Delhi High Court
Shahid Balwa vs The Directorate Of Enforcement on 29 May, 2013
Author: Jayant Nath
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on : 06.05.2013
Decided on : 29.05.2013
+ LPA No.79/2013 & CM No.2310/2013
SHAHID BALWA ..... Appellant
Through: Mr. Rakesh Tiku, Sr. Adv. along with
Mr. Vijay Aggarwal and Mr. Mudit
Jain, Advs.
VERSUS
THE DIRECTORATE OF ENFORCEMENT ..... Respondent
Through: Mr. Vikas Garg along with Ms. Divya
Jyoti Singh, Advs. and Mr. Sandeep
Aggarwal, EO/ED.
AND
+ LPA No.80/2013 & CM No.2332/2013
VINOD GOENKA ..... Appellant
Through: Mr. Aman Lekhi, Sr. Adv. along with
Mr. Vijay Aggarwal and Mr. Mudit
Jain, Advs.
VERSUS
THE DIRECTORATE OF ENFORCEMENT ..... Respondent
Through: Mr. Vikas Garg along with Ms. Divya
Jyoti Singh, Advs. and Mr. Sandeep
Aggarwal, EO/ED.
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE JAYANT NATH
JAYANT NATH, J.
1. By the present appeal, the appellants seek to impugn the order dated
24.01.2013 passed by the learned Single Judge dismissing the writ petitions
of the appellants. The present order will dispose of LPA 79/2013 and LPA
80/2013 which are based on common facts. For convenience the facts of
LPA 79/2013 are stated here.
2. The brief facts giving rise to the said petitions is that a complaint
dated 01.07.2011 was filed under Section 16 (3) of the Foreign Exchange
Management Act, 1999(hereinafter referred to as „FEMA‟) for alleged
contravention of Section 6(3)(b) of FEMA read with Regulation 5(1) of the
Foreign Exchange Management (Transfer or Issue of Security by a Person
Resident Outside India) Regulations, 2000 and Para 2, 3 and 9(1) (A) & (B)
of Schedule 1 of the said Regulation read with Press Note no. 3 (2007 series)
issued by Ministry of Commerce and Industry, Department of Industrial
Policy and Promotion (SIA) (FC Division) by M/s Etisalat DB Telecom Pvt.
(formerly, M/s Swan Telecom Pvt. Ltd.).
3. According to the complaint, it is alleged that M/s Swan Telecom Pvt.
Ltd , (M/s Etisalat DB Telecom Pvt. Ltd.) contravened the condition of
clause (vi), (vii) and (xxi) of Para-B of Press Note No. 3(2007 series) as
aforesaid and thereby contravened the provisions of para 2 of Schedule 1 of
Regulation (5) (1) of the Foreign Exchange Management (Transfer or Issue
of Security by a Person Resident Outside India) Regulations 2000 read with
section 6(3)(b) of FEMA, 1999 in issuing shares to M/s Etisalat Mauritius
under automatic route facility to the tune of Rs.3228.44 Crores.
4. It was further stated in the complaint that M/s Swan Telecom Pvt. Ltd.
(M/s Etisalat DB Telecom Pvt. Ltd) chose to issue 5.27% equity shows to
M/s Genex Exim Ventures Pvt. Ltd and 44.73% equity to M/s Etisalat
Mauritius without any FIPB approval and thus contravened the provisions of
Para 3 of Schedule I of Regulation (5)(1) of the Foreign Exchange
Management (Transfer or Issue of Security by a Person Resident outside
India) Regulations 2000 read with section 6(3) (b) of FEMA, 1999 for the
amount of Rs.380 crores plus Rs.3228.44 crores approx., by issuing shares
to M/s Genex Exim and M/s Etisalat Mauritius.
