Directorate Of Enforcement vs The Appellate Tribunal For ...
2003 Latest Caselaw 646 Del

JUDGMENT

Badar Durrez Ahmed, J.

1. Rule. Since the matter is of some urgency, with the consent of the parties, it was taken up for final hearing straight-away. In this Writ petition the provisions of Section 20(4) of the Foreign Exchange Management Act, 1999 (hereinafter referred to as FEMA) have come up for interpretation. The question involved in this petition relates to the extent of jurisdiction of the Chairperson relative to the jurisdiction of a member of the Appellate Tribunal (Respondent No. 1) with respect to the transfer of a matter for hearing by a Bench consisting of two membeRs.

2. Section 20 of FEMA reads as under:-

"20 COMPOSITION OF APPELLATE TRIBUNAL.

(1) The Appellate Tribunal shall consist of a Chairperson and such number of Members as the Central Government may deem fit.

(2) Subject to the provisions of this Act, -

(a) the jurisdiction of the Appellate Tribunal may be exercised by Benches thereof;

(b) a Bench may be constituted by the Chairperson with one or more members;

(c) the Benches of the Appellate Tribunal shall ordinarily sit at New Delhi and at such other places as the Central Government may, in consultation with the Chairperson, notify;

(d) the Central Government shall notify the areas in relation to which each Bench of the Appellate Tribunal may exercise jurisdiction.

(3) Notwithstanding anything contained in sub-section (2), the Chairperson may transfer a Member from one Bench to another Bench.

(4) If at any stage of the hearing of any case or matter it appears to the Chairperson or a Member that the case or matter is of such a nature that it ought to be heard by a Bench consisting of two Members, the case or matter may be transferred by the Chairperson or, as the case may be, referred to him for transfer, to such Bench as the Chairperson may deem fit."

(italics added)

Upon a plain reading of the aforesaid provisions, it is clear that the Appellate Tribunal consists of a Chairperson and such number of members as the Central Government may deem fit. The jurisdiction of the Tribunal may be exercised by Benches of the Tribunal and Chairperson is empowered to constitute a Bench with one or more membeRs. Ordinarily, the Benches of the Appellate Tribunal are to sit at New Delhi or at such other places as the Central Government may in consultation with the Chairperson notify. The Central Government is empowered to notify areas in relation to which each Bench of the Appellate Tribunal may exercise its jurisdiction. The Chairperson is also empowered to transfer a member from one Bench to another Bench. Under Sub-Section (4) of Section 20 the Chairperson or a Member may, if he/she feels that a particular case or matter is of such a nature that it ought to be heard by a Bench consisting of two Members, transfer the matter to such Bench. In the case of a Member who feels that the case ought to be heard by a Bench of two Members, the Member is required to refer the matter to the Chairperson for transfer to such Bench as the Chairman may deem fit. In the case of the Chairman, he may transfer the case straight-away. It is, thus, clear that the difference in their powers is one of procedure. Substantively, both the Chairman as well as a Member have the same power for transfer and to this extent they exercise concurrent jurisdiction for transferring the matter to be heard by a Bench consisting of two MembeRs.

3. In the case at hand, a Member had decided that the case was not of such a nature which ought to be heard by a Bench consisting of two MembeRs. A judicial order to this effect was passed by the said Member. Subsequently, the Chairperson acting administratively transferred the matter in question to be heard by a Bench comprising of two MembeRs. The question, therefore, is whether the Chairperson had the jurisdiction to do so?

4. Now to the facts. There were altogether eighteen appeals arising from a common Order-in-Original dated 30.9.1998 passed by the Special Director of Enforcement under the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as FERA). By the said Common Order-in-Original, penalties had been imposed for FERA violations on Respondents 2 to 19 herein. Appeals were filed before the Appellate Tribunal for Foreign Exchange, New Delhi (Respondent No. 1). These appeals were placed for hearing on 22.1.2003 before the Learned Member (Smt. P.N. Santhakumari Menon). The Cause List for 22.1.2003 indicates that the eighteen appeals being Appeal No. 194/1999 etc. were listed for hearing before the said Member. The interim applications (IAs) for waiver of pre-deposit of penalty amounts along with the said appeals were taken up for hearing and the learned Member after considering the submissions of both sides did not find any ground for dispensing with the entire penalty amounts. However, she directed that pre-deposit to the extent of 80% of the penalty amount be waived. Thereafter the matters were adjourned to 26.3.2003 for reporting compliance and also for hearing and disposal of the appeals.

