Madras High Court
V.Ramachandran vs The Special Director on 3 March, 2011
Author: T.Raja
Bench: T.Raja
IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated:- 03.03.2011 Coram:- The Hon'ble Mr. Justice T.RAJA Writ Petition No.24534 of 2010 and M.P. No.1 of 2010 1. V.Ramachandran Former Chairman, Helios and Matheson Information Technology Ltd., Adwave Towers, No.9 South Boag Road, T. Nagar, Chennai 600 017. 2. G. Murali Krishna, Managing Director, Helios and Matheson Information Technology ltd., Adwave Towers, No.9 South Boag Road, T. Nagar, Chennai 600 017. ... Petitioners vs. The Special Director, Directorate of Enforcement, 6th Floor, Lok Nayak Bhawan, Khan Market, New Delhi 110 003. ... Respondent Petition under Article 226 of the Constitution of India for the issuance of a writ of certiorari to call for the records of the respondent relating to proceedings No.SDE/SKS/IV/5/2010, dated 03.09.2010, and quash the same. For Petitioners : Mr.R.Krishnamurthy, Senior Counsel for M/s.Pais, Lobo & Alvares For Respondent : Mr.M.Dhandapani, Special counsel for the Directorate of Enforcement. O R D E R
The petitioners herein challenge the impugned proceedings (No.SDE/KS/IV/5/2010) of the respondent-Special Officer, Enforcement Directorate, dated 03.09.2010, in and by which, a penalty of Rs.5,00,000/- came to be imposed under Section 13 (1) of the Foreign Exchange Management Act, 1999, on each of the petitioners herein by the aforesaid authority for the alleged contravention of the provisions under Section 6 (3)(j) of the Act on the ground that the petitioners offered personal guarantee for a loan amount of US$ 13.5 Million to a resident outside India without obtaining prior permission from the Reserve Bank of India (RBI).
2. Certain vital facts, which are necessary to be pointed out for better appreciation, are concisely outlined here-under:-
M/s.Helios and Matheson Information Technology Limited, Chennai-17, (hereinafter refereed to as H & M Ltd.) is a Public Limited Company and the petitioners herein are its Former Chairman and present Managing Director respectively. M/s.vMoksha Technologies Ltd. (in short 'VMT') is a non-resident Unit in Mauritius, Port Blair.
In order to expand its business activities, H & M Ltd. entered into a Sale Purchase Agreement (in short 'SPA') on 11.05.2005 with VMT at Mauritius to acquire 100% of its shares for US$ 13.5 Million with an understanding that the consideration will be first transferred by H & M Ltd. to VMT whereupon, the transferred amount will be re-transferred to H & M Limited who, in turn, will issue redeemable preference service shares of H & M Ltd. in favour of VMT, Mauritius and those shares will be redeemed after 18 months from the date of issue. Consequent to the agreement, VMT, Mauritius, deposited the Original Share Certificates and the Share Transfer Forms duly signed with the agents/Escrow as per the terms of the SPA. The petitioner-H & M Limited secured the approval from Foreign Investment Promotion Board for the said investment in non-convertible preference shares in H & M Limited by a non-resident/VMT, Mauritius.
The Government of India, by its proceedings dated 20.06.2005, granted approval for the collaborations between the petitioners and VMT Mauritius subject to the condition that the consideration for the investment in VMT Mauritius shall be paid out of the inward remittance of Foreign Exchange through normal banking channels and further, to invest with H & M Ltd., VMT Mauritius has to follow the procedure prescribed by the Government of India in Press Note No.9/99 whereby it is provided that foreign companies will have to bring the requisite funds from abroad and not leverage the same with the funds from the domestic market.