5. It is further stated that M/s Swan Telecom Pvt. Ltd issued shares to
M/s Etisalat Mauritius and indulged in over-valuation of its three shares
issued to said Etisalat Mauritius so as to remain within the stipulated
threshold of 49% equity prescribed for the automatic route. Hence the said
M/s Swan Telecom Pvt. Ltd violated the provisions of para 3 of the
Schedule 1 of Regulation (5) (1) of the Foreign Exchange Management
(Transfer of Issue of Security by a Person Resident outside India)
Regulations 2000 read with sections 6(3) (b) of FEA, 99 for the amount of
Rs.316.22 crores because the facility of automatic route was already
exhausted by the said M/s Swan Telecom Pvt. Ltd in issuing shares to
Foreign Investors without FIPB approval.
6. Pursuant to receipt of the said complaint dated 01.07.2011 a show
cause notice dated 08.07.2011 was issued against the said M/s Etisalat
Mauritius and its Directors including the appellant herein.
7. The appellant thereafter filed a preliminary reply dated 18.02.2012 to
the aforesaid show cause notice and reserved the right of filing a detailed
reply after receiving the documents as prayed for. On 25.05.2012, the
appellants filed three applications i.e. (a) application for non-joinder of
parties and for joint adjudication; (b) application under Article 20(3) of the
Constitution of India for keeping the adjudication proceedings before the
Court in abeyance and; (c) application for keeping in abeyance the
proceedings under Rule 4(3) FEMA Rules wherein the appellants have
prayed for providing necessary documents for proper adjudication of the
matter. On 17.09.2012, the Adjudicating Authority dismissed the said
applications filed by the appellants. Aggrieved by the said order the
appellants preferred writ petitions being CWP 6360/2012 against the said
order. This Court vide its order dated 05.10.2012 directed that the reply by
the other noticees may be supplied to the appellants on the filing of final
reply of the appellant. The appellant finally filed his reply dated 05.10.2012
before the Adjudicating Authority.
8. On 12.12.2012 the appellants filed another application seeking
permission to cross-examine certain persons for effective disposal of the
matter. The cross-examination was requested of Sh. Rajeshwar Singh,
Assistant Director of Enforcement, Sh. Ahmed Shakir, Director of M/s/
Genex Exim Venture Pvt. Ltd., Sh. Pratap Ghosa, CFO of M/s Etisalat DB
Telecom Pvt. Ltd. and Sh. K. Vasudeva, Vice President Finance of M/s
Etisalat DB Telecom Pvt. Ltd. Vide order dated 03.01.2013 the Adjudicating
Authority rejected the applications of the appellants. Thereafter the
appellants filed the said writ petition. The learned Single Judge dismissed
the said writ petitions vide order dated 24.01.2013. Hence the present appeal
has been filed.
9. The learned Single Judge dismissed the writ petition. The impugned
order held that the stage for leading cross examination had not been reached
and that further one would be slow to interdict proceedings before the
adjudicating authority on the grounds raised in the writ petition. The learned
Single Judge also observed that the appellants were attempting to derail the
adjudication proceedings by filing one application or the other at various
stages of the adjudication. Hence the writ petition was dismissed.
10. It is the contention of the learned senior counsel appearing for the
appellant that the complaint that has been filed by the respondent relies upon
the statements of the three persons namely Mr. Ahmad Shakir, Mr. Pratap
Ghose and Mr. K. Vasudeva, in Annexure „B‟ which gives the list of
documents relied upon by the complainant. The said Annexure „B‟ gives a
list of 16 documents including various agreement letters and the statements
of said three persons. It is claimed that cross examination is an integral part
and parcel of principle of natural justice and that on a fair reading of the
provisions of FEMA Act and Rules, it is permissible to cross-examine the
aforesaid persons and the same would be an indefensible right. Reliance is
placed on Section 16(1) of FEMA that provides that for the purposes of
adjudication under Section 13, the Central Government may appoint such
officers of the Central Government as it may think fit as Adjudicating
Authority for holding an enquiry in the manner prescribed after giving the
persons alleged to have committed contravention, a reasonable opportunity
of being heard for the purpose of imposing a penalty. Reliance is also placed
on Rule 4 of the Foreign Exchange Management (Adjudication Proceedings
and Appeals) Rules, 2000. It is stated that right of cross examination in the
present case would have to be read into the aforesaid statutory provisions. It
is pointed out that the respondents are relying on the said statements of the
three persons and the appellant is entitled to test the veracity of the
statements on the touchstone of cross examination. It is also contended that
in the present proceedings unless opportunity for cross-examination is
granted to the appellant, grave and irreparable loss/injury would be caused
to them inasmuch as under Section 13 of FEMA a penalty upto 3 times the
sum involved in the contravention can be imposed. The alleged
contravention in the present case amounts to a total sum of Rs.7200 Crores.