5. Being aggrieved by the order dated 22.1.2003, eight writ petitions were filed by some of the parties before the High Court at Bombay. It is pertinent to note that in these writ pertitions the jurisdiction/competence of the learned Member in passing the order dated 22.1.2003 was not challenged. By an order dated 18.2.2003 the High Court at Bombay was of the opinion that it was a fit case for full waiver of pre-deposit. While disposing of the writ petitions, the High Court at Bombay noted that the appeals were ready for final hearing and that, in fact, the appeals were posted on the Board along with other companion appeals. In these circumstances, the High Court at Bombay set aside the order dated 22.1.2003 and directed waiver of pre-deposit of the entire penalty amount. The High Court at Bombay also directed respondent No. 2 therein (respondent No. 1 herein) to hear the parties and dispose of the appeals on or before 30.4.2003. It was recorded therein that the counsel appearing on behalf of the petitioners (respondents 2-19 herein) undertook that no adjournment would be sought in the matter. With these observations and directions the writ petitions were disposed of.

6. Applications for directions were filed in Appeal Nos. 217-223/1999 by some of the Respondents herein for referring the appeals pending before the Single Member of the Appellate Tribunal for hearing by a Bench comprising of two MembeRs. These applications were listed before the learned Member on 11.3.2003. The learned Member passed a judicial order dated 11.3.2003 recording therein that she did not find any complicated question of law involved in the matter so as to refer the same under Section 20(4) of FEMA to the Chairperson for constituting a Bench comprising of two MembeRs. The order passed, is as under:-

"Both sides represented by lawyeRs. Kept aside for hearing.

2. Mr. Gaddo points out to the Hon'ble High Court Judicature, Bombay in W.P. No. 511 and 512 of 2003 has directed for disposed of this appeal latest by 30.4.2003. The Counsel for the appellants submits that the matter is liable to be heard by a Division Bench; on perusal of the records I don't find any complicated question of law involved to hear so as to refer the matter as under section 20 sub-section 4 of FEMA. I do not find any provisions under section 20 sub-section 4 is attracted here. In view of the directions in W.P. No. 511 and 512/2003 by the Hon'ble High Court of Bombay, the cases are posted for final hearing to 3.4.2003. The counsel for the appellants submits that Appeal No. 194 to 223 of 1999 stands posted for hearing to 9.4.2003 and these cases may be posted with those as scheduled for 9.4.2003, these appeals Along with other cases stand posted to 3.4.2003. This aspect be noted in the connected matteRs. The Counsel submits that Appeal No. 214, 215 and 216 of 1999 posted for 27th instant stand reposted to 3.4.2003 togetherwith. Mr. Gadoo concedes to such posting to the submissions. The Office is directed to put up those cases neatly. Appeals No. 214 to 216 posted to the same date. The cases reposted for 9.4.2003 will be posted to 3.4.2003. Miss Awantika Keswani, Advocate submits that she is appearing for the other two batches of cases posted for 9.4.2003 and that she takes notice of in the posting coupled with submissions that no separate notice is necessary.

3. For hearing and disposal call on 3.4.2003.

(P. N. SANTHAKUMARI)

MEMBER"

7. From the aforesaid order two things are clear. Firstly, the learned Member rejected the application for referral to a Bench comprising of two Members on the ground that it did not involve any complicated question of law and was not a case fit for such referral. Secondly, all the matters i.e., the connected appeals were clubbed together and posted for hearing on 3.4.2003 and this posting of matters was consented to by counsel present.

8. The next order on record is the impugned order dated 3.4.2003. To appreciate the full scope of the controversy, it is necessary to set out the entire order:-

"Date 03.04.2003

Appeal No. 194 to 200, 203, 214 to 223/99

Shri T.K. Gadoo, learned counsel for the respondent raised preliminary objection that this Bench has no jurisdiction to hear these appeals since the matter has already been heard by the learned Member on 11.03.2003. An application was moved before me for referring the case to Division Bench. I have passed the following order on 26.03.2003:

"In these appeals total penalty of Rs. 10, 67, 97, 000/- has been imposed. The Hon'ble Bombay High Court has stayed the order passed by this tribunal directing one of the appellants (M/s Mackinnon & Mechenzie & Co. Ltd. ) to deposit Rs. 40 lakhs pending disposal of the appeal. the appeal, as directed, has to be disposed of before 30th April, 2003. I have looked into the record and the order and I find that these appeals involved substantial question of law and facts. The facts also appear to be complicated. Hence, it is desirable that these appeals be placed for hearing before a Division Bench. I find that in one of the appeals the learned Member has ordered appeals to be listed before her. I find that this case was not assigned to her for disposal hence the Registrar should not have placed these appeals for hearing without obtaining my ordeRs. Henceforth no appeal be placed for hearing before the member unless Registrar obtains an order for placing these cases before the Member. Let these appeals be listed for hearing before Division Bench comprising Chairperson and the Member on 3.4.2003 at Delhi. Issue notice today."

