SAFEMA Affirms FERA Penalty for Unauthorized Payments as Lack of Final Hearing Doesn’t Breach Natural Justice

Case Details: Nand Lal Sarawogi v. Special Director Directorate of Enforcement, Kol. - [2024] 166 taxmann.com 8 (SAFEMA-New Delhi)

Judiciary and Counsel Details

• Munishwar Nath Bhandari, Chairman & Balesh Kumar, Member
• R.K. Sinha & Nirmal Kumar Chowdhury, Advs. for the Appellant.
• Surender Kumar & Pranav Kumar, Advs. for the Respondent.

Facts of the Case

In the instant case, a Show Cause Notice (SCN) was issued charging the appellant for receiving and making a payment of Rs. 5.81 lakhs in contravention of Sections 9(1) (b) and 9 (1) (d) of the Foreign Exchange Regulation Act, 1973. The Adjudicating Authority vide the impugned order imposed a penalty of Rs.50 lakhs on the appellant. The appellant challenged the said order on grounds of violation of principles of natural justice.

According to the appellant, the impugned order was ex-parte since they were not given an effective hearing before issuing the order. Further, the statement which was recorded by the appellant was retracted as during custody, he was tortured and beaten. Also, their prayer for cross-examination of other noticees was not granted.

It was noted that after having served the SCN and having furnished the relied-upon documents, there does not appear to be any prejudice caused to the interest of the appellants by the denial of cross-examination.

A number of hearings were given to the appellant during the course of Adjudication proceedings, and thus, it did not appear to be convincing that merely because the hearing was not held just before the passing of the impugned order, in spite of a number of opportunities given to appellant earlier that impugned order was vitiated by violation of the principle of natural justice. Further, retractions had been dealt by the respondent from time to time.

Appellate Tribunal Held

The Appellate Tribunal held that, after having served SCN and having furnished relied-upon documents, even so during proceedings of adjudication, there did not appear to be any prejudice caused to the interest of the appellant by denial of cross-examination, which in any case was not necessary in instant proceedings. Therefore, there was no reason to cause intervention in the impugned order, and accordingly, an appeal against the same was to be dismissed.

List of Cases Referred to

• Vinod Solanki v. Union of India (2008) 16 SCC 537 (para 8)
• Telstar Travels Private Limited & Ors. v. Enforcement Directorate (2013) 9 SCC 549 (para 9).