Madras High Court
P.S.Saminathan vs The Secretary To Government Of India on 3 March, 2014
Author: T.Raja
Bench: T.Raja
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED:03.03.2014
CORAM
THE HONOURABLE MR.JUSTICE T.RAJA
W.P.Nos.28461 and 28462 of 2010
and
M.P.No.1 of 2010
P.S.Saminathan ... petitioner
Versus
1.The Secretary to Government of India,
Department of Revenue,
North Block,
New Delhi 110 001.
2.The Director of Enforcement,
Government of India,
Lok Nayak Bhawan,
Khan Market,
Lodhi Road, New Delhi 110 003.
3.The Assistant Director,
Directorate of Enforcement,
(Foreign Exchange Management Act)
Government of India,
Shastri Bhavan, 3rd Floor,
3rd Block,
No.26, Haddows Road,
Chennai 600 006.
4.The Assistant Director,
Directorate of Enforcement,
Government of India,
No.23-24, 2nd Floor, Mittal Chambers,
Nariman Point, Mumbai 400 021.
5.The Official Liquidator, High Court,
Madras as Liquidator of M/s.Pyramid
Saimira Theatres Ltd., (in liquidation)
Government of India,
Department of Company affairs,
Corporate Bhavan, UTI Buildings,
Chennai 600 001. ... Respondents
Prayer in W.P.No.28461 of 2010: Writ petition filed under Article 226 of the Constitution of India praying to issue a writ of Certiorarified Mandamus, directing the 3rd respondent to call for the records relating to impugned summons proceedings of the 3rd respondent vide F.No.T.3/66/CZO/C/2010 dated 16.11.2010 and quash the same and may be pleased to direct the 3rd respondent not to proceed further based on the impugned summons namely F.No.T.3/66/CZO/C/2010 dated 16.11.2010.
Prayer in W.P.No.28462 of 2010: Writ petition filed under Article 226 of the Constitution of India praying to issue a writ of Prohibition, restraining the 3rd respondent from continuing the proceedings as against the petitioner pursuant to the summons No.T.3/66/CZO/C/2010 dated 16.11.2010 issued as the same is without jurisdiction and authority of law and in violation of principles of natural justice.
For petitioner : Mr.R.Yashodvardhan,
(in both W.Ps') Senior Counsel for
M/s.Pass Associates
For Respondents : Mr.P.Wilson, Addl. Solicitor
(in both W.Ps') General of India
Assisted by
Mr.M.Dhandapani
for R1 to R4
Mr.B.Dhanarj for R5
O R D E R
These writ petitions are filed by Mr.P.S.Saminathan. The first writ petition is challenging the summons issued by the third respondent, the Assistant Director, Directorate of Enforcement (Foreign Exchange Management Act), Chennai in F.No.T.3/66/CZO/C/2010 dated 16.11.2010, wherein the third respondent called upon the petitioner to appear personally before him on 22.11.2010 at 10.30 hours to give evidence and also to produce the documents specified under the schedule viz., Passport, Bank passbook with up to date entries and details of immovable properties and to quash the same with further direction to the third respondent not to proceed further based on the impugned summon viz. F.No.T.3/66/CZO/C/2010 dated 16.11.2010.
2. The second writ petition is also directed against the same summon issued by the third respondent on the ground that the same is without jurisdiction and authority of law and also in violation of the principles of natural justice.