This order relates to appeal No. 194 to 200. The learned Member had passed order rejecting the prayer of the appellant referring the case to Division Bench since case involves substantial question of law and facts. As recorded in my order the matter can be heard by Bench consisting of Member only if case assigned to Member under Section 20 (b) of FEMA. Appeal No. 217 to 223/99 were listed before Hon'ble Member in which order was passed that appeals may not be listed before the DB because it does not involve substantial question of law. Hon'ble Bombay High Court has directed that these appeals be disposed off by 30.4.2003. Moreover the case was not part heard before the Hon'ble Member. She had directed all the cases on 3.4.2003. Hence in my opinion the preliminary objection has no merit and has to be rejected. Hence these appeals are taken up for hearing in view of the direction of the Hon'ble High Court.

Shri T.K. Gadoo, counsel for the respondent prays for time to move to Hon'ble High Court against my order referring the appeals before Division Bench. He is granted two weeks time to bring the stay order failing which these appeals will be listed for hearing. Issue dusty.

(R.N. SAHAY)

CHAIRPERSON"

9. The aforesaid order dated 3.4.2003 was passed not by the said Member but by the Chairperson of the Appellate Tribunal (Respondent No. 1). In the impugned order dated 3.4.2003 it is mentioned that the Chairperson had earlier passed an order on 26.3.2003. How this order came to be passed is a mystery. Mr A. K. Panda, the learned senior counsel appearing on behalf of the petitioner, has placed on record the Cause List of matters before the Chairperson on 26.3.2003. The Cause List does not disclose any of the said eighteen appeals. Clearly, these matters were not posted for hearing before the said Chairperson. However, it is indicated in the impugned order dated 3.4.2003 that he passed an order on 26.3.2003. There is no copy of the actual order dated 26.3.2003 on record. The only reference is the quoted portion in the impugned order dated 3.4.2003. By the purported order dated 26.3.2003 the Chairperson held that the appeals involved substantial questions of law and that the facts also appear to be complicated. He, accordingly, held that it was desirable that the appeals be placed for hearing before a Division Bench. Then, he makes a rather disparaging remark regarding the said Member that the case in which the Member had ordered appeals to be listing for hearing before her was not assigned to her for disposal and that the Registrar should not have placed the appeals for hearing without obtaining the Chairperson's ordeRs. He then directed that no appeal be placed for hearing before the said Member unless the Registrar first obtained an order for placing the same before the said Member. He directed that the appeals be listed before the Division Bench comprising of the Chairman and the said Member on 3.4.2003. In the impugned order dated 3.4.2003 it is indicated that the learned counsel for the respondents before the Appellate Tribunal raised the preliminary objection that the Bench had no jurisdiction to hear the appeal since the matter had already been heard by the learned Member on 11.3.2003. It is curious to note the reference in the order dated 3.4.2003 to the effect that:- "application was moved before me for referring the case to Division Bench." It is not mentioned as to who moved the application, when was it moved and how was it listed. Yet, the Chairperson in his impugned order dated 3.4.2003 further mentioned that it is on this application that he passed the order dated 26.3.2003. Even in the quoted order dated 26.3.2003, it is not mentioned as to whether counsel for the parties appeared, whose application was being disposed and what were the rival contentions. The Chairperson after reiterating that the Member had passed the order rejecting the prayer of the respondent for referring the case to the Division Bench noted that the matter could be heard by the member only if the case had been assigned to her under Section 20(2)(b) of FEMA. He further noted that the case was not part-heard before the member and held that the preliminary objection regarding the jurisdiction of the Bench hearing the matter on 3.4.2003 had no merit. He further recorded that the appeals were being taken up for hearing in view of the directions of the High Court at Bombay. The counsel for the respondents prayed for time to move the High Court against the Chairperson's order referring the appeals before the Division Bench and the Chairperson, as mentioned in the impugned order dated 3.4.2003, granted two weeks' time failing which the appeal would be listed for hearing.

10. To recapitulate, on 22.1.2003 all the eighteen appeals were listed before the said Member. On 19.2.2003 three appeals (195/1999, 197/1999 and 200/1999) were listed before the said Member. On 11.3.2003 seven matters (Appeals Nos. 217/1999 to 223/1999) were listed before the said Member when she directed that the seven appeals and other connected appeals be listed for hearing on 3.4.2003. On 26.3.2003, contrary to what is indicated in the impugned order dated 3.4.2003, none of the eighteen appeals were listed for hearing before any Bench of the Appellate Tribunal. On 3.4.2003 all the eighteen matters were listed for hearing before the Division Bench headed by the Chairperson. It is interesting to note that the impugned order dated 3.4.2003 though ostensibly passed in the eighteen appeals which were supposedly listed before the Division Bench has, in point of fact, been passed by the Chairperson acting alone. Even the tenor of the order suggests that it was passed by the Chairperson alone and the other member was not party to the said order. It has also been signed by the Chairperson alone. So the impugned order dated 3.4.2003 is an order passed by the Chairperson and cannot be regarded as an order passed by the Division Bench. Thereafter, on 28.4.2003 the said eighteen appeals were again listed before the Division Bench wherein the matter was adjourned to 12.5.2003 and I am told that it has been further adjourned on account of the pendency of the present writ petition.