It is claimed that under Section 14, if a person fails to make full payment of
the penalty imposed upon him under Section 13, he is liable for civil
imprisonment as stated under Section 14 of the said Act.
11. Learned senior counsel appearing for the appellant further submits
that under the Foreign Exchange Regulations Act 1973, the enquiry was
conducted in exercise of power under "The Adjudication Proceeding and
Appeal Rules 1974". He states that the procedure as prescribed for
adjudication of the proceedings in Rule 3 of the said Rules is almost
identical as Rule 4 of the Foreign Exchange Management Rules 2000,
(adjudication proceedings and Appeal) Rules 2000 (hereinafter called the
„Rules of 2000‟)] and the present proceedings are being conducted under the
said Rules of 2000.
12. He relies upon the judgment of Division Bench of the Kerala High
Court in the case of Central Govt. represented by Directorate, Enforcement
Directorate, Foreign Exchange Regulation Act, New Delhi vs. Fr. Alfred
Iames Fernandez, AIR 1987 Kerala 179 and the judgment of the Single
Bench of this Court in the case of Mehar Singh v. Appellate Board Foreign
Exchange 1986(10) DRJ 19 to argue that under the Adjudication
Proceedings and Appeal Rules, 1974" these judgments have held that the
Rules in question under FERA provide for a personal hearing which
includes the right to examine and cross examine the witnesses. He has also
relied upon Gurmeet Kaur Dhillon -vs- Tribunal for Foreign Exchange &
Anr., 2007 CRL.L.J.3294 whereby the Single Judge of Punjab and Haryana
High Court relied upon the judgment of Kerala High Court and held as
follows:-
"In spite of that, the authorities took no steps to permit the
appellants to cross-examine the persons said to have been
examined under Section 40 of the FERA and, therefore, in view
of the law laid down by the Kerala High Court in the case of
Central Govt. represented by the Director, Enforcement
Directorate, Foreign Exchange Regulation Act, New Delhi v.
Alfred James Fernandes (supra), said evidence cannot be taken
into account."
13. It is argued that as the Provisions of the Rules under FERA are
identical to the Foreign Exchange Management Rules 2000, the appellants
in view of the said judgments is entitled to cross examine the said witnesses
and the impugned orders have wrongly denied them the said opportunity.
14. He further relies on the following judgments to submit that in the
given facts, he would have a right to cross-examine.
(i)State of Kerala vs. K.T. Shaduli Grocery Dealer Etc (1977) 2 SCC
777;
(ii) Khem Chand, vs. Union of India and others AIR 1958 SC 300;
(iii)Ayaaubkhan Noorkhan Pathan vs. State of Maharashtra, AIR
2013 SC 58;
It is also submitted by the learned senior counsel for the appellant that
the judgments relied upon in the impugned order by the learned Single
Judge also support such contention of the appellant that cross-examination
should have been allowed. He refers to the following judgments
(iv) K.L.Tripathi -vs- State Bank of India, (1984) 1 SCC 43;
(v) Union of India -vs- Delhi High Court Bar Association, (2002) 4
SCC 275;
(vi)Hira Nath Mishra -vs- Principal, Rajender Medical College,
Ranchi (1973) 1 SCC 805;
15. On the other hand, learned counsel appearing for respondents states
that there is no procedure prescribed under the Rules of 2000 for permitting
the appellant to cross examine the witnesses which they have sought for.