3. Mr.Yasodhavardan, learned Senior Counsel for the petitioners in both the writ petitions would submit that the petitioner is being the Promoter and Director of the company viz., M/s.Pyramid Saimira Theatres Ltd., which is ordered to be wound up by this Court vide order dated 29.04.2010, pursuant to the winding up order, when the 5th respondent viz., The Official Liquidator, High Court, Madras has taken over the charge of the petitioner's company, its property and he has taken possession of the office premises and all other assets of the company, the petitioner can not be called up to appear for enquiry on behalf of the company. Before the petitioner's company was wound up and taken over possession by the 5th respondent, the petitioner's company raised through automatic route Foreign currency convertible Bond (in short FCCB) by filing relevant application with Reserve Bank of India on Form No.83 and thereafter, the FCCB was issued confirming to the Foreign Direct Investment Policy of the Government of India and the Reserve Bank of India also issued direction from time to time. Complying the same, the petitioner's company purchased the above mentioned FCCB. The transactions for purchase of the above said FCCB were permissible in law by virtue of the Notification in GSR.757(E) dated 07.07.2004 and the Director of Reserve Bank of India also in his proceedings dated 01.08.2007 approved the FCCB in letter No.2007704 under the automatic approval route. It goes without saying that FCCB issue was within the ceiling prescribed and moreover, the public issue of FCCB was also through a reputed lead manager viz., Jefferies International Limited, United kingdom. It is also come within the Schedule I sub clause 3 of the transfer or issue of any Foreign Security Regulation, 2004.
4. Adding further, learned Senior counsel mentioned that only after grant of permission by the Reserve Bank of India to the petitioner's company and after complying with all the other conditions, the FCCB was purchased, but ignoring all these facts the 4th respondent issued a summon on 27.07.2009 calling upon the petitioner to submit some details. The petitioner in turn submitted a detailed reply. Being satisfied with the reply and the documents submitted by the petitioner on behalf of the petitioner's company, the 4th respondent dropped all further proceedings and decided not to proceed further. Therefore, the proceedings under FEMA initiated by the 4th respondent in his communication No.T-3/82-B/2009/PKN dated 27.07.2009 from Mumbai was not proceeded, which also goes to show that the same was not proceeded one year one month and that gives an indication that the matter was closed once and for all. While so, the third respondent issued one another summon, impugned in the present writ petitions, calling upon the petitioner to come for enquiry in the capacity as Chairman and Managing Director of the company to attend personally, and also to give evidence and produce documents such as Passport, bank passbook and details of immovable properties. Even after the receipt of the summon, again the petitioner sent a representation to the 3rd respondent in response to the summon, explaining the details of the earlier enquiry conducted by the 4th respondent on the very same issue, which reached finality, hence the petitioner requested the 3rd respondent to drop all the proceedings.
5. Adding further, it was stated that when the issue for which the petitioner was called upon to appear personally by the third respondent, was already concluded after submitting his detail representation to the 4th respondent and no action was taken by the 4th respondent, it goes without saying that the 4th respondent has become functus offcio after an expiry of one year under the provision of the relevant act. Hence, the third respondent can not compel the petitioner to appear for enquiry. In view of the issue of summon, the petitioner who is seriously suffering from renal disease, for which he has been undergoing dialysis on every alternative days, has been put to serious prejudice. On this basis prayed for quashing the summon.
6. Continuing his argument, he is further submitted that when the petitioner's company was already wound up and the 5th respondent has been appointed and he has also taken over the charge of the entire company including its assets and liabilities, the third respondent cannot continue any proceedings against the petitioner in relation to any commission or omission said to have been committed by the petitioner. Therefore, when the petitioner's company was ordered to be wound up by this Court vide order dated 29.04.2010 and subsequently, the 5th respondent also had taken over of the physical assets and records of the company, the issuance of impugned summons calling upon the petitioner to give statement on behalf of the company is wholly illegal. Therefore, the impugned summon is liable to be set aside. On the basis of representing the same contentions sought for allowing the second writ petition also.
7. In support of his contention, he has also relied upon a judgment of the Apex Court in the case of Natwar Singh Vs. Director of Enforcement and another reported in (2010) 13 SCC 255 to contend that every notice or summon issued should indicate the nature of contravention alleged to have been committed by the person concerned and after taking the cause, if any, shown by such person, the adjudicating authority is required to form an opinion as to whether an inquiry is required to be held into the allegations of contravention. It is only then the real and substantial enquiry into allegations of contravention begins. The third respondent has issued summon, but the petitioner had already submitted his detailed reply and other documents before the 4th respondent and for which, the 4th respondent had not taken any conclusion. The third respondent once again reissuing the same summon calling upon the petitioner to appear personally to answer in relation to the same issue, for which the 4th respondent issued summon again clearly shows the 3rd respondent has come to the conclusion.
