KANWAR NATWAR SINGH V/S DIRECTOR OF ENFORCEMENT & ANR - CIVIL APPEAL NO. 8602 OF 2010 (OCTOBER 5, 2010)

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 8601 OF 2010 ARISING OUT OF SPECIAL LEAVE PETITION (C) NO. 10553 OF 2008


KANWAR NATWAR SINGH ... APPELLANT
VERSUS
DIRECTOR OF ENFORCEMENT & ANR. ... RESPONDENTS

WITH CIVIL APPEAL NO. 8602 OF 2010 ARISING OUT OF SPECIAL LEAVE PETITION (C) NO. 10554 OF 2008


KANWAR JAGAT SINGH ... APPELLANT


VERSUS


DIRECTOR OF ENFORCEMENT & ANR. ... RESPONDENTS


JUDGMENT


B. SUDERSHAN REDDY, J.

1. The central question of law arising on the appeal before
this Court is whether a noticee served with show cause
notice under Rule 4(1) of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 (hereinafter referred to as `the Rules') is entitled to demand to furnish all the documents in possession of the adjudicating Authority including those documents upon which no reliance has been placed to issue a notice requiring him to show cause why an inquiry should not be held against him?

The Adjudicating Authority's refusal to supply all the
documents as demanded by the appellants led to filing of
writ petitions by the appellants in Delhi High Court which were heard and dismissed.



2. In order to consider and decide the issue that arises for


our consideration, it is just and necessary to briefly notice


the relevant facts:




PART I : BACKGROUND FACTS


A complaint in writing has been filed by an officer


authorized against the appellants under sub-section (3) of


Section 16 of the Foreign Exchange Management Act, 1999


3



(hereinafter referred to as `FEMA' or `the Act') in which


certain serious allegations have been levelled against the


appellants which we are not required to notice in detail. The


gravamen of the complaint is that the appellants along with


others, jointly and severally, without general or special


permission of the Reserve Bank of India dealt in and


acquired Foreign Exchange totaling US $ 8,98,027.79 in


respect of two oil contracts with SOMO of Iraq. Out of the


said amount, the appellants and others jointly and severally,


without the required permission of the Reserve Bank of India


made payment and transferred Foreign Exchange of US $


7,48,550 to the credit of specified account with Jordan


National Bank, Jordan i.e., to persons resident outside India,


in fulfillment of precondition imposed by SOMO for allocation


of oil under aforesaid two contracts, in contravention of the


provisions of FEMA. It is further alleged that the appellants


and others, jointly and severally, without the required


permission of the Reserve Bank of India transferred Foreign


Exchange of US $ 1,46,247.23 being the commission


4



amount in respect of two oil contracts with SOMO to the


account with the Barclays Bank, London in contravention of


the provisions of the Act. The appellants together with


others jointly and severally failed to take all reasonable


steps to repatriate the aforesaid Foreign Exchange within the


stipulated period and in the prescribed manner, in


contravention of the provisions of FEMA read with


Regulations, 2000. In addition to the above, some other


allegations also levelled against appellant No. 2. The


Adjudicating Authority having received the said complaint,


set the law in motion and accordingly issued a notice to the


appellants under the provisions of FEMA read with the Rules,


requiring them to show cause why an inquiry should not be


held against them.


3. The appellants having received the show cause notice,


instead of submitting their reply, required the


Adjudicating Authority to furnish "copies of all the


documents in ... possession in respect of the instant case,


including the 83000 documents allegedly procured by one


5



Virender Dayal from USA in connection with the instant


case..." This seemingly innocuous request ultimately


turned out to be the origin of this avoidable litigation. The


fact remains that the copies of all such documents as


relied upon by the Adjudicating Authority were furnished.


The Authority, however, declined to furnish copies of


other documents and decided to hold an inquiry in


accordance with the provisions of FEMA and the Rules.


4. Aggrieved by the communications so sent by the


Authority, the appellant No.1 filed writ petition in Delhi


High Court which was disposed of with direction extending


time to file reply to the show cause notice. As regards the


prayer for supply of copies of the documents, the Court


gave liberty to demand such copies but left the issue


regarding the entitlement of appellant No.1 to such


documents open.


5. Thereafter, a preliminary/short reply to the show cause


notice was submitted by the appellants but once again


insisting with the demand that the copies of the


6



documents not otherwise relied upon by the Adjudicating


Authority also be supplied before taking any further steps


in the matter.


6. The Adjudicating Authority, by the impugned proceedings,


made it clear that the provisions of FEMA and the Rules


provide for supply of the grounds, nature of contravention


and copies of relied upon documents only in order to


enable the noticee to make effective representation and


the said requirement has been met. The Adjudicating


Authority also made it clear that it is bound to conduct


proceedings in accordance with the statute and the Rules


and the noticees in any case are not entitled to ask the


Authority to deviate from the said procedure laid down in


FEMA and the Rules. The Authority clearly put the


appellants on notice that it shall proceed with the inquiry


in accordance with the provisions of the Act and the


Rules.