VMT, Mauritius, for remitting US$ 13.5 Million which is equivalent to Rs.58,37,75,195/-, being the consideration for allotment of preference shares in H & M Ltd., availed credit facilities from the State Bank of Mauritius at Mauritius. In order to comply with the terms of the SPA, H & M Ltd. gave a letter of lien and guarantee in favour of Chennai Branch of State Bank of Mauritius. Thereafter, on 29.06.2005, the entire sum of Rs.58,37,75,195/- was remitted to the account of H & M Ltd. at the State Bank of Mauritius Branch at Chennai. On the very next day, ie., on 30.06.2005, the said amount credited to the account of H & M Ltd. was re-transmitted to the account of VMT, Mauritius, with the State Bank of Mauritius at Mauritius, towards the consideration for the purchase of 3 subsidiaries of VMT.
At this juncture, it is relevant to note that a rift originated between the petitioner-company and the successive Management of the VMT Mauritius on the very transactions referred to above which gave rise to various proceedings including the impugned proceedings under challenge herein.
Despite fulfilment of the terms and conditions as contained in the SPA on the part of H & L Ltd., VMT Mauritius committed breach of the terms on account of certain disputes that arose between Rajeev Shawney, the present Chairman of VMT and Pawan Kumar, the then CEO/Chairman of VMT Mauritius. Arbitration Proceedings initiated thereupon by the petitioners to resolve the dispute arose with the Management of VMT Mauritius are still pending. The said Rajeev Shawney is also said to have made false and defamatory allegations against H & M Ltd. and the petitioners apart from lodging a false and frivolous complaint against them alleging commission of serious offences of fraud.
Inasmuch as the successive Management of VMT Mauritius alleged fraud in the transaction in question and highlighted the same in the complaint made to the RBI, by letter dated 28.08.2007, the RBI requested the respondent-Department to examine and investigate the issue for necessary action, which resulted in search of the office premises of the petitioners on 12.03.2008 and during such search, incriminating documents were said to have been seized and statements of the individuals recorded including that of the Branch Manager of the State Bank of Mauritius (SBM) at Chennai, who is said to have stated that the petitioners furnished guarantees only to the SBM at Mauritius.
Ultimately, after conclusion of the investigation, a show cause notice, dated 21.01.2010, came to be issued against the petitioners stating that they have contravened the provisions under Section 6 (3) (j) of the Foreign Exchange Management Act, 1999 (FEMA) read with Regulation 3 of the Foreign Exchange Management (Guarantees) Regulation 2000 to the extent of US$ 13.5 million equivalent to Rs.58,37,75,193/- in having stood as guarantors for obtaining the loan from State Bank of Mauritius, Mauritius, and requiring them to show cause in writing within 30 days from the date of receipt of the notice as to why adjudicating proceedings as contemplated under Section 13 of FEMA should not be held against them in the manner as provided under Rule (4) of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 (in short 'Rules') and as to why penalty(ies) as provided in Section 13 (1) of FEMA should not be imposed on them. The petitioners submitted a detailed explanation along with a letter, dated 01.07.2010, of their Advocate stating that the Authority has no jurisdiction to proceed against the petitioners and as such, there was no need to have an enquiry at all.
At such stage, challenging the proceedings pending before the adjudicating authority, the petitioners filed W.P. Nos.15059 of 15060 of 2010. By common order dated 13.07.2010, this Court found that nothing has been brought on record to substantiate the claim of the petitioners that the principles of natural justice have been violated and so finding, refused to interfere with the show cause notice, however, considering the plea of the petitioners that their grievance would stand redressed if a direction is issued to the respondents for deciding the case of the petitioners on the basis of the explanation offered to the effect that the provisions under Section 6(3)(j) have no application to their case at all, the writ petition came to be disposed of with a direction to the Department to consider such objections within a period of four weeks from the date of receipt of a copy of the order.