11. Mr A. K. Panda, the learned Senior Counsel appearing on behalf of the petitioner, submitted that the purported order dated 26.3.2003 of the learned Chairman which has been quoted in the impugned order dated 3.4.2003 is an administrative order under Section 29 and 30 of FEMA. It is his contention that the said administrative order was passed on the incorrect factual assumption that in one of the appeals the said Member had ordered all the appeals to be listed before her. He submits that the order ignored the factum of the listing of the appeals along with the I.As before the learned Member on 22.1.2003 and the subsequent writ petitions challenging the orders passed therein. He further submitted that the Chairperson fell into error inasmuch as the order dated 26.3.2003, although it was an administrative order however, recorded a finding without hearing the parties to the following effect:-

"I find that these appeals involve substantial questions of law and facts. The facts also appear to be complicated........."

This finding is contrary to the finding recorded in the judicial order dated 11.3.2003 passed by the learned Member wherein she held:-

"I don't find any complicated question of law involved here so as to refer the matter under Section 20(4) of FEMA......."

Mr Panda submitted that the Chairperson as well as a Member of the Tribunal exercise concurrent jurisdiction for referring a matter to a Division Bench under Section 20(4) of FEMA. In the facts of this case, he submitted that both the single Member as well as the Chairman have independently exercised jurisdiction in respect of the same eighteen appeals. While the said Member rejected the application for referral to a Division Bench, the Chairperson directed hearing of the eighteen appeals before the Division Bench. It is Mr Panda's contention that the order passed by the single Member is a judicial order whereas the purported order dated 26.3.2003 passed by the Chairperson is merely an administrative order. A judicial order cannot be set at naught by an administrative order. Accordingly, the judicial order dated 11.3.2003 passed by the said Member would stand and the purported administrative order dated 26.3.2003 passed by the Chairperson would be of no effect. For this proposition the learned counsel for the petitioner has referred to the decisions of the Supreme Court in the case of Union of India v. K.M. Shankarappa: (2001) 1 SCC 582 (Paragraph 7); Jaswant Sugar Mills v. Lakshmi Chand: ; Shankarlal Aggarwal v. Shankarlal Poddar: ; and B.B. Rajwanshi v. State of U.P.: .

12. The Supreme Court in Jaswant Sugar Mills (supra) has set out the tests or criteria for determining whether an act or decision is judicial. In paragraph 13 of the said report it is stated thus:-

"13. To make a decision or an act judicial, the following criteria must be satisfied:

1) it is in substance a determination upon investigation of a question by the application of objective standards to facts found in the light of pre-existing legal rules;

2) it declares rights or imposes upon parties obligations affecting their civil rights; and

3) that the investigation is subject to certain procedural attributes contemplating an opportunity of presenting its case to a party, ascertainment of facts by means of evidence if a dispute be on questions of fact, and if the dispute be on question of law on the presentation of legal argument, and a decision resulting in the disposal of the matter on findings based upon those questions of law and fact."

Applying these tests there can be little doubt that an order passed under section 20(4) of FEMA either by the Chairperson or a Member (as the case may be) would be a judicial order. In fact, at the stage of arguments of this petition, there was no objection to the proposition that the order dated 11.3.2003 was a judicial order and the purported order dated 26.3.2003 passed by the Chairperson was a purely administrative order. In the light of this position it would not be necessary to advert to the Supreme Court decision in Shankarlal Aggarwal's case (supra) which also explains the trappings of a judicial order.

13. In Shankarappa's case (supra) the Supreme Court held that:-

"To permit the executive to review and/or revise that decision would amount to interference with the exercise of judicial functions by a quasi-judicial Board. It would amount to subjecting the decision of a quasi-judicial body to the scrutiny of the executive. Under our Constitution the position is reverse. The executive has to obey judicial ordeRs. "

The same sentiment is found in paragraph 13 of the Supreme Court decision in B.B. Rajwanshi v. State of U.P. (supra). What applies to the executive would equally apply to the Chairperson acting in his administrative capacity. Clearly, then, the judicial order dated 11.3.2003 passed by the said Member could not have been reviewed and/or revised by the Chairperson in his administrative capacity. Thus, after the said Member, by her judicial order dated 11.3.2003 had declined to refer the appeals to the Chairperson for transfer to a bench consisting of two members, the Chairperson could not, while acting administratively set the order dated 11.3.2003 at naught. In fact, as would be clear from the discussion below, the respondents could not even have moved another application before the Chairperson for transfer of the appeals to a bench consisting of two membeRs. Nor could the Chairperson have entertained such an application.