7. The appellants promptly challenged the impugned order


of the Adjudicating Authority in petitions filed under


7



Article 226 of the Constitution of India resulting in the


impugned judgment of the Delhi High Court. Hence these


appeals.


8. Leave granted.


9. We have heard Shri U.U. Lalit, learned senior counsel for


the appellants and Shri Gopal Subramanium, learned


Solicitor General of India for the respondents.




PART II : LEGAL SUBMISSIONS




10.Learned senior counsel for the appellants strenuously


contended that there is a duty cast on the Adjudicating


Authority to disclose and supply copies of all the


documents that may be available with him enabling the


noticee to effectively defend and rebut the allegations


mentioned in the show cause notice. The submission was


that the noticee is not only entitled to the documents


referred to and relied upon to set the law in motion but all


such other documents that may be in possession of the


Adjudicating Authority. The learned senior counsel


8



submitted that principles of natural justice and concept of


fairness require supply to the noticee all such documents


whether relied on or not by the Adjudicating Authority.


11.The learned Solicitor General of India, on the other hand,


submitted that rule 4 of the Rules is a comprehensive self


contained code and that the Adjudicating Authority is to


follow and proceed step by step in accordance with the


said Rules. The learned Solicitor General submitted that it


is a normal rule of construction that when a statute vests


certain power in an Authority to be exercised in a


particular manner, then the said Authority has to exercise


it only in the manner provided in the statute itself. Hence


the Adjudicating Authority cannot deviate from the


mandate of the statute and the Rules to do something


which is not provided for either in the statute or in the


Rules. The submission was that the Rules do not provide


for furnishing all the documents that may be in possession


of the Adjudicating Authority as prayed for by the


appellants. It was alternatively contended that principles


9



of natural justice are complied with in the instant case


since copies of relied on documents were supplied to the


appellants.





PART III : RELEVANT STATUTE AND RULES




12. As part of the ongoing economic liberalization relating to



foreign investments and foreign trade, a review of the


Foreign Exchange Regulation Act, 1973 was made in the


year 1993 and several amendments were enacted


subsequently. The Government of India felt that Foreign


Exchange Regulation Act, 1973 must be repealed and to


be replaced by a comprehensive legislation and for that


purpose, a taskforce was constituted to have overall look


on the subject and suggest the required changes. The


taskforce submitted its report in 1994. On the


recommendations of the taskforce and keeping in view


the significant developments that had taken place since


1993, the Foreign Exchange Management Bill was


introduced in the Parliament. The Statement of Objects &


1



Reasons reveals that the provisions of the Bill aim at


consolidating and amending the law relating to Foreign


Exchange with the objective of facilitating external


trade and payments and for promoting the orderly


development and maintenance of Foreign Exchange


markets in India. The Foreign Exchange Management Bill


having been passed by both the Houses of Parliament,


received the assent of the President on 29th December,


1999 and it came into force on the first day of June, 2000


as the Foreign Exchange Management Act, 1999 (42 of


1999).


13.Chapter II of FEMA deals with "Regulation and


Management of Foreign Exchange". Chapter III thereof


deals with "Authorized Person". Chapter IV deals with


"Contravention and Penalties". Section 13 of FEMA which


is relevant for our present purposes reads as under:



13. Penalties -


(1) If any person contravenes any provision of this

Act, or contravenes any rule, regulation,

notification, direction or order issued in exercise of


1



the powers under this Act, or contravenes any

condition subject to which an authorisation is

issued by the Reserve Bank, he shall, upon

adjudication, be liable to a penalty up to thrice the

sum involved in such contravention where such

amount is quantifiable, or up to two lakh rupees

where the amount is not quantifiable, and where

such contravention is a continuing one, further

penalty which may extend to five thousand rupees

for every day after the first day during which the

contravention continues.


(2) Any Adjudicating Authority adjudging any

contravention under sub-section (1), may, if he

thinks fit in addition to any penalty which he may

impose for such contravention direct that any

currency, security or any other money or property

in respect of which the contravention has taken

place shall be confiscated to the Central

Government and further direct that the Foreign

exchange holdings, if any of the persons

committing the contraventions or any part thereof,

shall be brought back into India or shall be

retained outside India in accordance with the

directions made in this behalf.


Explanation.- For the purposes of this sub-section,

"property" in respect of which contravention has

taken place, shall include ;-


(a) Deposits in a bank, where the said property is

converted into such deposits;


(b) Indian currency, where the said property is

converted into that currency; and


(c) Any other property which has resulted out of

the conversion of that property.