After disposal of the aforesaid writ petitions, by letter dated 15.07.2010, sent by the Advocates of the petitioners to the respondent-Directorate, it was stated that there was no need for the petitioners to attend the scheduled personal hearing fixed on 16.07.2010. The opportunities given to the petitioners for personal hearings on 12.07.2010 and 14.07.2010 were not availed of by the petitioners. Since the petitioners did not desire to attend the personal hearings as expressed by them in the aforesaid letter and sought to consider their cases based on the explanation offered on 01.07.2010, the authority, taking note of the time-limit prescribed in the order of the learned single Judge, after considering the case of the petitioners as detailed in their explanation, ultimately declined to accept the same and, by the proceedings challenged herein, imposed a penalty of Rs.5 lakhs each on the petitioners herein.
3. Mr.R.Krishnamurthy, learned Senior Counsel appearing for the petitioners, in an arduous endeavour to whittle down the vigour of the impugned order, studiously contended by advancing the following submissions:-
(i) The petitioners herein did not stand as guarantors for any non-resident but the letter of comfort-guarantee was given only to a resident of India. Generally, if a person guarantees re-payment of a loan availed of by a borrower, the guarantor would also execute the loan agreement along with the borrower, whereas, in the case on hand, the loan agreement, dated 28.06.2005, executed by VMT in favour SBM, Mauritius, would depict that the borrower alone had executed the loan agreement and the petitioners had never executed the agreement along with the borrower as guarantors. The lien and guarantee on the part of the petitioners did not pertain to the loan granted by the SBM at Mauritius but pertains to petitioners' account with SBM at Chennai Branch, which is not a non-resident. Under such circumstances, in a transaction which in no way involves a non-resident as a party, there is no scope for applicability of Section 6(3)(j) of FEMA.
(ii) In matters relating to Capital Account Transactions, for a resident to offer guarantee to a non-resident, no permission of the RBI is necessary at all. While sub-Section (2) of Section-6 states that the RBI may, in consultation with the Central Government, specify any class or classes of capital account transactions which are permissible and limit up to which foreign exchange shall be admissible for such transactions, sub-section (1) thereof clearly states that subject to what is provided in sub-Section (2), any person may sell or draw foreign exchange to or from an authorised person for a capital account transaction, provided that the Reserve Bank shall not impose any restriction on the drawal of foreign exchange for payment due on account of amortization of loans or for depreciation of direct investments in the ordinary course of business. Since Section-(3) is very explicit that Clause (j) pertaining to guarantee/surety in respect of any debt/obligation/liability by (i) a person resident in India and owed to a person resident outside India or (ii) by a person outside India, may be regulated by the RBI without prejudice to the generality of the provisions of sub-Section (2), the transactions involved herein would only fall under Section 6 (2) of the Act and the purview of section 6(3) (j) is clearly excluded from application.
(iii) When all the transactions had been done through the Chennai Branch of the SBM after obtaining advice of Pricewaterhouse Coopers Pvt. Ltd and Khaitan and Co., if in fact permission of the RBI was necessary, the Chennai Branch of the SBM should have returned the papers submitted by the petitioners-company, instructing them to obtain the requisite permission from the RBI. At any rate, for the default, if any, committed by the authorised dealer-Chennai Branch of SBM, the petitioners cannot be held responsible and the authorized dealer, who acted as an agent of the RBI alone is answerable, however, no charge was ever levelled against the dealer.
(iv) After disposal of W.P. Nos.15059 and 15060 of 201, vide order dated 13.07.2010, the respondent was directed to consider the objections submitted by the petitioners on 01.07.2010 and the said authority, having formed an opinion to impose huge penalty on the petitioners declining to accept the explanation offered, before passing the impugned proceedings, should have issued a fresh show-cause notice as provided under Section 4 of the Rules and afforded all reasonable opportunities to substantiate the defence, however, it seems that the authority had already made up his mind to hold against the petitioners and such attitude on the part of statutory authorities should be depreciated.
(v) In Harbanslal Sahnia v. Indian Oil Corpn. Ltd. (AIR 2003 SC 2120), it has been categorically held that rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion and that, in an appropriate case, in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies viz., (a) where the writ petition seeks enforcement of the Fundamental Rights; (b) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. In the light of the above case law, the respondents cannot canvass a plea of alternative remedy available by way of appeal before the appellate authority-Appellate Tribunal for Foreign Exchange (AFTE) under the Act as against the impugned order passed by the original authority.