14. Therefore, I am in agreement with the submission of the learned Senior Counsel appearing on behalf of the petitioner that after disposal of the application by the said Member on 11.3.2003 it was not open to the parties to approach the Chairperson for exercise of concurrent jurisdiction. Though I am of the opinion that Mr Panda's reliance upon the decision of the Supreme Court in Bank of India v. Lekhimoni Das: for this proposition is misplaced. He relied upon paragraph 8 which is to the following effect:-

"As a general principle where two remedies are available under law one of them should not be taken as operating in derogation of the other. A regular suit will not be barred by a summary and a concurrent remedy being also provided therefore, but if a party has elected to pursue one remedy he is bound by it and cannot on his failing therein proceed under another provision."

Section 20(4) would come into play only when a matter is already being heard by the Chairperson or a Member, as the case may be. This would be clear from the very opening words of section 20(4) which are to the following effect - "If at any stage of the hearing of any case or matter..". That being the case, the question of a party electing to go before the Chairperson or a Member does not arise. So, under section 20(4) it is not as if two remedies are available. In point of fact, it is only one remeDy. Hence, the aforesaid decision of the Supreme Court in Bank of India v. Lekhimoni Das (supra) would not apply. However, despite this, after the passing of the judicial order dated 11.3.2003 by the said Member refusing referral for transfer, it was not open to the parties to approach the Chairperson for transfer of the appeals to a bench of two membeRs. This is so because under the scheme of the provisions of section 20(4) of FEMA, if a case is being heard by the Chairperson, only then can a party approach him for transferring the case to a bench consisting of two membeRs. On the other hand, if the case is being heard by a member, only then can a party move an application for referral for transfer before such member. No order can be passed under section 20(4) of FEMA by the Chairperson in a case being heard by a member and vice versa. When the Chairperson passed the purported order dated 26.3.2003, the appeals were being heard by the said Member. As such, no order under section 20(4) could then be passed by the Chairperson acting judicially. Moreover, the judicial order dated 11.3.2003 passed by the said Member would also operate as res judicata and thereby prevent the parties from seeking a judicial order from the Chairperson exercising concurrent jurisdiction.

15. Mr. Rajiv Nayar, learned Senior Counsel appearing on behalf of the respondent nos. 2 to 8 and 15 agreed that the impugned order passed by the Chairperson is purely administrative in nature and is not a judicial order. However, according to him, it is settled law that such administrative decisions are not open for scrutiny under Article 226 of the Constitution of India except in extraordinary cases wherein the order has been passed under mala fides. In support he refers to the decision of the Supreme Court in Income Tax Appellate Tribunal Hyderabad Special Bench, Hyderabad v. Deputy Commissioner of Income Tax (Assts) III, Hyderabad, A.P. And Others: to the following effect:-

"We fail to appreciate how the High Court in exercise of its power under Article 226 of the Constitution could sit in appeal or judgment over the administrative decision of the President who might have felt that the case was of all-India importance and was required to be decided by a larger bench of three membeRs. Such an administrative order is not open to scrutiny under Article 226 of the Constitution of India except in extraordinary cases wherein the order is shown to be a mala fide one. No such allegation was made by the Department against the President of the Tribunal on the facts of the present case."

According to Mr. Nayar the present petition contains no allegations of mala fides in respect of the impugned orders dated 26.3.2003 and 3.4.2003. As such, according to him, the impugned order cannot be interfered with under Article 226 and the petition ought to be dismissed. I am unable to agree with this. The aforesaid Supreme Court decision in Income Tax Appellate Tribunal Hyderabad Special Bench (supra) is distinguishable from the present case and it, in any event, does not militate against the case of the petitioner. This will be clear presently. In that case the President of the Income Tax Appellate Tribunal (ITAT) by an administrative order had constituted a Special Bench for hearing three appeals which involved interpretation of Section 115-J of the Income Tax Act, 1961 in respect of which there was a conflict of opinion between two benches of the ITAT, namely, Madras and Hyderabad benches. His comptency to do so in his administrative capacity was questioned in a writ petition before the Andhra Pradesh High Court. A Division Bench of the said High Court took the view that on the facts and circumstances of the case the President of the Tribunal was not justified in constituting the Special Bench for deciding the said three appeals. It further held that the President has to exercise his discretion judiciously and judicially and it may not be exercised at his mere whim or fancy. In effect, the decision of the Andhra Pradesh High Court meant that the President of the ITAT could not constitute a Special Bench save and except under a judicial order. The Supreme Court repelled this conclusion as unsustainable in view of the scheme of the Income Tax Act, 1961 and the relevant regulations and in particular section 255 and Regulation 98-A. In this context it would be appropriate to set out the portion of the said Supreme Court decision (at pages 464-465 of the report) which immediately preceded the above-quoted portion relied upon by Mr Nayar. It is as follows:-