1



14.Chapter V deals with "Adjudication and Appeal". Section


16 is relevant which is reproduced hereinbelow:



16. Appointment of Adjudicating Authority -


(1) For the purpose of adjudication under section

13, the Central Government may, by an order

published in the Official Gazette, appoint as many

officers of the Central Government as it may think

fit, as the Adjudicating Authorities for holding an

inquiry in the manner prescribed after giving the

person alleged to have committed contravention

under section 13, against whom a complaint has

been made under sub-section (2) (hereinafter in

this section referred to as the said person) a

reasonable opportunity of being heard for the

purpose of imposing any penalty:


Provided that where the Adjudicating Authority is

of opinion that the said person is likely to abscond

or is likely to evade in any manner, the payment

of penalty, if levied, it may direct the said person

to furnish a bond or guarantee for such amount

and subject to such conditions as it may deem fit.


(2) The Central Government shall, while

appointing the Adjudicating Authorities under sub-

section (1), also specify in the order published in

the Official Gazette their respective jurisdiction.


(3) No Adjudicating Authority shall hold an enquiry

under sub-section (1) except upon a complaint in

writing made by any officer authorised by a

general or special order by the Central

Government.


1



(4) The said person may appear either in person

or take the assistance of a legal practitioner or a

chartered accountant of his choice for presenting

his case before the Adjudicating Authority.


(5) Every Adjudicating Authority shall have the

same powers of a civil court which are conferred

on the Appellate Tribunal under sub-section (2) of

section 28 and;-


(a) All proceedings before it shall be deemed to be

judicial proceedings within the meaning of sections

193 and 228 of the Indian Penal Code, 1860 (45 of
1860);


(b) Shall be deemed to be a civil court for the

purposes of sections 345 and 346 of the Code of

Criminal Procedure, 1973 (2 of 1974).


(6) Every Adjudicating Authority shall deal with

the compliant under sub-section (2) as

expeditiously as possible and endeavor shall be

made to dispose off the complaint finally within

one year from the date of receipt of the

complaint:


Provided that where the complaint cannot be

disposed off within the said period, the

Adjudicating Authority shall record periodically the

reasons in writing for not disposing off the

complaint within the said period.


15.In exercise of the powers conferred by Section 4 read


with sub-section (1) of Section 16, sub-section (3) of


Section 17 and sub-section (2) of Section 19 of the Act,


the Central Government made the Rules for holding


1



inquiry for the purpose of imposing penalty and appeals


under Chapter V of the said Act. The rules are called the


Foreign Exchange Management (Adjudication Proceedings


and Appeal) Rules, 2000. Rule 4 of the said Rules which


prescribes the procedure for holding of inquiry which is


material for our present purposes is as under:



4. Holding of inquiry.--


(1) For the purpose of Adjudicating under section

13 of the Act whether any person has committed

any contravention as specified in that section of

the Act, the Adjudicating Authority shall, issue a

notice to such person requiring him to show cause

within such period as may be specified in the

notice (being not less than ten days from the date

of service thereof) why an inquiry should not be

held against him.


(2) Every notice under sub-rule (1) to any such

person shall indicate the nature of contravention

alleged to have been committed by him.


(3) After considering the cause, if any, shown by

such person, the Adjudicating Authority is of the

opinion that an inquiry should be held, he shall

issue a notice fixing a date for the appearance of

that person either personally or through his legal

practitioner or a chartered accountant duly

authorised by him.


(4) On the date fixed, the Adjudicating Authority

shall explain to the person proceeded against or


1



his legal practitioner or the chartered accountant,

as the case may be, the contravention, alleged to

have been committed by such person indicating

the provisions of the Act or of Rules, regulations,

notifications, direction or orders or any condition

subject to which an authorisation is issued by the

Reserve Bank of India in respect of which

contravention is alleged to have taken place.


(5) The Adjudicating Authority shall, then, given

an opportunity to such person to produce such

documents or evidence as he may consider

relevant to the inquiry and if necessary, the

hearing may be adjourned to future date and in

taking such evidence the Adjudicating Authority

shall not be bound to observe the provisions of the

Indian Evidence Act, 1872 (1 of 1872).


(6) While holding an inquiry under this rule the

Adjudicating Authority shall have the power to

summon and enforce attendance of any person

acquainted with the facts and circumstances of the

case to give evidence or to produce any document

which in the opinion of the Adjudicating Authority

may be useful for or relevant to the subject

matter of the inquiry.


(7) If any person fails, neglects or refuses to

appear as required by sub-rule (3) before the

Adjudicating Authority, the Adjudicating Authority

may proceed with the adjudication proceedings in

the absence of such person after recording the

reasons for doing so.


(8) If, upon consideration of the evidence

produced before the Adjudicating Authority, the

Adjudicating Authority is satisfied that the person

has committed the contravention, he may, be

order in writing, impose such penalty as he thinks


1



fit, in accordance with provisions of Sec. 13 of the

Act.