The learned counsel relies upon Raj Kumar Shivhare vs. Assistant Director,
Directorate of Enforcement and Another 2010 (4) SCC 772 where the
Hon‟ble Supreme Court held that FEMA is a complete Code in itself and
Chapter V of FEMA read with the Rules provides a complete network of
provisions adequately structuring rights and remedies available to a person
who is aggrieved by adjudication under FEMA. He also relies upon
Kanungo & Co. v. Collector of Customs (1973) 2 SCC 438, where the
Hon‟ble Supreme Court held that principles of natural justice do not require
that in the matter like this, the person who has given information should be
examined in the presence of the appellant or should be allowed to be cross
examined by them on the statements made before the Customs Authorities.
Relying on the said judgment, he submits that the appellant has no right to
cross-examine. In the written synopsis, the learned counsel for the
respondent also relies upon the judgments cited by the learned Single Judge
of this Court in his order dated 24.01.2013 which are reproduced as under:-
(i) M/s. Kanungo and Company vs. Collector of Customs and others,
(73) 2 SCC 438;
(ii)Balumal Jamnadas Batra vs. State of Maharashtra (1975) 4 SCC
645;
(iii) Collector of Customs, Madras & Ors, vs. D.Bhoormall (1974) 2
SCC 544;
(iv) K.L.Tripathi -vs- State Bank of India and ors, (1984) 1 SCC
43;
(v) Union of India & Anr. -vs- Delhi High Court Bar Association &
Ors., (2002) 4 SCC 275;
(vi)Hira Nath Mishra and others -vs- The Principal, Rajendra
Medical College, Ranchi and Others (1973) 1 SCC 805;
(vii)Gurcharan Singh -vs- State of Bombay and anr., AIR 1952
SCR 737;
(viii) State Bank of India vs. Allied Chemical Laboratories and
Anr. (2006) 9 SCC 252; and
(ix) State of Kerala vs. K.T.Shaudli Grocery Dealers;
16. The legal position regarding the right to cross examination has been
well settled by a catena of judgments of Hon‟ble Supreme Court. In State of
Kerala vs. K.T. Shaduli Grocery Dealer Etc (1977) 2 SCC 777, the facts of
the case related to the assessment of the assessee for sales tax for three
assessment years where the return filed by him on the basis of his books of
accounts appeared to the sales tax officer to be incorrect and incomplete
since certain sales appearing in the books of account of one Haji
Usmankutty were not accounted for in the books of accounts maintained by
the assessee. The assessee applied to the sales tax officer for an opportunity
to cross examine Mr. Haji Usmankutty. The Hon‟ble Supreme Court in para
5, held as follows:-
"The question is what is the content of this provision which
imposes an obligation on the Sales Tax Officer to give and
confers a corresponding right on the assessee to be afforded, a
reasonable opportunity "to prove the correctness or
completeness of such return". Now, obviously "to prove" means
to establish the correctness or completeness of the return by any
mode permissible under law. The usual mode recognised by
law for proving a fact is by production of evidence and
evidence includes oral evidence of witnesses. The opportunity
to prove the correctness or completeness of the return would,
therefore, necessarily carry with it the right to examine
witnesses and that would include equally the right to Cross-
examine witnesses examined by the Sales Tax Officer. Here, in
the present case, the return filed by the assessee appeared to the
Sales Tax Officer to be incorrect or incomplete because certain
sales appearing in the books of Haji Usmankutty and other
wholesale dealers were not shown in the books of account of
the assessee. The Sales Tax Officer relied on the evidence
furnished by the entries in the books of account of Haji
Usmankutty and other wholesale dealers for the purpose of
coming to the conclusion that the return filed by the assessee
was incorrect or incomplete. Placed in these circumstances, the
assessee could prove the correctness and completeness of his
return only by showing that the entries in the books of account
of Haji Usmankutty and other whole- sale dealers were false,
bogus or manipulated and that the return submitted by the
assessee should not be disbelieved on the basis of such entries,
and this obviously, the assessee could not do, unless he was
given an opportunity of cross-examining Haji Usmankutty and
other wholesale dealers with reference to their accounts. Since
the evidentiary material procured from or produced by Haji
Usmankutty and other wholesale dealers was sought to be relied
upon for showing that the return submitted by the assessee was
incorrect and incomplete, the assessee was entitled to have Haji
Usmankutty and other wholesale dealers summoned as
witnesses for cross-examination. It can hardly be disputed that
cross-examination is one of the efficacious methods of
establishing truth and exposing falsehood."
