HC Quashes FEMA Tribunal order; No obligation to preserve documents for ‘belated’ enquiries

HC quashes Foreign Exchange Appellate Tribunal’s (‘AT’) order, whereby appellant Xerox Modi Corp. was penalised for failure to submit exchange control copies for import transactions to authorized dealer, terms it a violation of natural justice principles; Observes that order was passed without informing appellant about the communications between adjudicating authority & authorised dealer & without providing it with incriminating material, holds “it was the primary obligation of the adjudicating authority to place all incriminating material – which was intended to be relied upon to condemn the appellants and penalize them in a quasi-criminal proceedings…”; Notes that impugned transactions pertained to period December 1993 to 1996 and show cause notice was issued in 2002, accepts appellant’s stand that documents for such transactions were not preserved, holds adjudicating authority’s enquiry to be ‘highly belated’, states “even though there is no period of limitation prescribed therefor.. for such delays, the noticee cannot be made to suffer and the circumstance pleaded by the noticee that the documents have not been preserved or are not available would have to be given due weightage”; Also observes that appellant had placed sufficient proof to show utilization of those remittances, states “even on merits, appellants had raised substantial defence to raise sufficient doubt…”, and points out that proceedings under FEMA, being quasi criminal in character, adjudicating authority should have made out a case beyond all reasonable doubt; Relies on SC observations in Shanti Prasad v. Director of Enforcement and M/s Bareily Electricity Supply Co. Ltd. v. The Workmen & Ors:Delhi HC