(9) Every order made under sub-rule (8) of the

rule 4 shall specify the provisions of the Act or of

the rules, regulations, notifications, direction or

orders or any condition subject to which an

authorisation is issued by the Reserve Bank of

India in respect of which contravention has taken

place and shall contain reasons for such decisions.


(10) Every order made under sub-rule (8) shall be

dated and signed by the Adjudicating Authority.


(11) A copy of the order made under sub-rule (8)

of the rule 4 shall be supplied free of charge to the

person against whom the order is made and all

other copies of proceedings shall be supplied to

him on payment of copying fee @ Rs. 2 per page,


(12) The copying fee referred to in sub-rule (11)

shall be paid in cash or in the form of demand

draft in favour of the Adjudicating Authority.




PART IV : DISCUSSION




Analysis of relevant provisions of FEMA and the Rules




16.The issue that arises for our consideration is to be


resolved in the background of this statutory setting. The


FEMA is a self contained and special legislation dealing


with the Foreign Exchange management. It essentially


1



deals with regulation and management of the Foreign


Exchange. The provisions of the Act mandate that save as


otherwise provided in the Act, rules or regulations made


thereunder or with the general or special permission of


the Reserve Bank, no person shall deal in or transfer any


Foreign Exchange or foreign security to any person not


being an authorised person; make any payment to or for


the credit of any person resident outside India in any


manner; receive otherwise through an authorised person,


any payment by order or on behalf of any person resident


outside India in any manner; enter into any financial


transaction in India as consideration for or in association


with acquisition or creation or transfer of a right to


acquire, any asset outside India in any manner. It is


further provided that no person resident in India shall


acquire, hold, own, possess or transfer any Foreign


Exchange, foreign security or any immovable property


situated outside India. That if any person contravenes any


provision of the Act, or contravenes any rule, regulation,


1



notification, direction or order issued in exercise of the


powers under the Act, or contravenes any condition


subject to which an authorisation is issued, he shall, upon


adjudication, be liable to a penalty. For the purpose of


adjudication, the Central Government may, by an order,


appoint officers of the Central Government as the


Adjudicating Authorities for holding inquiry in the manner


prescribed after giving the person alleged to have


committed contravention against whom a complaint has


been made, a reasonable opportunity of being heard for


the purpose of imposing any penalty.


17.That a bare reading of the relevant provisions of the Act


and the Rules makes it abundantly clear that the manner,


method and procedure of adjudication are completely


structured by the statute and the Rules. The Authority is


bound to follow the prescribed procedure under the


statute and the Rules and is not free and entitled to


devise its own procedure for making inquiry while


adjudicating under Section 13 of the Act since it is under


1



legislative mandate to undertake adjudication and hold


inquiry in the prescribed manner after giving the person


alleged to have committed contravention against whom a


complaint has been made, a reasonable opportunity of


being heard for the purpose of imposing any penalty. The


discretion of the Authority is so well structured by the


statute and the Rules.


18. The Rules do not provide and empower the Adjudicating



Authority to straightaway make any inquiry into


allegations of contravention against any person against


whom a complaint has been received by it. Rule 4 of the


Rules mandates that for the purpose of adjudication


whether any person has committed any contravention,


the Adjudicating Authority shall issue a notice to such


person requiring him to show cause as to why an inquiry


should not be held against him. It is clear from a bare


reading of the rule that show cause notice to be so issued


is not for the purposes of making any adjudication into


alleged contravention but only for the purpose of deciding


2



whether an inquiry should be held against him or not.


Every such notice is required to indicate the nature of


contravention alleged to have been committed by the


person concerned. That after taking the cause, if any,


shown by such person, the Adjudicating Authority is


required to form an opinion as to whether an inquiry is


required to be held into the allegations of contravention.


It is only then the real and substantial inquiry into


allegations of contravention begins. While holding inquiry


into allegations of contravention, every Adjudicating


Authority shall have the powers of a Civil Court under the


Code of Civil Procedure in respect of the matters, namely,


(a) summoning and enforcing the attendance of any


person and examining him on oath; (b) requiring


discovery and production of documents; (c) receiving


evidence on affidavits; (d) requisitioning any public


record, document or copy of such record or document


from any office; (e) issuing commissions for examination


of witnesses or documents etc. That all proceedings


2



before the Adjudicating Authority shall be deemed to be


judicial proceedings within the meaning of Sections 193


and 228 of the Indian Penal Code; shall be deemed


to be a Civil Court for the purposes of Sections 345 and


346 of the Code of Criminal Procedure, 1973.