17. Reference next may be had to the case of Khem Chand, vs. Union of
India and others AIR 1958 SC 300. This matter related to the appellant
therein who was appointed as Sub-Inspector in the Co-operative Societies
Department and posted as Sub-Inspector in the Milk Scheme. A charge sheet
was issued upon him formulating several charges. An Enquiry Officer was
appointed. The only issue that survived to be decided was as to whether the
appellant was given a reasonable opportunity of showing cause against the
action proposed to be taken in regard to him. In para 19, the Hon‟ble Court
held as follows:-
"(19) To summarise: the reasonable opportunity envisaged by
the provision under consideration includes:
(a)****
(b) an opportunity to defend himself by cross-examining the
witnesses produced against him and by examining himself or
any other witnesses in support of his defence, and finally"
18. The latest judgment of the Hon‟ble Supreme Court in this regard is in
the case of Ayaaubkhan Noorkhan Pathan vs. State of Maharashtra, AIR
2013 SC 58. The said case pertains to a Caste Certificate issued to the
appellant. On the basis of his being a member of the Scheduled Tribe, the
appellant was appointed as a Senior Clerk in the Municipal Corporation of
Aurangabad. The Scrutiny Committee to whom the matter was referred to
revoked the Caste Certificate. It was the submission of the appellant before
the Hon‟ble Supreme Court that he was denied the opportunity to cross-
examine witnesses which resulted in grave miscarriage of justice. The
Hon‟ble Supreme Court after noting the various previous judgments
rendered on this issue recorded as follows:-
"28. The meaning of providing a reasonable opportunity to
show cause against an action proposed to be taken by the
government is that the government servant is afforded a
reasonable opportunity to defend himself against the charges, on
the basis of which an inquiry is held. The government servant
should be given an opportunity to deny his guilt and establish
his innocence. He can do so only when he is told what the
charges against him are. He can therefore, do so by cross-
examining the witnesses produced against him. The object of
supplying statements is that, the government servant will be able
to refer to the previous statements of the witnesses proposed to
be examined against him. Unless the said statements are
provided to the government servant, he will not be able to
conduct an effective and useful cross-examination."
29. ***
30. The aforesaid discussion makes it evident that, not only
should the opportunity of cross-examination be made available,
but it should be one of effective cross-examination, so as to
meet the requirement of the principles of natural justice. In the
absence of such an opportunity, it cannot be held thät the matter
has been decided in accordance with law, as cross-examination
is an integral part and parcel of the principles of natural justice."
20. In view of the above judgement of the Hon‟ble Supreme Court
especially in the latest judgment of Ayaaubkhan Noorkhan Pathan(supra)
it would clearly follow that cross-examination of witnesses has been held to
be an integral part and parcel of the principles of natural justice. Refusal to
grant permission to cross-examine witnesses would normally be an
exception.
21. Learned counsel for the respondent has relied on various judgments to
try and submit that there is no inherent right for cross-examination. The
first judgment relied upon by him is Gurcharan Singh -vs- State of
Bombay, AIR 1952 SC 221. Relevant paragraph 7 is reproduced as under:-
"The only point which Mr.Umrigar attempts to make in
regard to the reasonableness of this procedure is that the
suspected person is not allowed to cross-examine the
witnesses who deposed against him and on whose evidence
the proceedings were stated. In our opinion, this by itself
would not make the procedure unreasonable having regard
to the avowed intention of the legislature in making the
enactment. The law is certainly an extraordinary one and
has been made only to meet those exceptional cases where
no witnesses for fear of violence to their person or property
are willing to depose publicly against certain bad characters
whose presence in certain areas constitute a menace to the
safety of the public residing therein. This object would be
wholly defeated if a right in confront to cross-examine these
witnesses was given to the suspect."