"The aforesaid regulation shows that the Bench concerned which is seized of the matter may in exercise of its judicial function in appropriate case make a reference to the President to constitute a Special Bench. The exercise of that function by the Bench of the Tribunal hearing the matter is of course a judicial function but so far as the President's power under sub-section (1) read with sub-section (3) of Section 255 to constitute Benches or for that matter Special Benches is concerned the said power is an administrative power. It is obvious that the President in this connection may even act suo motu if it is brought to his notice that any important point is pending for decision in a matter which requires to be decided by a larger bench. If the President acting on such information and in bona fide exercise of his powers constitutes a larger bench or a Special Bench for deciding a matter it cannot be said that he acts ultra vires his powers or functions entrusted to him by the legislature under Section 255(1) read with Section 255(3) of the Income Tax Act. Consequently, the Division Bench of the High Court with respect was in error when it took the view that a Special Bench can be constituted by the President only pursuant to a Judicial order and not in exercise of his administrative poweRs. It is of course true that in any pending matter before a bench of two learned members, if it is felt by the learned members that a Special Bench is required to be constituted, they can pass a judicial order in the light of the procedure laid down by Regulation 98-A. But such a situation had never arisen on the facts of the present case. We have already seen above that the two learned members had recommended to the President to constitute a Special Bench for resolving the controversy centering round the construction of Section 115-J of the Income Tax Act by their communication dated 25-9-1992. That was styled as a reference under Section 255(3) of the Income Tax Act. It was merely a recommendation for invoking the administrative powers of the President under Section 255(3) for constituting a Special Bench. It was certainly not a reference under Section 255(3) read with Regulation 98-A."

Then again, the Supreme Court observed (at page 465) as under:-

"It is also difficult for us to appreciate how the High Court could persuade itself to hold that when none of the Benches of the Tribunal had made any reference by judicial order the President of the Income Tax Tribunal was not competent to constitute a Special Bench. As we have already noted above Special Benches can be constituted by the President both in exercise of his administrative powers under Section 255(1) read with Section 255(3) as also on the basis of a judicial order passed by any bench of the Tribunal making a reference to the President in that connection under Regulation 98-A. But it is not as if that such a reference by the members under Regulation 98-A by passing a judicial order is the only mode and manner in which the President can be moved to constitute a Special Bench. Even independent of such a reference on the judicial side the President can in an appropriate case even suo motu move in the matter and can constitute a Special Bench of course on appropriate and germane grounds. It is, however, true that the President in exercise of his administrative powers under Section 255(3) cannot just constitute a Special Bench without any rhyme or reason. Such an administrative exercise can be demonstrated to be unreasonable, capricious or mala fide on a given set of facts. But in our view present case was not of that type. There was a conflict of opinion between two benches of the Tribunal, namely, Madras and Hyderabad Benches. It is, however, true that Madras Bench decision was by a single member while the Hyderabad Bench decision was by a Division Bench. Still it could not be said that there was no conflict of decisions between two benches of the Tribunal. That itself constituted a rational and valid ground for the President to act in exercise of his administrative powers to constitute a Special Bench if he thought it fit to do so. Such an exercise on the facts of the present case cannot be styled as an arbitrary or whimsical or fanciful one as wrongly and uncharitably assumed by the Division Bench of the High Court."

Thus, in the case of the ITAT, in view of the provisions of section 255(1) and (3) of the Income Tax Act, 1961, the Supreme Court held that the President of ITAT had the power on the administrative side to constitute a special bench. In the case before the Supreme Court, it was expressly noted that a special bench could be constituted either under a judicial order under Regulation 98-A or by an administrative order passed by the President under section 255(1) or (3). Further, in that case no judicial order had been passed under Regulation 98-A and only an administrative order had been passed by the President of ITAT. Here the facts are different. There is a judicial order passed by the said Member on 11.3.2003 and there is a conflicting and subsequent administrative order passed by the Chairperson. The question is which order, the earlier judicial order or the later administrative order, will hold the field? This question was not before the supreme court. The question before it was quite different. It was - whether the President ITAT could at all pass a order constituting a special bench while acting in his administrative capacity or could he do so only by a judicial order? That is not the question here. Secondly, the Supreme Court did not hold that an administrative order such as the one impugned herein was not open to scrutiny under Article 226 of the Constitution. In fact, instances where the court could interfere are indicated in the said decision itself when it observed that:-

"It is, however, true that the President in exercise of his administrative powers under Section 255(3) cannot just constitute a Special Bench without any rhyme or reason. Such an administrative exercise can be demonstrated to be unreasonable, capricious or mala fide on a given set of facts. But in our view present case was not of that type."