Principles of natural justice : statutory requirement

and fair hearing




19. It is true that rule 4 does not require the Adjudicating



Authority to supply copies of any documents along with


the show cause notice. The rule does not require the


Adjudicating Authority even to furnish any list of


documents upon which reliance has been placed by him to


set the law in motion. Does it mean that the Adjudicating


Authority is not required to furnish the list of documents


and copies thereof upon which reliance has been placed


by him to issue notice of show cause to a person against


whom a complaint has been made by the authorized


officer? Whether the principles of natural justice and


doctrine of fairness require supply of documents upon


2



which reliance has been placed at the stage of show cause


notice? "It is not possible to lay down rigid rules as to


when the principles of natural justice are to apply; nor as


to the scope of extent. Everything depends on the subject


matter" [see R Vs. Gaming Board for Great Britain ex


p. Benaim and Khaida1]. Observed Lord Denning MR.:


"Their application, resting as it does upon statutory


implication, must always be in conformity with the


scheme of the Act and with the subject matter of the


case". Even in the application of the doctrine of fair play


there must be real flexibility. There must also have some


real prejudice to the complainant; there is no such thing


as a merely technical infringement of natural justice. The


requirements of natural justice must depend on the


circumstances of the case, the nature of the inquiry, the


rules under which the tribunal is acting, the subject


matter to be dealt with and so forth. Can the Courts


supplement the statutory procedures with requirements


over and above those specified? In order to ensure a fair

1 (1970) 2 QB 417


2



hearing, Courts can insist and require additional steps as


long a such steps would not frustrate the apparent


purpose of the legislation.


20. In Lloyd Vs. McMahon2, Lord Bridge observed:



"My Lords, the so-called rules of natural justice

are not engraved on tablets of stone. To use the

phrase which better expresses the underlying

concept, what the requirements of fairness

demand when any body, domestic, administrative

or judicial, has to make a decision which will affect

the rights of individuals depends on the character

of the decision-making body, the kind of decision

it has to make and the statutory or other

framework in which it operates. In particular, it is

well-established that when a statute has conferred

on any body the power to make decisions affecting

individuals, the courts will not only require the

procedure prescribed by the statute to be

followed, but will readily imply so much and no

more to be introduced by way of additional

procedural safeguards as will ensure the

attainment of fairness".


21. As Lord Reid said in Wiseman Vs. Boardman3:



"For a long time the courts have, without

objection from Parliament, supplemented

procedure laid down in legislation where they have

found that to be necessary for this purpose..."







2 [1987] AC 625

3 [1971] AC 297


2



22.It is thus clear that the extent of applicability of


principles of natural justice depends upon the nature of


inquiry, the consequences that may visit a person after


such inquiry from out of the decision pursuant to such


inquiry.


23. The right to fair hearing is a guaranteed right. Every



person before an Authority exercising the adjudicatory


powers has a right to know the evidence to be used


against him. This principle is firmly established and


recognized by this Court in Dhakeswari Cotton Mills


Ltd. Vs. Commissioner of Income Tax, West Bengal4.


However, disclosure not necessarily involves supply of the


material. A person may be allowed to inspect the file and


take notes. Whatever mode is used, the fundamental


principle remains that nothing should be used against the


person which has not brought to his notice. If relevant


material is not disclosed to a party, there is prima facie


unfairness irrespective of whether the material in question


arose before, during or after the hearing. The law is fairly

4 (1955) 1 SCR 941


2



well settled if prejudicial allegations are to be made


against a person, he must be given particulars of that


before hearing so that he can prepare his defence.


However, there are various exceptions to this general rule


where disclosure of evidential material might inflict


serious harm on the person directly concerned or other


persons or where disclosure would be breach of


confidence or might be injurious to the public interest


because it would involve the revelation of official secrets,


inhibit frankness of comment and the detection of crime,


might make it impossible to obtain certain clauses of


essential information at all in the future [See R Vs.


Secretary of State for Home Department, ex. p. H]5.


24.The concept of fairness may require the Adjudicating


Authority to furnish copies of those documents upon


which reliance has been placed by him to issue show


cause notice requiring the noticee to explain as to why an


inquiry under Section 16 of the Act should not be


initiated. To this extent, the principles of natural justice

5 [1995) QB 43


2



and concept of fairness are required to be read into rule


4(1) of the Rules. Fair procedure and the principles of


natural justice are in built into the Rules. A noticee is


always entitled to satisfy the Adjudicating Authority that


those very documents upon which reliance has been


placed do not make out even a prima facie case requiring


any further inquiry. In such view of the matter, we hold


that all such documents relied on by the Authority are


required to be furnished to the noticee enabling him to


show a proper cause as to why an inquiry should not be


held against him though the Rules do not provide for the


same. Such a fair reading of the provision would not


amount to supplanting the procedure laid down and would


in no manner frustrate the apparent purpose of the


statute.