22. The said judgment pertains to an order of externment passed
against the petitioner under the City of Bombay Police Act. The action
of externment was done to protect the general public against the
dangerous and bad characters, and in view of the purpose of the statute,
the Court disallowed cross-examination.
23. Learned counsel also relied upon the judgement in the case of
Union of India -vs- Delhi High Court Bar Association, (2002) 4 SCC
275. This matter pertains to right of cross-examination before the Debt
Recovery Tribunal wherein in paragraph 23 it was held as under:-
"When the High Courts and the Supreme Court in exercise of
their jurisdiction under Article 226 and Article 32 can decide
questions of fact as well as law merely on the basis of
documents and affidavits filed before them ordinarily, there
should be no reason as to why a Tribunal, likewise, should not
be able to decide the case merely on the basis of documents
and affidavits before it. It is common knowledge that hardly
any transaction with the bank would be oral and without proper
documentation, whether in the form of letters or formal
agreements. In such an event the bona fide need for the oral
examination of a witness should rarely arise. There has to be a
very good reason to hold that affidavits, in such a case, would
not be sufficient."
24. The matter pertained to right to cross-examine before the Debt
Recovery Tribunals. The Hon‟ble Supreme Court noted that the reason
for establishing Banking Tribunals was to expedite the disposal of the
claims by the banks. The Hon‟ble Court, however, recognised that in
certain cases right to cross-examine the witness would be allowed.
25. The next judgment relied upon by the learned counsel for the
respondent is the judgment in the case of Hira Nath Mishra -vs-
Principal, Rajender Medical College, Ranchi (1973) 1 SCC 805. This
matter pertained to the veracity of enquiry committee constituted on
account of the complaint received from some girl students regarding
certain acts by the male students. In paragraph 13 the Hon‟ble Court
has held as follows:-
"Rules of natural justice cannot remain the same applying to
all conditions. We know of statutes in India like the Goonda
Acts which permit evidence being collected behind the back of
the goonda and the goonda being merely asked to represent
against the main charges arising out of the evidence collected.
Care is taken to see that the witness who gave statements
would not be identified. In such cases there is no question of
the witnesses being called and the goonda being given an
opportunity to cross-examine the witnesses. The reason is
obvious. No witness will come forward to give evidence in the
presence of the goonda. However, unsavoury the procedure
may appear to a judicial mind, these are facts of life which are
to be faced. The girls who were molested that night would not
have come forward to give evidence in any regular enquiry and
if a strict enquiry like the one conducted in a court of law were
to be imposed in such matters, the girls would have had to go
under the constant fear of molestation by the male students
who were capable of such indecencies."
The Hon‟ble Court disallowed cross-examination keeping in view
the need to protect the girls who had given their statements.
26. Reliance was also placed on the case of K.L.Tripathi -vs- State
Bank of India, (1984) 1 SCC 43. This matter pertained to a
departmental enquiry leading to dismissal of the employee. The Hon‟ble
Supreme Court in paragraph 32 held as follows:-
"The basic concept is fair play in action administrative, judicial
or quasi-judicial. The concept of fair play in action must
depend upon the particular lis, if there be any, between the
parties. If the credibility of a person who has testified or given
some information is in doubt, or if the version or the statement
of the person who has testified, is, in dispute, right of cross-
examination must inevitable form part of fair play in action but
where there is no lis regarding the facts but certain explanation
of the circumstances there is no requirement of cross-
examination to be fulfilled to justify fair play in action. When
on the question of facts there was no dispute, no real prejudice
has been caused to a party aggrieved by an order, by absence of
any formal opportunity of cross-examination per se does not
invalidate or vitiate the decision arrived at fairly. This is more
so when the party against whom an order has been passed does
not dispute the facts and does not demand to test the veracity of
the version or the credibility of the statement."
27. The right to cross-examination was denied on the facts of the case.
Further the appellant in that case never asked for cross-examination and he
admitted the facts but only an explanation of the acts was given.
