Delhi High Court
Natwest Markets Plc Formerly The ... vs The Special Director (Central ... on 3 December, 2020
$~39
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision : 03.12.2020
+ W.P.(C) 9743/2020
NATWEST MARKETS PLC FORMERLY THE ROYAL
BANK OF SCOTLAND NV ..... Petitioner
Through: Mr.Suhail Dutt, Sr. Adv. with
Mr.Nishant Varun & Mr.Pawan
Sharma, Advs.
versus
THE SPECIAL DIRECTOR (CENTRAL REGION)
ADJUDICATING AUTHORITY DIRECTORATE OF
ENFORCEMENT & ANR. ..... Respondents
Through: Mr.Chetan Sharma, ASG &
Mr.Anil Soni, CGSC with
Mr.Devesh Dubey, Adv. for
UOI.
Mr.Ravi Prakash, CGSC with
Mr.Farman Ali, Mr.Mohammad
Shahan Ulla & Mr.Kaushal
Kait, Advs.
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
NAVIN CHAWLA, J. (Oral)
This petition has been heard through video conferencing.
CM APPL. 31109/2020 (Exemption)
Allowed, subject to all just exceptions.
W.P.(C) 9743/2020 & CM APPL. 31108/2020
1. This petition has been filed by the petitioner challenging the
Show Cause Notice dated 24.08.2020 issued by the respondent no. 1
W.P.(C) 9743/2020 Page 1
calling upon the petitioner to show cause as to why an inquiry be not
held against the petitioner in the manner provided in Rule 4 of the
Foreign Exchange Management (Adjudication Proceedings and
Appeal) Rules, 2000 (hereinafter referred to as the 'Rules').
2. The learned senior counsel for the petitioner submits that the
Show Cause Notice relates to proceedings of the year 2010 and
therefore, is highly belated. He submits that this itself is a ground for
setting aside the Show Cause Notice. In support of his submission, he
places reliance on the judgment of this Court in Standard Chartered
Bank vs. Directorate of Enforcement, MANU/DE/3676/2010.
3. He further submits that even on the face of the Show Cause
Notice, no violation of Clause 2.2 of the Circular dated 17.05.2005 is
made out against the petitioner. He submits that the petitioner is in full
compliance with the provisions of Clause 2.2 of the Circular dated
17.05.2005, violation of which has been alleged against the petitioner.
Placing reliance on the judgment of this Court in General Electric
Company and Ors. Vs. Deputy Director of Income Tax and Ors.
MANU/DE/3364/2011 and of the Supreme Court in The Deputy
Commissioner, Central Excise & Anr. vs. Sushil & Company & Anr.
MANU/SC/0547/2016, the learned senior counsel for the petitioner
submits that where no case is made out on the facts alleged in the
Show Cause Notice itself, this Court would be within its jurisdiction to
entertain the Writ petition and quash such Show Cause Notice.
4. I have considered the submissions made by the learned senior
counsel for the petitioner.
W.P.(C) 9743/2020 Page 2
5. The Impugned Show Cause Notice has been issued to the
petitioner in terms of Rule 4 of the Rules and reads as under:-
"5. NOW THEREFORE, the Noticees are required
to Show Cause in writing within 30 days from the
date of receipt of this Notice, as to why inquiry
proceedings as contemplated under section 13
FEMA should not be held against them in the
manner as provided in Rule (4) of the Foreign
Exchange Management (Adjudication Proceedings
and Appeal) Rules, 2000, for the aforementioned
contraventions and amount.
6. NOTICEES are further informed that in case it is
decided to hold inquiry proceedings as
aforementioned, they would be required to appear
either in person or through Legal Practitioner /
Chartered Accountant, duly authorized by them to
explain and produce such documents or evidence, as
may be useful for or relevant to the subject matter of
enquiry, and in case the Noticees fail, neglect or
refuse to appear before the undersigned on the
appointed dated and time, the adjudication
proceedings shall proceed against them ex-parte."
6. Rule 4 of the Rules requires a two-stage scrutiny of the
complaint by the Adjudicating Authority. Sub-rule 1 to sub-rule 5 of
Rule 4 of the Rules are quoted hereinunder:-
"4. Holding of inquiry.--
(1) For the purpose of adjudicating under section 13
of the Act whether any person has committed any
W.P.(C) 9743/2020 Page 3
contravention as specified in that section of the Act,
the Adjudicating Authority shall, issue a notice to
such person requiring him to show cause within
such period as may be specified in the notice (being
not less than ten days from the date of service
thereof) why an inquiry should not be held against
him.
(2) Every notice under sub-rule (1) to any such
person shall indicate the nature of contravention
alleged to have been committed by him.
(3) After considering the cause, if any, shown by
such person, the Adjudicating Authority is of the
opinion that an inquiry should be held, he shall
issue a notice fixing a date for the appearance of
that person either personally or through his legal
practitioner or a chartered accountant duly
authorised by him.
(4) On the date fixed, the Adjudicating Authority
shall explain to the person proceeded against or his
legal practitioner or the chartered accountant, as
the case may be, the contravention, alleged to have
been committed by such person indicating the
provisions of the Act or of rules, regulations,
notifications, direction or orders or any condition
subject to which an authorisation is issued by the
Reserve Bank of India in respect of which
contravention is alleged to have taken place.
(5) The Adjudicating Authority shall, then, given an
opportunity to such person to produce such
documents or evidence as he may consider relevant
to the inquiry and if necessary, the hearing may be
W.P.(C) 9743/2020 Page 4
adjourned to future date and in taking such evidence
the Adjudicating Authority shall not be bound to
observe the provisions of the Indian Evidence Act,
1872 (1 of 1872)."
7. A reading of the above Rules would clearly show that the
Impugned Show Cause Notice is at the first stage wherein the
Adjudicating Authority on receiving a reply to the Impugned Show
Cause Notice is to form an opinion whether an inquiry at all should be
held against the petitioner.
8. In view of the above, at this stage I do not deem it appropriate
to entertain this present petition. The petitioner shall be at liberty to
raise all its contentions before the Adjudicating Authority. Needless to
say, if the petitioner is aggrieved of the decision taken by the
Adjudicating Authority, it shall always be open to the petitioner to
challenge the same in accordance with law.
9. The petition is accordingly dismissed with no order as to costs.
NAVIN CHAWLA, J
DECEMBER 3, 2020/rv
W.P.(C) 9743/2020 Page 5
