Rajasthan High Court
M/S Jai Exports vs Joint Director, Directorate Of ... on 5 April, 2022
Bench: Ashok Kumar Gaur
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B.Civil Misc. 2nd Stay Application No.3316/2022
In
S.B. Civil Writ Petition No. 10463/2019
1. M/s Jai Exports, Having Its Address At C-438, Basni Phase
II, Jodhpur Through Its Partner Shri Mahaveer Agarwal
S/o Shri Ram Avtar Agarwal, Having Its Address At C-
438, Basni Phase II, Jodhpur-342001
2. Mahaveer Agarwal S/o Shri Ram Avtar Agarwal, Having
Its Address At C-438, Basni Phase II, Jodhpur
3. Mukesh Agarwal S/o Shri Ram Avtar Agarwal, Having Its
Address At C-438, Basni Phase II, Jodhpur
----Petitioners
Versus
1. Joint Director, Directorate Of Enforcement, Jaipur, Having
Its Address At Zonal Office, 2nd Floor, Jeevan Nidhi-II, LIC
Building, Bhawani Singh Road, Jaipur
2. Additional Director Of Enforcement (Western Region),
Having Its Address At Janmabhoomi Chambers, 1st Floor,
W.h. Marg, Ballard Estate, Mumbai
3. Assistant Director, Directorate Of Enforcement, Jaipur,
Having Its Address At Zonal Office, 2nd Floor, Jeevan
Nidhi-II, LIC Building, Bhawani Singh Road, Jaipur
4. Special Director Of Enforcement-Cum-Adjudicating
Authority, Having Its Address At 1st Floor, U.T.
Government Press Building Madhya Marg, Sector-18,
Chandigarh
----Respondents
For Petitioner(s) : Mr.Prateek Gattani, Adv.
Mr.Vikas Kabra, Adv.
Mr.Kunal Agarwal, Adv.
For Respondent(s) : Mr.Anand Sharma, Adv.
(2 of 8) [CW-10463/2019]
HON'BLE MR. JUSTICE ASHOK KUMAR GAUR
Order
05/04/2022
The present writ petition has been filed by the petitioners
challenging the order dated 26.04.2019, passed by the Additional
Director of Enforcement (Western Region), Government of India,
Ministry of Finance, Department of Revenue, Mumbai.
The petitioners also feel aggrieved against the proceedings
initiated by show cause notice dated 15.06.2018 and complaint
dated 13.06.2018.
Learned counsel for the respondents has filed reply to the
writ petition.
Learned counsel for the respondents has raised preliminary
objections about maintainability of the writ petition on two counts
i.e. (i) territorial jurisdiction of this Court to entertain the writ
petition and (ii) statutory alternative remedy available to the
petitioner under Section 19 of the Foreign Exchange Management
Act, 1999 (in short 'FEMA', 1999).
Learned counsel for the respondents submitted that in the
present case, initially a show cause notice, issued to the
petitioners, was challenged before the Punjab and Haryana High
Court by filing Civil Writ Petition No.4216/2019 and the said writ
petition came to be decided on 15.02.2019, whereby the Punjab
and Haryana High Court disposed of the writ petition by permitting
the petitioners to file a detailed and comprehensive representation
raising all the issues by way of reply to the show cause notice and
after filing of the reply, the respondents were directed to decide
the same by passing a speaking order after affording an
opportunity of hearing to the petitioners.
(3 of 8) [CW-10463/2019]
Learned counsel for the respondents submitted that after
decision of the writ petition by the Punjab and Haryana High
Court, the proceedings were carried out by the Additional Director
and after taking into account various facets of the case, the
Authority while exercising the power under Section 13 (1) of the
FEMA, 1999, has imposed penalty on the petitioners.
Learned counsel for the respondents submitted that writ
petition preferred by the petitioners at Jaipur Bench, Jaipur is not
maintainable as no part of cause of action has arisen in the
territory of the State of Rajasthan.
Learned counsel for the respondents also submitted that the
order dated 26.04.2019 passed by the Additional Director itself
makes a mention that appeal against the order dated 26.04.2019
is maintainable before the Appellate Tribunal for Foreign Exchange
Amendment Act, Ministry of Finance Department, New Delhi, after
depositing the amount of penalty within a period of 45 days from
the date of service of the order.
Learned counsel submitted that the petitioners if at all had
any grievance, the statutory remedy of filing appeal under Section
19 of the FEMA, 1999, could have been availed by him.
Learned counsel for the petitioners submitted that objection
raised by the respondents is liable to be rejected by this Court.
Learned counsel submitted that part of cause of action has
arisen to the petitioners in the State of Rajasthan and as per
Article 226(2) of the Constitution of India if part of cause of action
arises in the territory of Rajasthan, the writ petition has to be
entertained by the Rajasthan High Court.
(4 of 8) [CW-10463/2019]
Learned counsel submitted that initially a complaint by the
Assistant Director was sent from Jaipur and on the basis of same,
the show cause notices were issued to the petitioners.
Learned counsel submitted that even the impugned order
dated 26.04.2019 directs that the petitioners are required to
deposit the penalty amount in the office of Joint Director,
Directorate of Enforcement, Jaipur.
Learned counsel submitted that these two relevant facts are
part of cause of action and the petitioners have rightly filed the
present writ petition.
Learned counsel for the petitioners further submitted that
objection of availing alternative remedy, raised by the
respondents, is not required to be entertained by this Court, as
there is a violation of principle of natural justice.
