FEMA | No Natural Justice Violation If Adjudicating Authority Unable To Furnish Few Documents Relied Upon To Initiate Action: Jammu & Kashmir High Court

The Jammu and Kashmir and Ladakh High Court has emphasised that withholding documents from the aggrieved party does not violate natural justice principles if the opposing party is unable to provide them.

A bench comprising Justice Sanjay Dhar made these observations while hearing a plea in terms of which the petitioner had challenged a communication issued by ED officials opining that adjudication proceedings as contemplated under Section 13(1) FEMA should be held against the petitioners.

In the instant case the petitioners had received a show cause notice from ED stating that a complaint under Section 16(3) of FEMA had been filed against them for contravention of FEMA and the Rules and Regulations framed thereunder. The notice asked the petitioners to show cause why adjudication proceedings should not be held against them, and why the seized foreign currency of 1,00,000/ US Dollars should not be confiscated to the Central Government.

The petitioners filed a reply to the show cause notice, raising preliminary objections with regard to maintainability of the proceedings and contending that the criminal trial and the complaint filed by ED are technically intertwingled. The petitioners also filed a reply on the merits of the complaint and submitted that the documents relied upon were unreadable, blurred, and not legible.

However, the Adjudicating Authority, after considering the petitioners' reply, framed an opinion that adjudication proceedings under Section 13(1) of FEMA should be held against the petitioners.

Challenging the communication the petitioners contended that the Adjudicating Authority, without taking note of the request of the petitioners that they should be allowed to inspect the documents relied upon in the complaint as the same are not legible, issued the impugned communication/notice.

It was also submitted that it was incumbent upon the respondents to provide legible copies of the documents relied upon in the complaint or to allow the petitioners to have inspection of the documents in their office but without doing so, the Adjudicating Authority has, in a mechanical manner, issued the impugned communication/notice.

The bench opined that while FEMA and its accompanying rules don't explicitly require the Adjudicating Authority to furnish copies of the documents used in the show cause notice, it is essential for the Authority to provide these documents to the concerned individual. This ensures that they can respond appropriately and effectively to the notice, it emphasised.

In the instant case Justice Dhar noted that the petitioners stated in their reply that the relied-upon documents were illegible and requested legible copies or permission to prepare copies from the respondents' office. However, there is no evidence of the petitioners receiving the documents after filing their reply to the show cause notice, the bench pointed.

The bench also noted that the documents relied upon by the respondents, were not legible due to damage caused by the floods in 2014. Consequently, it was impossible for them to provide legible copies to the petitioners. The rules of natural justice cannot be applied when the respondents are unable to furnish legible copies of certain documents and since the petitioners have effectively responded to all the allegations in the show cause notice, including those related to confessional statements and statements recorded before the Chief Judicial Magistrate, Srinagar, which are also stated to be not legible, the non-supply of legible copies of these two documents, which are not available with the respondents, has not caused any prejudice to the petitioners, the bench underscored.

"If the respondents are insisted upon to provide legible copies of those documents which are not even in their possession, it will amount to stretching the principles of natural justice too far, particularly at a stage when only the adjudication proceedings have been initiated and the parties are yet to produce their respective evidences/material before the Adjudicating Authority, whereafter the matter is required to be considered finally by the said Authority", the bench reasoned.

Thus the Court dismissed the plea.

Case Title: Mushtaq Ahmad Dar Vs Enforcement Directorate & Ors

Citation: 2023 LiveLaw (JKL) 127

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