So submitting, learned Senior Counsel states that inasmuch as, in the present case, the authority has proceeded by pre-determining the issue without even considering the basic and core aspects adverted to on the part of the petitioners and the principles of natural justice having not been complied with by not resorting to the course outlined in Section 4 of the Rules for issuance of a fresh show cause notice, the impugned proceedings are rendered invalid in the eye of law, and pleads for grant of the prayer sought for.
4. Controverting the submissions made by the learned Senior Counsel, Mr.M.Dhandapani, learned Special Counsel appearing for the respondent-Directorate would submit that, after exhaustively considering the objections made by the petitioners, the authority could not agree with their claim since the case clearly falls under Section 6(3) (j), however, the authority was lenient enough in imposing the penalty under challenge and a close reading of the provisions would only suggest that Section 6(2) has no applicability to the petitioners' case.
Further, the present writ petition, agitated in the second round of litigation before this Court, by the very same parties may be rejected on the simple ground that as against the present impugned order passed subsequent to the direction issued in W.P. Nos.15059 and 15060 of 2010 by duly considering the issue in the light of the explanation offered by the petitioners, an efficacious alternative remedy under Section 19 is available by way of Appeal before the ATFE and all the grounds raised herein can be very well agitated and canvassed before the said Forum.
When all dealings pertaining to permissible capital account transactions as governed by FEMA are stipulated by the RBI, prior permission of the RBI must have been obtained by the petitioners who stood guarantors to a non-resident and the present case is clearly covered by Regulation-3 of FEM (Guarantees) Regulation 2000.
The respondent even before disposal of the earlier writ petitions on 13.07.2010, fixed the date of personal hearing on 12.07.2010 and even thereafter, they did not avail the opportunity of personal hearing for which the dates given were 14.07.2010 and 16.07.2010. If the petitioners were really looking for an ample opportunity, despite the explanation offered by them, by availing the opportunity of personal hearing fixed on 14.07.2010 and 16.07.2010, either personally or through counsel, they could have effectively projected their pleas and claims, rather, they simply addressed a letter dated 15.07.2010 so vaguely stating that there was no need for them to any more attend the enquiry as the matter could be decided based on the explanation. Thus, the authority, conscious of the fact that the High Court had fixed an outer-limit for disposal of the petitioners' case on the basis of the explanation, proceeded therewith, assessed and dealt in detail with each of the objections made and ultimately, passed the impugned order and in the said order, clear discussion has been made to hold that only the provisions under Section 6(3)(j) of the Act is applicable to the issue in question.
Referring to Section 35 of the FEMA which provides that any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law arising out of such order; and relying on a case law of the Apex Court reported in 2010 CIJ 61 CLJ (Rajkumar Shivhare v. Asst. Director, Directorate of Enforcement) wherein it has been categorically held that when an appeal remedy was provided under the Act, only appeal had to be preferred and the writ petition was not maintainable, learned special counsel submits that, in the present case, the petitioners without exhausting such remedy of appeal has rushed to this Court and further, even if he suffers an adverse order at the hands of the appellate authority, he has further recourse to challenge the appellate order by filing an appeal u/s.35 of the Act to this Court. Under such circumstances, a deep analysis of the case would go to show that it may not be appropriate at this stage for this Court to appreciate the case of the petitioners by delving into the various points raised and hence, the writ petition may be dismissed at the threshold.
5. I have given my thoughtful consideration to the rival submissions made on either side and carefully perused the materials available on record.
