion that a single Member of the Bench could not have formulated additional points of difference. 9. In this view of the matter, we are of the opinion that the orders dated 11.6.2008, 3.10.2007 and 5 23.10.2008, which are impugned in this writ petition deserve to be quashed and set aside and are accordingly quashed and set aside. 10. The matter is remanded to the Tribunal with a direction to formulate the points of difference in terms of Section 31 of the Foreign Exchange Management Act, 1999 and furnish a copy thereof to the petitioners. Needless to say that thereafter the 3rd Member will hear the points of difference and dispose of the matter in accordance with law. 11. Writ petition is disposed of in the aforestated terms. JUDGE JUDGE JUDGE JUDGE JUDGE JUDGE