PART V : DUTY OF ADEQUATE DISCLOSURE




25. The real question that arises for consideration is whether



the Adjudicating Authority even at the preliminary stage is


2



required to furnish copies of all the documents in his


possession to a noticee even for the purposes of forming


an opinion as to whether any inquiry at all is required to


be held. In this regard, learned senior counsel for the


appellant pressed into service the doctrine of duty of


adequate disclosure which according to him is an essential


part of the principles of natural justice and doctrine of


fairness. A bare reading of the provisions of the Act and


the Rules do not support the plea taken by the appellants


in this regard. Even the principles of natural justice do not


require supply of documents upon which no reliance has


been placed by the Authority to set the law into motion.


Supply of relied on documents based on which the law


has been set into motion would meet the requirements of


principles of natural justice. No Court can compel the


Authority to deviate from the statute and exercise the


power in altogether a different manner than the


prescribed one. As noticed, a reasonable opportunity of


being heard is to be provided by the Adjudicating


2



Authority in the manner prescribed for the purpose of


imposing any penalty as provided for in the Act and not at


the stage where the Adjudicating Authority is required


merely to decide as to whether an inquiry at all be held


into the matter. Imposing of penalty after the adjudication


is fraught with grave and serious consequences and


therefore, the requirement of providing a reasonable


opportunity of being heard before imposition of any such


penalty is to be met. In contradistinction, the opinion


formed by the Adjudicating Authority whether an inquiry


should be held into the allegations made in the complaint


are not fraught with such grave consequences and


therefore the minimum requirement of a show cause


notice and consideration of cause shown would meet the


ends of justice. A proper hearing always include, no


doubt, a fair opportunity to those who are parties in the


controversy for correcting or contradicting anything


prejudicial to their view. Lord Denning has added: "If the


right to be heard is to be a real right which is worth


2



anything, it must carry with it a right in the accused man


to know the case which is made against him. He must


know what evidence is given and what statements have


been made affecting him: and then he must be given a


fair opportunity to correct or contradict them" [see


Kanda Vs. Government of Malaya]6.


26.In the present case, the inquiry against the noticee is yet


to commence. The evidence as may be available upon


which the Adjudicating Authority may place reliance,


undoubtedly, is required to be furnished to the person


proceeded against at the second stage of inquiry into


allegations of contravention. It is at that stage, the


Adjudicating Authority is not only required to give an


opportunity to such person to produce such documents as


evidence as he may consider relevant to the inquiry, but


also enforce attendance of any person acquainted with the


facts of the case to give evidence or to produce any


document which in its opinion may be useful for or


relevant to the subject matter of the inquiry. It is no

6 [1962] AC 322


3



doubt true that natural justice often requires the


disclosure of the reports and evidence in the possession of


the deciding Authority and such reports and evidence


relevant to the subject matter of the inquiry may have to


be furnished unless the scheme of the Act specifically


prohibits such disclosure.


27. However, the learned senior counsel for the appellants in



support of his contention that there is a duty cast on the


Adjudicating Authority to disclose and supply copies of all


the documents that may be available with him to the


noticee, placed reliance on State Inspector of Police,


Vishakhapatnam Vs. Surya Sankaram Karri7 which is


not an authority for the proposition canvassed. It was a


case where the Court found that investigation into an


offence punishable under Section 13(1)(e) of the


Prevention of Corruption Act was undertaken without the


required authorization of the Superintendent of Police. In


that context, this Court observed that the manner in


which "the investigation was conducted, is condemnable.

7 (2006) 7 SCC 172


3



The least that a court of law would expect from the


prosecution is that the investigation would be a fair one.


It would not only be carried out from the stand of the


prosecution, but also the defence, particularly, in view of


the fact that the onus of proof may shift to the accused at


a later stage". Shri Lalit, strongly relied upon the


observations so made by this Court which in our


considered opinion, are not relevant for our purpose. One


cannot pick a sentence from here and there in the


Judgment and characterize it to be the ratio of the case.


The observations made in that case were in the context of


criminal investigation which was found to be unfair and


illegal.


28. In Union of India Vs. Ranu Bhandari8 this Court found



that some of the vital documents which have a direct


bearing on the detention order, had not been placed


before the detaining Authority and the detenu was


entitled to question such omission. It was the case of the


detenu that if his representation and the writ petition had

8 (2008) 17 SCC 348


3



been placed before the detaining Authority which


according to him contained his entire defence to the


allegations made against him, the same may have


weighed with the detaining Authority as to the necessity


of issuing the order of detention at all. It is under those


circumstances, this Court expressed its view that on


account of non-supply of those documents, the detenu


was prevented from making an effective representation


against his detention. In fact, the said decision is an


authority for the proposition that "when a detention order


is passed, copies of all the documents, both against the


detenu and in his favour, which had been relied upon by


the detaining Authority for reaching the satisfaction that


in the interest of the State and its citizens the preventive


detention of the detenu is necessary, must be supplied to


the detenu to enable him to make an effective


representation against the detention order in compliance


with Article 22(5) of the Constitution, irrespective of


whether he had knowledge of the same or not.