8. Per contra, Mr.Wilson, learned Additional Solicitor of India heavily refuting the statement made by the learned counsel appearing for the petitioner contended that the present writ petitions are wholly misconceived and are not maintainable in law on the ground that when the third respondent had issued summon, the petitioner appeared before the third respondent and also submitted a detailed representation dated 12.11.2010, in which the petitioner has undertaken to appear and produce all the relevant documents in future. When the petitioner has undertaken to appear before the 4th respondent, subsequently, it was thought fit to conduct enquiry by the Chennai office, therefore, without reaching any conclusion on the earlier summon issued by the 4th respondent, since jurisdiction to hold an enquiry falls within the third respondent office, the files were given to the third respondent and thereupon the third respondent issued summon calling upon the petitioner to appear personally at Chennai. In response to the summon, the petitioner also appeared on 12.11.2010. During the course of enquiry, the petitioner also has undertaken to submit the statement of the current accounts of PSTL, held in foreign banks, by next week and with regard to the Banks in India, he has also undertaken to furnish the bank statements of PSTL upto June 2009. When the petitioner in his written letter dated 12.11.2010 has undertaken to furnish all the documents required by the 3rd respondent, it is not open to him to file the present writ petitions challenging the validity of the summons issued by the third respondent. When the petitioner has already given an undertaking that he would appear and also produce the documents as and when called for enquiry, as against his own undertaking, he cannot file these writ petitions in the midst of enquiry.
9. Adding further, he had stated that under Section 37 of the Foreign Exchange Management Act, 1999, when the third respondent is going to conduct only an investigation with regard to the contravention referred to in Section 13, the learned counsel appearing for the petitioner should not mention before this Court that the third respondent has prejudged the issue. Indeed Section 37 of the Act gives power only to hold an enquiry and hold proper investigation into the contravention of the matter referred to in Section 13. During the course of investigation, if the third respondent finds out that there is any contravention committed by the petitioner in regard to the FCCB, a complaint would be filed by the third respondent and thereafter an order will be passed. If the petitioner is aggrieved by the order that could be issued on adjudication proceedings, he can always very well seek remedies by filing appeal against such order before the appellate Tribunal as provided under the said act. When that stage has not arisen, the petitioner ought not to have come to this Court in the middle of the proceedings, particularly, when he has already appeared and given a written undertaking that he would appear before the third respondent as and when called for and also fully co-operate with the investigation.
10. This Court fully agrees with the submissions made by the learned Additional Solicitor General of India appearing for the respondents. Keeping in view of the fact that the petitioner after receipt of the summon from the third respondent appeared before the third respondent and has also given a written undertaking dated 12.11.2010 to appear before the third respondent to complete the enquiry, this Court is of the view that the present writ petitions should not have been filed. Therefore, the petitioner is directed to appear before the third respondent as agreed earlier. On such appearance, the third respondent is directed to complete the enquiry as quickly as possible as he is having renal disease. It is needless to mention that, if for any reason, the petitioner is required to file any other documents relating to the FCCB issue, the 5th respondent is also directed to furnish the details if they are available with him.
11. With the above observations, both the writ petitions are dismissed. No costs. Consequently, connected miscellaneous petition is closed.
03.03.2014 Index : Yes/No Internet : Yes/No vsm Note: Issue order copy on 29.04.2014. T.RAJA,J. vsm To 1.The Secretary, Government of India, Department of Revenue, North Block, New Delhi 110 001. 2.The Director of Enforcement, Government of India, Lok Nayak Bhawan, Khan Market, Lodhi Road, New Delhi 110 003. 3.The Assistant Director, Directorate of Enforcement, (Foreign Exchange Management Act) Government of India, Shastri Bhavan, 3rd Floor, 3rd Block, No.26, Haddows Road, Chennai 600 006. 4.The Assistant Director, Directorate of Enforcement, Government of India, No.23-24, 2nd Floor, Mittal Chambers, Nariman Point, Mumbai 400 021. W.P.No.28461 and 28462 of 2010 03.03.2014