The Madras High Court ruled that the proceedings cannot proceed before person who was Adjudicating Authority by virtue of superseded notification issued under the Foreign Exchange Management Act, 1999 (FEMA).
It is the case of the appellants that the show cause notice having been issued by the Special Director, Directorate of Enforcement, he is “the Adjudicating Authority” and the further proceedings are required to be conducted by him alone and not by the Additional Director. Therefore, the appellants filed writ petitions, inter alia, praying for issuance of a writ of certiorari and seeking quashment of the notice dated 9.9.2020.
The Senior Counsel for the appellants submitted that the notification dated 27.9.2018 issued by the Central Government exercising the power under Section 16 of the Act of 1999, revising the pecuniary jurisdiction of the Officers of the Enforcement Directorate and transferring the cases is prospective in nature, but in the case on hand the said notification is given retrospective effect.
He pointed out that the Special Director issued notice way back on 23.2.2018, to wit, prior to the issuance of notification revising the pecuniary jurisdiction, and hence the savings clause contained in the notification to the effect that “except as respects things done or omitted to be done before such supersession…” comes to the aid of the appellants.
A Division Bench of Chief Justice Sanjay V Gangapurwala and Justice Bharatha Chakravarthy observed that “Albeit the notice is issued by the Special Director, who at the relevant and material time was the Adjudicating Authority, subsequently, because of the fresh notification issued on 27.9.2018, the Adjudicating Authority notified by the Central Government is the Additional Director and the Additional Director is empowered to conduct the adjudication proceedings. The inquiry and the adjudication proceedings has to proceed on the basis of the evidence produced. The evidence produced by the person would be considered by the Adjudicating Authority for forming an opinion to proceed further with the show cause notice.”
“The further proceedings cannot proceed before the person who was an Adjudicating Authority under the notification already superseded. The inquiry will have to be continued by the Adjudicating Authority as per the notification in vogue and not the Adjudicating Authority under the superseded notification” the Court concluded.
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