6. Admittedly, VMT Ltd. is a holding company, a non-resident at Mauritius with whom the petitioners, in order to promote their business, entered into a Sale Purchase Agreement duly signed by both sides on 11.05.2005 and it was agreed that the petitioner-company will acquire 100% shares of VMT for a consideration of US$ 15 million, with an understanding that the consideration will be first transferred to VMT Ltd. whereupon the amount will be re-transferred to H & M Ltd., who in tun will issue redeemable preference shares in favour of VMT and those shares will be redeemed after 18 months from the date of issue. VMT applied for loan from the State Bank of Mauritius at Mauritius and on the basis of the letter of lien and guarantee furnished by the petitioners, the said amount released by SBM at Mauritius was credited to the petitioner's account at the Chennai Branch of SBM on 29.06.2005. In respect of the said transaction, the RBI received a complaint from the present Chairman of VMT stating that the said transaction was fraudulently entered into by collusion between the petitioners and the erstwhile Chairman of the VMT, for, instead of crediting the acquisition proceeds into the accounts of VMT maintained with HSBC Bank, the sum was credited to the VMT's account with the SBM at the Mauritius Branch. The said complaint received by the RBI was forwarded to the respondent-Directorate for enquiry and investigation and on the basis of the materials collected, both oral and documentary, it was found that even though the present transaction between a resident in India/petitioners and a non-resident/VMT at Mauritius falls only under the specified class of permissible capital account transaction in terms of Section 6(2) of FEMA, the same is regulated in terms of Regulation of FEM (Guarantees) Regulation, 2000 issued under Section 6(3)(j) of FEMA.
7. Even though at the first instance after completion of the investigation, the petitioners were issued with a show cause notice on 21.01.2010 and a detailed explanation was offered along with a letter, dated 01.07.2010, from their Counsel to the effect that there was no need to have an enquiry at all, the petitioners did not choose to appear for the personal hearing scheduled on 12.07.2010, rather, they chose to file the writ petitions as mentioned above with an emphatic allegation that the principles of natural justice have been flagrantly violated in their case. One of the grounds taken therein is relevant to be quoted below:-
That all the materials needed for the enquiry are available on record and the petitioner has no other record to produce or offer any other explanation other than brought to the notice of the respondent during the investigation in the year 2008 and also its explanations offered under in his letter dated 01.07.2010. Hence, there is no need at all to hold any further enquiry and first respondent can hold on the materials already available on record and that I have not contravened any provisions of the said Act. The continuation of the adjudication proceedings in spite of the request made by me in my explanation offered to the charges would lead to unnecessary and lengthy proceedings and harassment to me. It was further highlighted in the said litigation that guarantee furnished by the petitioners was through a Bank in Chennai viz., SBM's Chennai Branch, and for such issuance of guarantee by a resident in India to a non-resident, permission of RBI is not necessary in terms of Section 6 (2) and the regulations made there-under and further, the respondents have not produced the guarantee alleged to have been issued to the non-resident. While disposing of the writ petition, this Court discarded the strong argument regarding violation of the principles of natural justice and, acting upon the plea of the petitioners that they restrict the prayer to the extent that their grievance would get redressed if a direction was issued to the respondents to consider their claim of non-applicability of Section 6(3) (j) to their case on the basis of the detailed explanation submitted on 01.07.2010, ultimately directed the respondents to consider those objections and pass orders within a period of four weeks from the date of receipt of a copy of the order.
8. At this juncture, it must be taken note of that even during the pendency of the writ petition, personal hearing was scheduled on 12.07.2010 and the writ petition came to be disposed of on 13.07.2010. Two more opportunities were given to the petitioners to attend the personal hearings scheduled on 14.07.2010 and 16.07.2010, but the petitioners did not avail it of. The petitioners could have very well utilised the further opportunity of personal hearing coupled with the direction of this Court for consideration of the case by the respondent in the light of the detailed explanation offered on 01.07.2010, to effectively defend their case and substantiate the claim and pleas now raised as to the applicability of Section 6(2) of FEMA to the complete exclusion of Section 6(3) (j) and the Regulations issued thereunder. It must also be pointed out here that when the petitioners themselves requested this Court that they would be satisfied if a mere direction is issued to consider their claim in the light of the explanation offered, the presumption would be that they only required a decision at the hands of the authority based on the explanation offered and that in the event of an adverse order, they would resort to the further course of remedy as provided under the statute. Therefore, in the subsequent proceedings now adjudicated by this Court, they are estopped from raising the plea of compliance to the principles of natural justice as provided under Rule-4 of the Rules. If they were cautious and conscious enough, in the letter, dated 15.07.2010, sent to the Directorate by the petitioners through their counsel, they could have emphasised that in the event of their case being considered negatively, they may be given a further opportunity by way of giving a fresh personal hearing in the matter. But, the petitioners did not take such efforts at any point of time.