Learned counsel submitted that Foreign Exchange
Management (Adjudication Proceedings and Appeal), Rules 2000,
have not been followed by the respondents and the mandatory
provisions as contained in Rule 4 of the Rules of 2000, has been
flagrantely violated.
Learned counsel for the petitioners submitted that after
service of show cause notice on the petitioners, the Authorities
were first required to afford an opportunity to the petitioners and
after considering the reply/defence taken by the petitioners, the
Authorities were thereafter required to form its opinion and give a
notice for adjudication.
Learned counsel submitted that there is wholesome breach
of principles of natural justice and statutory Rules and as such, if
this Court finds that principles of natural justice is violated, then
the present writ petition is maintainable.
(5 of 8) [CW-10463/2019]
Learned counsel submitted that the Apex Court in the case of
Kanwar Natwar Singh Vs. Director of Enforcement and Ors.
reported in (2010) 13 SCC 255 has interpreted the procedure,
which is required to be followed as per Rule 4(1) of the Foreign
Exchange Management (Adjudication Proceedings and Appeal)
Rules, 2000.
Learned counsel, on the strength of the said judgment,
submitted that the Rules are required to be mandatorily followed
by the Authorities and if the same is not done, in such a situation,
writ petition is the only remedy to a litigant and as such the
petitioners have rightly approached this Court.
I have heard the submissions made by learned counsel for
the parties and perused the material available on record.
This Court finds that the writ petition filed at Jaipur Bench,
Jaipur for challenging the order dated 26.04.2019 passed by the
Additional Director, is not maintainable as no cause of action has
arisen in the territory of State of Rajasthan.
The submission of learned counsel for the petitioner that
initially a complaint was filed by the Additional Director and
further direction to deposit the penalty amount in Jaipur Office,
cannot be termed as a part of cause of action.
This Court finds that the complaint which was filed against
the petitioner, has resulted into issuance of show cause notice to
the petitioner and thereafter, adjudication has to take place and as
such the petitioners cannot be allowed to state that part of cause
of action, has arisen in the territory of State of Rajasthan.
This Court finds that initially the petitioner had filed writ
petition against show cause notice in the Punjab and Haryana High
Court at Chandigarh and after an order being passed to approach
(6 of 8) [CW-10463/2019]
the respondents by giving a detailed and comprehensive
representation, the Authorities have finally ajdudicated the issue
of violation of Foreign Exchange and order dated 26.04.2019 has
been passed.
The submission of learned counsel for the petitioners that
the petitioners are residents of Jodhpur and further, they are
having their business operations in the State of Rajasthan and as
such, this Court has ample jurisdiction to entertain the writ
petition, suffice it to say by this Court that the residence of the
petitioners or their place of carrying business, cannot constitute as
part of cause of action.
The other reason with regard to maintainability of writ
petition before this Court on account of violation of principle of
natural justice, suffice it to say by this Court that if the petitioner
has any grievance in respect of violation of any provisions of Rules
of 2000 or the Act of 1999, the Appellate Forum has been
constituted by the legislature and all issues including the issue of
violation of principle of natural justice or delay can all be agitated
by the petitioner before the Appellate Forum.
This is beyond comprehension of this Court that when an
appeal is provided, before the Appellate Authority, then litigant
cannot raise the issue of violation of principle of natural
justice/delay/competence of any Authority to issue the orders.
This Court finds that the alternative statutory remedy
available to the litigant/petitioners is available to them and the
order, which is put to challenge itself makes a reference of such a
remedy/Authority for raising the grievance.
(7 of 8) [CW-10463/2019]
This Court, in the wake of statutory alternative remedy
available to the petitioners, would not like to entertain the present
petition filed under Article 226 of the Constitution of India.
Learned counsel for the petitioners, at this juncture,
submitted that the writ petition is pending before this Court since
2019 and there is a timeline provided under Section 19 of the
FEMA, 1999 to file an appeal and as such the petitioners would be
deprived to file their appeal and they will not be able to defend
themselves, suffice it to say by this Court that the provisions,
contained in Section 19 of the FEMA, 1999, gives power to the
Appeallate Tribunal to consider the issue of limitation and if proper
cause is shown by the litigant, the Authorities can also condone
the delay period after considering the entire facts and law.
Therefore, this apprehension of the petitioners is wholly
unfounded.
Learned counsel for the petitioners submitted that there is
requirement of pre-deposit of entire penalty amount and as such,
the petitioners would be having great difficulty in preferring an
appeal after depositing the penalty amount and in view of COVID-
19 situation, the petitioners would not be able to collect huge
amount of penalty, suffice it to say by this Court that under
proviso (2) as contained in Section 19 of the FEMA, 1999, it is for
the litigant/petitioners to show before the Appellate Tribunal that
depositing of penalty will cause undue hardship to them. The
Appellate Tribunal has been given power to dispense with such
deposit, subject to the conditions as it may deem fit to impose to
safeguard the relaxation of the penalty. It is always open to the
petitioners to move appropriate application before the Appellate
Tribunal showing their difficulty in their business and claiming
(8 of 8) [CW-10463/2019]
exemption from depositing the penalty as pre-deposit for filing
appeal.
Accordingly, this writ petition is dismissed on account of
alternative, statutory remedy available to the petitioners as well
as on the ground of lack of cause of action arisen before this
Court.
However, it is made clear that dismissal of the writ petition
would not entail any adverse order for the purpose of approaching
the Appellate Authority and it will be permissible for the
petitioners to raise all the issues and order passed by this Court
will have no bearing on merits of the appeal.
(ASHOK KUMAR GAUR),J
Monika/86
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