28. Learned counsel for the respondent has also heavily relied upon the
judgment of M/s. Kanungo & Company vs. Collector of customs and
others, (1973) 2 SCC 438. That matter pertained to a firm carrying on
business as a dealer or importer and repairer of watches. The Customs in the
course of search seized certain amount of watches. On the argument of
breach of principles of natural justice on account of denial of the right of
cross-examination, the Hon‟ble Supreme Court in para 12 noted as follows:-
"We may first deal with the question of breach of natural justice.
On the material on record, in our opinion, there has been no such
breach. In the Show-Cause notice issued on August, 21, 1961 all
the material on which the Custom Authorities have relied was
set out and it was then for the appellant to give a suitable
explanation. The complaint of the appellant now is that all the
persons from whom enquiries were alleged to have been made
by the authorities should have been produced to enable it to
cross-examine them. In our opinion, the principles of natural
justice do not require that in matters like this the persons who
have given information should be examined in the presence of
the appellant or should be allowed to be cross-examined by
them on the statements made before the Customs Authority.
Accordingly, we hold that there is no force in the third
contention of the appellant."
The aforesaid judgment was rendered on the facts of the said case.
29. The legal position that would follow is that normally if the credibility
of a person who has testified or given some information is in doubt or if the
version or the statement of the person who has testified is in dispute
normally right to cross-examination would be inevitable.If some real
prejudice is caused to the complainant, the right to cross-examine witnesses
may be denied. No doubt, it is not possible to lay down any rigid rules as to
when in compliance of principles of natural justice opportunity to cross-
examine should be given. Everything depends on the subject matter. In
the application of the concept of fair play there has to be flexibility. The
application of the principles of natural justice depends on the facts and
circumstances of each case.
30. Now, coming to the facts of this case. In the complaint that has been
filed, the statements of three witnesses have been extensively relied upon.
Regarding Shri Pratap Ghosh, CFO of M/s.Etisalar DB Telecom Pvt.Ltd. his
statement is relied upon in paragraph 10.2 of the complaint which para reads
as follows:-
"10.2. Shri Pratap Ghosh, CFO of M/s. Etisalat DB Telecom
Pvt.Ltd. in his statement dated 08.04.2011 under the provisions of
FEMA, 1999 inter-alia stated that he had joined this company in
August, 2009 and before tht he was working in Etisalat Group head
office as Director (financial consolidation and reporting) based in Abu
Dhabi, that so far three investments from abroad has been received by
the company totaling Rs.3543 crores approximately during the period
since December, 2008 to May, 2010; that these FDI were received by
the company as pr agreement(s) dated 23.09.2008; tht it is a fact that
shares to M/s. Genex Exim, Chennai were allotted in December, 2008
pursuant to the agreement(s) dated 23.09.2008; that on 17.12.2008
company had issued shares to M/s.Etisalat Mauritius, M/s.Genex
Exim and M/s.Tiger Trustees, that shares were allotted to M/s.Etisalat
Mauitius as decided by M/s.Etisalat UAE, that as per share
subscription agreement dated 23.09.2008 (under clause 2.2) after the
issuance of such shares and completion of all actions; M/s. Etisalat
Mauritius would be allotted 50% +10 equity shares of the company
subject to FIPB approval; that there appears a delay in reporting to
RBI after issue of the shares in the FORM FCGPR submitted by the
company on 13.04.2009; that the total of share holding in the
company held by M/s. Etisalat Mauritius and M/s. Delphi Investments
Mauritius was already 49% which was the maximum limit allowed for
non-resident entities under automatic route."
31. Regarding the next witness Shri Ahmad Shakir, Promotor/Director of
M/s. Genex Exim Ventures Pvt. Ltd., the complaint in paragraph 11.3 relies
upon the said statement to prove that the purchase of shares by Genex
Exim Ventures Pvt. Ltd. was in fact a foreign investment disguised as
domestic investment.