9. By way of circumspection, without proceeding further on the issues enveloped by facts in dispute with reference to various documents and the manner in which they executed, now, it would be of much relevance to refer to a case law of the Apex Court in Raj Kumar Shivhare's case, wherein, it has been categorically ruled as follows:-
34. When a statutory forum is created by law for redressal of grievance and that too in a fiscal Statute, a writ petition should not be entertained ignoring the statutory dispensation. In this case High Court is a statutory forum of appeal on a question of law. That should not be abdicated and given a go-bye by a litigant for invoking the forum of judicial review of the High Court under writ jurisdiction. The High Court, with great respect, fell into a manifest error by not appreciating the aspect of the matter. It has however dismissed the writ petition on the ground of lack of territorial jurisdiction. After ruling so, the Apex Court proceeded further to discuss the issue based on the earlier decisions and the ratio laid down therein, and the relevant portions are extracted below:-
36. Reference may be made to the Constitution Bench decision of this Court rendered in Thansingh Nathmal and others vs. The Superintendent of Taxes, Dhubri, reported in AIR 1964 SC 1419, which was also a decision in a fiscal law. Commenting on the exercise of wide jurisdiction of the High Court under Article 226, subject to self imposed limitation, this Court went on to explain: "The High Court does not therefore act as a court of appeal against the decision of a court or tribunal, to correct errors of fact, and does not by assuming jurisdiction under Article 226 trench upon an alternative remedy provided by statute for obtaining relief. Where it is open to the aggrieved petitioner to move another tribunal, or even itself in another jurisdiction for obtaining redress in the manner provided by a statute, the High Court normally will not permit by entertaining a petition under Article 226 of the Constitution the machinery created under the statute to be bypassed, and will leave the party applying to it to seek resort to the machinery so set up." (Emphasis added)
37. The decision in Thansingh (supra) is still holding the field.
38. Again in Titaghur Paper Mills Co. Ltd. and another vs. State of Orissa and another [AIR 1983 SC 603] in the background of taxation laws, a three judge Bench of this Court apart from reiterating the principle of exercise of writ jurisdiction with the time-honoured self imposed limitations, focused on another legal principle on right and remedies. In paragraph 11, at page 607 of the report, this Court laid down:
"It is now well recognized that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of. This rule was stated with great clarity by Willes, J. in Wolverhampton New Water Works Co. v. Hawkesford [1859] 6 C.B (NS) 336 at page 356 in the following passage:
"There are three classes of cases in which a liability may be established founded upon statute.... But there is a third class, viz., where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it...the remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class. The form given by the statute must be adopted and adhered to." The rule laid down in this passage was approved by the House of Lords in Neville v. London Express Newspaper Ltd. [1919] AC 368 and has been reaffirmed by the Privy Council in Attorney-General of Trinidad and Tobago v. Gordon Grant and Co. [1935] AC 532 and Secretary of State v. Mask and Co. AIR 1940 PC 105. It has also been held to be equally applicable to enforcement of rights, and has been followed by this Court throughout. The High Court was therefore justified in dismissing the writ petitions in limine".
