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Bombay HC quashes FEMA proceedings against Lalit Modi : Asks RBI & Govt to seriously consider FEMA violations in IPL [Read Judgment]

Lalit Modi

A two-judge bench of the Bombay High Court has quashed the proceedings under Foreign Exchange Management Act (FEMA) against former IPL Chairman Lalit Modi.

The division bench comprising of Justice S.C Dharmadhikari and Justice Bharati H. Dangre has observed that cross-examination of witnesses cannot be denied where their statements are exclusively relied upon by the Adjudicating Authority when issuing a Show Cause Notice to the person against whom such evidence is sought to be used.

The petitioner Lalit Modi was Vice President of the Board of Control of Cricket in India (BCCI) and also the Chairperson of a council governing a cricket tournament called the Indian Premier League (IPL).

The Enforcement Department claimed that such payment was made without permission from the Reserve Bank of India (RBI), and thus, contravening Section 3(b) of the FEMA. Proceedings were issued against the petitioner and imposition of penalty was proposed. The petitioner alleged that he was denied copies of reply to the SCN filed by the other co-noticees, including the BCCI. The petitioner also claimed that other documents were provided belatedly after several requests. The petitioner also alleged that he was denied copies of statements given by officials of the BCCI. Subsequently, the petitioner’s request to cross-examine the persons whose statements were recorded.

Before the High Court, the Petitioner contended that, the statements recorded in connection with the violations and breaches of the FEMA and its rules. They have been recorded in connection with and have the direct nexus to the IPL, which was conducted in South Africa. The persons connected with the affairs of the BCCI and others, who have given these statements, are referred to with names in the annexure. This is not a merely referred material. These statements are proposed to be expressly relied upon. If they are relied upon, then, it is incumbent upon the first respondent to allow the petitioner to cross-examine these persons during the course of the adjudication.

The bench, before concluding, observed that “it is because of the acts and deeds of the BCCI in relation to a tournament styled as IPL that all these proceedings had to be initiated and now conducted in accordance with the FEMA. If IPL has led to serious breaches and violations of the FEMA, then, it is high time the organisers realise that after 10 years of holding such tournaments what we have achieved can be termed as a gain or advantage or benefit for they are outweighed completely by the resultant illegalities and breaches of law, which are projected in several courts consuming a lot of precious judicial time”.

While slamming the BCCI and Central Government the Court has said that, “If the IPL has resulted in all of us being acquainted and familiar with phrases such as “Betting”, “fixing of matches”, then, the RBI and the Central Government should at least now consider whether holding such tournaments serves the interest of a budding cricketer, the sport, the game itself. There is an auction and buying and selling of young cricket players by business houses and chubs. Apart from the huge money involved, the tournament has brought with it crimes and casualties in the form of ban on clubs and players allegedly involved in wrongdoing and breaching of rules and regulations. Now the worrying trend is that such events are being organized even by that in-charge of other sports/games such as Football, Hockey, and Badminton. Therefore, it is for the Central Government and the administrators to take a call on all these violations of law committed by the organizers of the Indian Premier League (IPL) tournaments. It observed that apart from the huge money involved, the tournament also brought with it crimes and casualties in the form of ban on clubs and players allegedly involved in wrongdoing and breaching of rules and regulations. It also observed that such events were being organized even by that in-charge of other sports. Thus, the Court left it to the Central Government and the administrators to take a call on this issue.

The Court also directed that the cross-examination shall be conducted and concluded in two or three sittings and positively by 13th March 2018.

To Read the full text of the Judgment CLICK HERE

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