11.3 of the complaint reads as under:-
"11.3 It is thus clear that purchase of shares by Genex Exim Ventures
Pvt. Ltd. From the overseas funds received under well conceived
design was foreign investment disguised as domestic investment. It is
also substantiated by the statement of Shri Ahmad Shakir,
Promoter/Director of M/s. Genex Exim Ventures Pvt. Ltd. He in his
statement dated 07.04.2011 under FEMA stated that he had already
tendered full facts regarding investment in Swan & agreement with
Etisalat etc. in his statements dated 02.02.11, 17.03.11 and 07.04.11
under PMLA."
Similarly, in paragraphs 8.2 and 8.3 of the complaint again the
complaint relies upon the statement of the said Shri Ahmad Shakir.
32. Further alongwith the complaint is annexure B with the heading "List
of relied upon documents to complaint" at Sl.No.9 of the said annexure is
the statement dated 2.2.2011, 17.3.2011 and 7.4.2011 of Shri Ahmad Shakir,
at serial No.10 is the statement dated 08.04.2011 of Mr.Pratap Ghose and at
serial No.11 is the statement dated 06.04.2011 of Mr.K.Vasudeva.
33. In the application that was filed by the appellants for seeking
permission to cross-examine, it is stated that there is a need to cross-examine
Shri Ahmad Shakir, Shri Pratap Ghose and Shri K.Vasudeva to controvert
their statements and to establish their (appellants) innocence as the charges
have been denied by the said appellant. A fourth person who is sought to be
cross-examined is Shri Rajeshwar Singh, Assistant Director i.e. the
complainant as according to the appellant it intends to cross-examine the
said person with intent to controvert the veracity of the complaint regarding
contraventions of various provisions of FEMA and it is further stated that
the statements made by the said complainant in the complaint are inherently
false.
34. Keeping in view the facts of the present case and the nature of
allegations being raised against the appellant the judgments of the Supreme
Court in the case of K.T.Shaduli (supra), Khem Chand vs. UOI (supra) and
Ayaaubkhan Noorkhan Pathan vs. State of Maharashtra(supra) would in
our view apply to the facts of this case. The respondent has failed to place
on record any fact to show that prejudice would be caused to it if the
appellant is permitted to cross-examine the said witness. In fact a query was
posed to the learned counsel for the respondent about whether any prejudice
would be caused to the respondent if the cross-examination is allowed. The
learned counsel could not specify any prejudice. In our view the present
appeal should be allowed to the extent that the appellants should be entitled
to cross-examine the three witnesses whose statements have been relied
upon by the respondent in the complaint. The respondent in the complaint
have heavily relied upon the statement of Shri Ahmad Sakir, Shri Pratap
Ghose and Shri K.Vasudeva. It would be in the fitness of things that to test
the veracity of their statements which is relied upon by the respondent the
appellants are allowed to cross-examine them.
35. However, other than the three witnesses no grounds are made out to
cross-examine any other person. The request of the appellant to cross-
examine Shri Rajeswhar Singh, Assistant Director, the complainant is a
request without merits. The said complainant has filed the complaint based
on material gathered by the respondent. No purpose would be served by
putting him to cross-examination as is sought by the appellants.
36. Though we have allowed the appellant to cross-examine the
witnesses, we are conscious of the fact that the appellant may be intent on
delaying the proceedings. We cannot help noting that the appellant has been
filing one application or the other at various stages of adjudication as noted
by the learned Single Judge. Keeping in view the nature of the matter, we
direct that the appellant be permitted to cross-examine the three witnesses,
namely, Shri Ahmad Shakir, Shri Pratap Ghose and Shri K. Vasudeva. The
learned adjudicating authority shall fix an appropriate date for cross-
examination of the said three witnesses. The said dates should be fixed
within one month from today and steps for presence of the witnesses be
taken. The cross-examination may be done on a day to day basis and may
be concluded by the learned adjudicating authority preferably within a
period of 10 working days from commencement. These directions are being
made so that no unnecessary delay takes place in completion of the cross-
examination of the said witnesses. Needless to add that the cross-
examination would be confined to questions as permissible in law.
37. With the above directions, the above appeal is disposed of.
JAYANT NATH, J.
CHIEF JUSTICE
May 29 2013
rb/nt/raj