3




29. The learned senior counsel further relied upon the



following observations made by this Court in Dwarka


Prasad Agarwal (Dead) by LRs. & Anr. Vs. B.D.


Agarwal & Ors.9:


"The very basis upon which a judicial process can

be resorted to is reasonableness and fairness in a

trial. Under our Constitution as also the

International Treaties and Conventions, the right

to get a fair trial is a basic fundamental /human

right. Any procedure which comes in the way of a

party in getting a fair trial would be violative of

Article 14 of the Constitution of India. Right to a

fair trial by an independent and impartial Tribunal

is part of Article 6(1) of the European Convention

for the Protection of Human Rights and

Fundamental Freedoms 1950."


We fail to appreciate as to how the above observations are


of any relevance to resolve the issue that arises for our


consideration in the present case. It is not the case of the


appellants that the procedure prescribed under Rule 4 of the


Rules comes in their way in getting a fair trail and therefore


the said provision is violative of Article 14 of the Constitution


of India. It is not the case that the Adjudicating Authority





9 (2003) 6 SCC 230


3



constituted under the present Act is not an independent and


impartial tribunal.


30. In Tribhuvandas Bhimji Zaveri & Anr. Vs. Collector



of Central Excise10, Officers of the Income Tax


Department raided the business premises of the appellant


and prepared an inventory of the stock of gold and gold


ornaments found in the premises. This was followed by a


show cause notice as to why penal action should not be


taken against the appellants. The appellants by their


letter had requested the authorities to furnish a certified


copy of the check list prepared at the time of raid with a


view to enabling them to check and verify the particulars.


In reply thereto, the Income Tax Officer expressed his


inability to provide the required documents on the ground


that they were not readily available with the Officer. It is


under those circumstances, this Court observed that the


failure to supply important piece of information to the


appellants has prejudiced the appellants and to this


extent the principles of natural justice would stand

10 (1997) 11 SCC 276


3



violated. From the facts in that case, it is clear that


particular documents containing important piece of


information which would have enabled the noticee therein


to offer a proper explanation were required to be made


available. The nature of the document, its relevancy being


a document prepared at the time of raid and its mention


in the show cause notice were taken into consideration. It


was a basic document based on which the law was set


into motion against the appellants therein. It is for that


reason this Court was of the view that such an important


document could not have been withheld from the


appellants therein.


31. In support of his submissions the learned senior counsel



has also referred us to the decision of this Court in State


of M.P. Vs. Chintaman Sadashiva Vaishampayan11. In


that case, the charged police officer wanted the


documents which were relevant and would have been of


invaluable assistance to him in making his defence and


cross-examining the witness who gave evidence against

11 AIR 1961 SC 1623


3



him in the Departmental Enquiry. It is in that context this


Court observed that "it is difficult and inexpedient to lay


down any general rules; whether or not the officer in


question has had a reasonable opportunity must always


depend on the facts in each case. The only general


statement that can be safely made in this connection is


that the departmental enquiries should observe rules of


natural justice, and that if they are fairly and properly


conducted the decisions reached by the enquiry officers


on the merits are not open to be challenged on the


ground that the procedure followed was not exactly in


accordance with that which is observed in Courts of law".


There is no dispute with this proposition.


32. In our opinion, these decisions do not assist the



appellants' case in any manner whatsoever because the


documents which the appellants wanted in the present


case are the documents upon which no reliance was


placed by the Authority for setting the law into motion.


Observations of the Courts are not to be read as Euclid's


3



theorems nor as provisions of the statute. The


observations must be read in the context in which they


appear. A line or a word in a judgment cannot be read in


isolation or as if interpreting a statutory provision to


impute a different meaning to the observations [see


Haryana Financial Corporation Vs. Jagdamba Oil


Mills12].