39. In this case, liability of the appellant is not created under any common law principle but, it is clearly a statutory liability and for which the statutory remedy is an appeal under Section 35 of FEMA, subject to the limitations contained therein. A writ petition in the facts of this case is therefore clearly not maintainable. In the light of the above observation of the Apex Court, this Court is of the view that, in the given circumstances, bypassing the effective and proper alternative remedy available and provided in the statute itself, it may not be proper to proceed to decide this writ petition by examining the issues arising from various facts in dispute.
10. Despite the clear position as outlined above which directly applies to the given case, the learned Senior Counsel endeavoured to draw support to his argument through the very same case law cited supra wherein reference was made to an earlier decision rendered in Seth Chand Ratan vs. Pandi Durga Prasad (D) By Lrs. and Ors (2003 (5) SCC 399 for the proposition that when a right or liability is created by a Statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before seeking the discretionary remedy under Article 226 of the Constitution; however, such principle is subject to one exception, namely, where there is a complete lack of jurisdiction of the Tribunal to take action or there has been a violation of rules of natural justice or where the tribunal acted under a provision of law which is declared ultra vires. In such cases, notwithstanding the existence of such a tribunal, the High Court can exercise its jurisdiction to grant relief.
11. Of course, the learned Senior Counsel may be right in citing the said decision if the circumstances herein are similar to that of those involved in Ratan's case, but in the present case, what is under challenge is an appealable order and therefore, when an appealable order is passed, particularly when the facts are in dispute, the writ petition filed under Article 226 of the Constitution of India without availing alternate remedy is not maintainable. Further, in the very same decision in Raj Kumar Shivhare's case, there is an answer to the argument of the learned Senior Counsel by placing reliance on Seth Chand Ratan's case in the following text :-
44. Therefore, principle laid down in the Ratan's case (supra) applies in the facts and circumstances of this case. If the appellant in this case is allowed to file a writ petition despite the existence of an efficacious remedy by way of appeal under Section 35 of FEMA this will enable him to defeat the provisions of the Statute which may provide for certain conditions for filing the appeal, like limitation, payment of court fees or deposit of some amount of penalty or fulfilment of some other conditions for entertaining the appeal. (See para 13 at page 408 of the report). It is obvious that a writ court should not encourage the aforesaid trend of by-passing a statutory provision.
12. In A. Venkatasubbiah Naidu vs S. Chellappan (2000 7 SCC 695), the Apex Court deprecated the practice of exercising the writ jurisdiction when an efficacious alternative remedy is available, by observing as follows:-
Though no hurdle can be put against the exercise of the constitutional powers of the High Court it is a well recognized principle which gained judicial recognition that the High Court should direct the party to avail himself of such remedies one or the other before he resorts to a constitutional remedy. Learned single judge need not have entertained the revision petition at all and the party affected by the interim ex parte order should have been directed to resort to one of the other remedies.
13. In the case on hand, the Statute/FEMA not only provides an alternative remedy of appeal as against the original order but also further remedy against the appellate authority's order by appeal to the High Court. The relevant provision being Section-35 under the caption 'Appeal to High Court', the same is extracted below:-
Any person aggrieved by any decision or order of the Appellate Tribunal may file and appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law arising out of such order.
Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days.
14. When an argument was advanced before the Apex Court that under Section 35, only appeals from final order could be filed, the Court, explaining the concept of the provision and its encompassing operation, vividly answered thus in Raj Kumar Shivhare's case:-
23.The argument that under Section 35 only appeals from final order can be filed has been advanced on a misconception of the clear provision of the Section itself. The Section clearly says that from `any decision or order' of the Appellate Tribunal, appeal can be filed to the High Court on a question of law.