16. Mr Nayar further submitted that under FEMA the Chairperson of the Appellate Tribunal has the sole prerogative, in much the same way as the Chief Justice of a High Court, to constitute Benches comprising of one or more Members to hear matters and to assign matters to such Benches. This, he says, is clear from a reading of the provisions of Section 20(2)(b) and 29 of FEMA. As regards the power of the Chief Justice to distribute the business of the Court, Mr Nayar referred to the decision of the Supreme Court in the case of State of Rajasthan v. Prakash Chand and Others: and particularly to paragraphs 15, 20 and 30 thereof. In that case the Supreme Court, inter alia, held that a careful reading of the provisions of the Ordinance and Rule 54 shows that the administrative control of the High Court of Rajasthan vests in the Chief Justice of the High Court alone and that it is his prerogative to distribute business of the High Court, both judicial and administrative. He alone, has the right and power to decide how the Benches of the High Court are to be constituted; which Judge is to sit alone and which cases he can and is required to hear as also as to which Judges shall constitute a Division Bench and what work those Benches shall do. In other words, the Judges of the High Court can sit alone or in Division Benches and do such work only as may be allotted to them by an order of or in accordance with the directions of the Chief Justice. The Supreme Court further noted that this necessarily means that it is not within the competence or domain of any Single or Division Bench of the Court to give any direction to the Registry in that behalf which will run contrary to the directions of the Chief Justice. Therefore, judicial discipline demands that in the event a single Judge or a Division Bench considers that a particular case requires to be listed before it for valid reasons, it should direct the Registry to obtain appropriate orders from the Chief Justice. The Supreme Court further held:-

"though, on the judicial side the Chief Justice is only the 'first amongst the equals', on the administrative side in the matter of constitution of Benches and making of roster he alone is vested with the necessary poweRs. "

On the strength of these observations of the Supreme Court in the case of the powers of the Chief Justice of the High Court of Rajasthan, Mr. Rajiv Nayar, learned Senior Counsel appearing for the respondents sought to draw a parallel with respect to the powers exercised by the Chairperson of the Appellate Tribunal. I don't see how the decision of the Supreme Court in Prakash Chand's case (supra) is applicable in the facts of the present case. In the case before the Supreme Court a single Judge of the High Court of Rajasthan had arrogated a particular roster to himself, contrary to the determination made by the Chief Justice of the High Court? In view of the applicable ordinance and Rules, the Supreme Court held that the single Judge could not do so. In the present case when the said Member passed the order dated 11.3.2003 she was fully entitled to do so. Her order does not suffer from lack of powers or jurisdiction. When the said member rejected the prayer to refer the matter for hearing by a bench of two members, she had the jurisdiction and authority to do so under the provisions of section 20(4) of FEMA. On the other hand the single Judge of the High Court of Rajasthan, in the case before the Supreme Court, had no jurisdiction or power to fix his own roster. The two situations are entirely different and no parallel can be drawn.

17. Another point raised by Mr Nayar was that the Division Bench of the Appellate Tribunal which passed the order dated 3.4.2003 clearly held that the appeals were never assigned to the said Member by the Chairperson and that the Registrar had placed them before her without the orders of the Chairperson. According to the learned senior counsel, this position is uncontroverter inasmuch as the said Member who passed the order dated 11.3.2003 was very much a member of the Division Bench which passed the orders on 3.4.2003 and 28.4.2003. Accordingly, he submits that as the said Member had no jurisdiction to hear the appeal on 11.3.2003 her order dated 11.3.2003 was a nullity. This submission is untenable. The reason is clear. At the cost of repetition, the impugned order dated 3.4.2003 though ostensibly passed in the eighteen appeals which were supposedly listed before the Division Bench has, in point of fact, been passed by the Chairperson acting alone. Even the tenor of the order suggests that it was passed by the Chairperson alone and the other member was not party to the said order. It has also been signed by the Chairperson alone. So the impugned order dated 3.4.2003 is an order passed by the Chairperson and cannot be regarded as an order passed by the Division Bench. Thereafter, on 28.4.2003 the said eighteen appeals were again listed before the Division Bench wherein the matter was merely adjourned. Thus, it cannot be said that the allegation that the said eighteen appeals were never assigned to the said Member was uncontroverter. I have already held that the matters were listed before the said Member from the very beginning and that she had jurisdiction to pass the order dated 11.3.2003.

