The
Special Director & Anr Vs. Mohd. Ghulam Ghouse and Anr [2004] Insc 23 (9 January 2004)
Doraiswamy
Raju & Arijit Pasayat
(Arising
out of SLP (Crl.) No. 2914 of 2003) ARIJIT PASAYAT,J
Leave
granted.
The
interim order passed by a Division Bench of the Bombay High Court is under
challenge by the Union of India and the Special Director, Enforcement
Directorate, Ministry of Finance, Govt. of India. Respondent No.1 filed a writ
petition before the Bombay High Court questioning legality of the show cause notice
no.T-4/144/SDE/(AKB)/B/2002 dated 31st May, 2002 issued by the appellant No.1
and prayed that the same may be quashed and set aside, for allegedly being
illegal, null and void. A prayer for interim relief was made to the effect that
pending hearing and final disposal of the writ petition, the Court be pleased
to pass an order of injunction restraining the respondents i.e. present
appellants before this Court and the State of Maharashtra (respondent No.3 in
the present appeal) and/or his subordinates or any other officer acting on his
behalf from initiating any proceeding pursuant to the show cause notice
referred to above, as issued by the present appellants. The High Court passed
the following order on 11.9.2002:
"Rule.
Status quo".
According
to the appellants the writ petition is thoroughly misconceived as it challenges
a show cause notice and in any event the final relief as sought for by
respondent No.1-writ petitioner in relation to the show cause notice should not
have been granted by an interim order of the nature passed by withholding any
further action in this regard . It was pointed out that respondent No.1 is
responsible for financial irregularities involving nearly Rupees 270 crores and
documents have been forged, accounts have been manipulated; and in any event
respondent No.1 was free to canvass all the points that were taken in the writ
petition before the authority issuing the notice. Instead of doing that he
rushed to the High Court and unfortunately the High Court not only entertained
the writ application but also granted interim relief which was in effect
allowing the writ petition even before it was heard on merits. The final relief
sought for itself, in substance, was granted by the interim order. There was
clear violation of the provisions of Foreign Exchange Regulation Act, 1973 (in
short the 'FERA') and Foreign Exchange Management Act, 1999 (in short the
'FEMA'). The Enforcement Directorate has clearly indicated in the notice the
various infractions which led to such large scale illegal transactions of more
than Rupees 270 crores. Respondent No.1 (writ petitioner) was clearly guilty of
various provisions of FERA and FEMA. The High Court should have thrown out the
writ petition at the threshold.
Per
contra, learned counsel for respondent No.1 submitted that the show cause
notice is clearly unfounded in law, cannot stand the test of legal scrutiny and
the High Court was justified not only in entertaining writ petition but also in
granting the interim protection.
This
Court in a large number of cases has deprecated the practice of the High Courts
entertaining writ petitions questioning legality of the show cause notices
stalling enquiries as proposed and retarding investigative process to find
actual facts with the participation and in the presence of the parties. Unless,
the High Court is satisfied that the show cause notice was totally non est in
the eye of law for absolute want of jurisdiction of the authority to even
investigate into facts, writ petitions should not be entertained for the mere
asking and as a matter of routine, and the writ petitioner should invariably be
directed to respond to the show cause notice and take all stands highlighted in
the writ petition. Whether the show cause notice was founded on any legal
premises is a jurisdictional issue which can even be urged by the recipient of
the notice and such issues also can be adjudicated by the authority issuing the
very notice initially, before the aggrieved could approach the Court. Further,
when the Court passes an interim order it should be careful to see that the
statutory functionaries specially and specifically constituted for the purpose
are not denuded of powers and authority to initially decide the matter and
ensure that ultimate relief which may or may not be finally granted in the writ
petition is accorded to the writ petitioner even at the threshold by the
interim protection, granted.
In the
instant case, the High Court has not indicated any reason while giving interim
protection. Though, while passing interim orders, it is not necessary to
elaborately deal with the merits, it is certainly desirable and proper for the
High Court to indicate the reasons which has weighed with it in granting such
an extra ordinary relief in the form of an interim protection. This admittedly
has not been done in the case at hand.
While
issuing notice on 7.7.2003, this Court had granted interim stay of the impugned
interim order. The respondent had entered appearance and we have heard the
learned senior counsel on either side. In the fitness of things, taking into
account the above circumstances, we dispose of the appeal with a direction that
the proceedings emanating from the show cause notice shall be continued, but
the final order passed pursuant thereto shall not be communicated to the
respondent No.1 (writ petitioner) without leave or further orders of the High
Court. The writ petition shall be disposed of on merits in accordance with law.
Any observation made in this appeal shall not be construed to be expression of
any opinion on the merits of the matter pending before the High Court. Since
the controversy is of a very limited as well as serious nature, the High Court
may explore the possibility of early disposal of the writ petition. The appeal
is allowed to the extent indicated with no order as to costs.
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