24.The word `any' in this context would mean `all'. We are of this opinion in view of the fact that this Section confers a right of appeal on any person aggrieved. A right of appeal, it is well settled, is a creature of Statute. It is never an inherent right, like that of filing a suit. A right of filing a suit, unless it is barred by Statute, as it is barred here under Section 34 of FEMA, is an inherent right (See Section 9 of the Civil Procedure Code) but a right of appeal is always conferred by Statute. While conferring such right Statute may impose restrictions, like limitation or pre-deposit of penalty or it may limit the area of appeal to questions of law or sometime to substantial questions of law. Whenever such limitations are imposed, they are to be strictly followed. But in a case where there is no limitation on the nature of order or decision to be appealed against, as in this case, the right of appeal cannot be further curtailed by this Court on the basis of an interpretative exercise. Under Section 35 of FEMA, the legislature has conferred a right of appeal to a person aggrieved from `any' `order' or `decision' of the Appellate Tribunal. Of course such appeal will have to be on a question of law. In this context the word `any' would mean `all'.
15. In similar circumstances, while dealing with the allegation of violation of the principles of natural justice in a writ petition filed relating to Customs Act, 1962, this Court in the case law reported in 2009 (248) ELT 30 (S.Ram Kumar vs. Union of India), repelled the allegation holding that writ jurisdiction under Article 226 should not have been invoked without availing the alternative remedy provided under Section 128 and 129A of the Customs Act for the reason that the appellate authority under the statute is vested with the power to appreciate the factual aspects and the petitioner can very well establish his right before the said authority. More importantly, this High Court, in the said Judgement has further held that in fiscal matters, there should not be short-circuiting of the statutory remedies. Such principle as laid down above is also clearly applicable to the present case.
16. Thus, on the various disputed questions as to whether,
(i) failure to obtain permission from the RBI by the authorised Agent was in fact due to inadvertence or deliberately intentional;
(ii) whether the actual transaction which directly involves a non-resident would amount to invocation of Section 6 (3) (j) and the Regulations made thereunder particularly when there is an argument that the ultimate beneficiary was a non-resident company at Mauritius;
(iii) whether the petitioners were deprived of an effective opportunity in placing their case before the authority by, in fact, non-supply of any crucial document?
(iv) whether Circular No.29, dated 27.03.2006, has any applicability and is helpful to the case of the petitioners; etc. in regard to the allegation in the complaint which gave rise to the enquiry and proceedings ie., instead of crediting the acquisition proceeds to the account of VMT maintained with the HSBC Bank, the proceeds were credited to VMT's account with SBM at Mauritius to the wrongful benefit of the erstwhile chairman of the VMT, the petitioners could have challenged the order passed by the original authority before the ATFE under Section 19 of the Act and thereafter, if still aggrieved by any order passed by the Appellate Tribunal, they have further appeal remedy before the High Court u/s.35 of the Act as has been consistently held by the Apex Court in its various decisions as referred to above while dealing with alike cases. Even accepting the argument of the learned Senior Counsel for the petitioners that the instant case is an exceptional case where this Court can proceed with the matter, I am of the considered opinion that such exercise would only turn out to be futile since there exist many disputed questions and further, none of the 3 elements as enumerated in Hanbanslal Sahnia's case is present herein to treat the present case otherwise.
17. In the light of the foregoing discussion, I hold that the present writ petition is not maintainable and accordingly, the same is dismissed. However, the petitioners are at liberty to file an Appeal before the AFTE, if they so desire, and in that event, the appellate authority shall not raise any objection to entertain the appeal on the ground of limitation since the matter was pending on the file of this Court. However, in respect of other relevant conditions such as payment of court fees, deposit of penalty or fulfilment of any other conditions for entertaining the Appeal, it is for the AFTE to decide on such issues. It is made clear that in view of the peculiar circumstances involved in the given case, while exercising its vast powers under Section 28 of the Act, the Tribunal may, if necessary, call for the entire records from the original authority, to render proper reasoning on the facts in dispute. The petitioners are given three weeks' time from to-day to prefer the appeal before the AFTE as provided under Section 19 of the Act and thereafter, if still feel aggrieved, they may file an appeal before this High Court under Section 35 of the Act. No costs. Connected Miscellaneous Petition is closed.
JI.
To The Special Director, Directorate of Enforcement, 6th Floor, Lok Nayak Bhawan, Khan Market, New Delhi 110 003