18. It was further submitted on behalf of the respondents that assuming without admitting that appeals Nos. 217 to 223/1999 had been assigned to the said Member and that she had validly passed her order dated 11.3.2003, the Chairperson, in view of the wide ranging powers granted to him under Sections 20 and 30 of FEMA, was still entitled in law to assign the appeals for hearing before a Division Bench. Therefore, there is no infirmity in the impugned order dated 3.4.2003. In this connection, it is further submitted on behalf of the respondents that the orders dated 26.3.2003 and 3.4.2003 passed by the Chairperson nowhere state that they have been passed in exercised of powers under Section 20(4) of the said Act. According to the respondents, the Chairperson had exercised his jurisdiction to place the appeal before the Division Bench in pursuance of the powers vested in him under Section 30 of FEMA. To examine this submission it would be necessary to first set out the provisions of section 30 of FEMA:-

"30. Power of chairperson to transfer cases - On the application of any of the parties and after notice to the parties, and after hearing such of them as he may desire to be heard, or on his own motion without such notice, the Chairperson may transfer any case pending before one Bench, for disposal, to any other Bench."

There is no quarrel with the proposition that the Chairperson can, either upon an application by any party or suo motu, transfer any case pending before one bench for disposal to any other bench. But, this is not what has happened in the present case. The chairperson has not transferred the appeals pending before the said Member for disposal to another Member. The purported order dated 26.3.2003 is an order of referral to a division bench rather than an order of transfer under section 30 of FEMA. This is apparent from the impugned order dated 3.4.2003 itself wherein it is recorded thus:-

"An application was moved before me for referring the case to Division Bench.";

and "Shri T.K. Gadoo, counsel for the respondent prays for time to move to Hon'ble High Court against my order referring the appeals before Division Bench."

In any event, the order passed by the Chairperson was admittedly an administrative order and it could not have the effect of nullifying the judicial order passed by the said member on 11.3.2003.

19. Mr. Rajiv Nayar further contends that all the eighteen appeals were filed under FERA and would have been heard by a Bench of the Appellate Board comprising of two Members had FERA continued to be in operation by virtue of Section 52(6) thereof. It is the respondent's contention that as the alleged offences relate to FERA violations they continue to be governed by FERA in view of the provisions of Section 49(4) of FEMA. Without going into the question of whether, under FERA, the appeal would be heard by a Board comprising of two members or not, it is clear that FERA has been repealed and by virtue of section 49(1) of FEMA the the Appellate Board constituted under FERA has heen dissolved. The procedure that is to be followed, even with regard to offences under FERA, will be governed by the provisions of FEMA. Thus, we need not look at the provisions of FERA for ascertaining the procedure for disposal of the said eighteen appeals. The relevant provisions are contained in FEMA and they have been adverted to above. What is to be seen is whether under provisions of FEMA and the circumstances surrounding the present case the impugned order dated 3.4.2003 was valid and legal? I have held that it was not.

20. Lastly, it is submitted by the respondents that in view of Section 35 of FEMA the petitioner had an alternative remedy of appeal before the High Court. Therefore, the writ petition ought to be dismissed as such. In any event, it is their contention that no prejudice will be caused to the petitioner if the matter is heard by the Division Bench particularly as the total penalty involved in the eighteen appeals is to the tune of about Rs 10.67 crores and substantial questions of law and also complicated questions of facts are involved in the appeals. I am unable to subscribe to this view also. The impugned order of the Chairperson is an administrative order and as such would not come within the purview of appeals under section 35 of FEMA. There is no alternative remedy available as alleged. On the contrary, the order dated 11.3.2003 being a judicial order was appealable under section 35 of FEMA. If the respondents felt aggrieved by it, they could have filed an appeal under section 35 of FEMA before the High Court within sixty days. They chose not to do so. Instead, they apparently made another application for referral before the Chairperson which they could not do for reasons indicated above. As regards the issue as to whether the said appeals involved complicated questions of law and facts and as to whether they were fit to be referred for hearing by a division bench of the Tribunal, this has already been decided in the negative by the said member in the judicial order passed by her on 11.3.2003. This order cannot be set at naught by the Chairperson acting in his administrative capacity.

21. In view of the foregoing discussion the impugned order dated 3.4.2003 as well as the order dated 26.3.2003 passed by the Respondent No. 1 in Appeal Nos. 194-200, 203, 214-223 of 1999 pending before it are quashed and set aside. The Respondent No. 1 is directed to hear and dispose of these appeals as expeditiously as possible. The writ petition is allowed to this extent. The parties shall bear their own costs.