33. One more decision upon which heavy reliance has been



placed by the learned senior counsel is RvH/RvC13. We


fail to appreciate as to how the said judgment would


render any assistance and support the case set up by the


appellants in the present proceedings. In that case, the


defendants were charged with criminal conspiracy to


supply a class A drug. The prosecution case was based on


police surveillance evidence. In pre-trial proceedings the


defendants made far-reaching requests for disclosure,


including all material relating to any covert human


intelligence sources involved in the investigation. At a



12 (2002) 3 SCC 496

13 [2004] UKHL 3


3



preliminary hearing, it appeared that a public interest


immunity inquiry would be necessary as the prosecution


wished to withhold documents from disclosure to the


defence on that ground. The Judge ruled, without having


looked in detail at the documents provided by the


prosecution, that unless independent counsel were


appointed, so as to introduce an adversarial element into


the public interest immunity inquiry, there was a risk that


the trial would be perceived to be unfair and therefore


violate Article 6(1) of the European Convention for the


Protection of Human Rights and Fundamental Freedoms,


1950 (as set out in Schedule 1 to the Human Rights Act


1998) (the convention), which provided for the right to a


fair trial. The Judge, therefore, ordered that special


counsel should be appointed. The Crown's appeal against


the Judge's ruling was successful. The defendants


appealed to the House of Lords contending inter alia that


it was incompatible with Article 6 of the convention for a


Judge to rule on a claim to public interest immunity in the


3



absence of adversarial argument on behalf of the accused


where the material which the prosecution was seeking to


withhold was or might be relevant to a disputed issue of


fact which the Judge had to decide in order to rule on an


application which would effectively determine the


outcome of the proceedings. The House of Lords held that


there is a golden rule that full disclosure of any material


held by the prosecution which weakened its case or


strengthened that of the defendants should be disclosed


to the defence. In circumstances where such material


could not be disclosed to the defence, fully or even at all,


without the risk of serious prejudice to an important


public interest, some derogation from the golden rule


could be justified, but such derogation was always to be


the minimum necessary to protect the public interest in


question and had never to imperil the overall fairness of


the trial.


34. This decision was followed by Attorney General's



guidelines and disclosure in which it is clearly explained


4



that disclosure is one of the most important aspects in the


criminal justice system and the application of proper and


fair disclosure is a vital component of a fair criminal


justice system. This amounts to no more and no less than


a proper application of the Criminal Procedure and


Investigations Act, 1996 (CPIA), recently amended by the


Criminal Justice Act, 2003. The scheme set out in the


Criminal Procedure and Investigations Act, 1996 is held to


be designed to ensure that there is fair disclosure and


material which may be relevant to an investigation and


which does not form part of the prosecution case. The


disclosure under the Act should assist the accused in the


timely preparation and presentation of their case and


assist the case to focus on all the relevant issues in the


trial.


35.It appears that those Acts recognize rights of accused


persons in a criminal case to a fair trial. It is clear that


disclosure of unused material in criminal proceedings in


United Kingdom is regulated by the provisions of those


4



Acts and applicable to criminal trials where the accused


are charged with criminal offences. Duty of disclosure of


unused material is not a definite concept to be applied in


any and every case in this country. There is no such Act


or law as in United Kingdom, nor any procedure


prescribed for disclosure of unused material in criminal


proceedings. In the present case, the appellants are not


defendants in any criminal trial. The judgment has no


application as to the fact situation and the law applicable


in United Kingdom is not applicable to either the


adjudicatory proceedings or even criminal trials in this


country.


36. On a fair reading of the statute and the Rules suggests



that there is no duty of disclosure of all the documents in


possession of the Adjudicating Authority before forming


an opinion that an inquiry is required to be held into the


alleged contraventions by a noticee. Even the principles of


natural justice and concept of fairness do not require the


statute and the Rules to be so read. Any other


4



interpretation may result in defeat of the very object of


the Act. Concept of fairness is not a one way street. The


principles of natural justice are not intended to operate as


roadblocks to obstruct statutory inquiries. Duty of


adequate disclosure is only an additional procedural


safeguard in order to ensure the attainment of the


fairness and it has its own limitations. The extent of its


applicability depends upon the statutory framework.


Hegde, J. speaking for the Supreme Court propounded:


"In other words, they (principles of natural justice) do not


supplant the law of the land but supplement it" [see A.K.


Kraipak Vs. Union of India14]. Its essence is good


conscience in a given situation; nothing more but nothing


less [see Mohinder Singh Gill Vs. Chief Election


Commissioner15].


Alternate submission


37.Yet another submission made by the learned senior


counsel requiring our consideration relates to



14 (1969) 2 SCC 262

15 (1978) 1 SCC 405


4



interpretation of sub-rule (6) of Rule 4. The learned senior


counsel contended that the appellants' request to the


Adjudicating Authority to furnish the copies of the


documents could be treated as one made under sub-rule


(6) of rule 4 which enables the Adjudicating Authority to


direct any person to produce any document which in his


opinion may be useful for or relevant to the subject


matter of inquiry. We find no merit in the submission. A


plain reading of sub-rule (6) of rule 4 makes it abundantly


clear that such a power to summon and enforce


attendance of any person acquainted with the facts and


circumstances of the case to give evidence or to produce


any document which may be relevant to the subject


matter of inquiry is only available to the Adjudicating


Authority while holding an inquiry into allegations of


contravention, but not at the stage where the Authority is


merely required to form an opinion as to whether an


inquiry should be held into allegations of contraventions.


It is always open to a person facing an inquiry to invoke


4



the jurisdiction of the Adjudicating Authority requiring any


person to produce any document which may be useful for


or relevant to the subject matter of inquiry. Such request


may have to be considered upon its own merits. A fair


reading of rule 4 which is a complete compendium for


holding of inquiry suggests that all the evidence and


documents which the Adjudicating Authority may consider


relevant for the purpose of inquiry may have to be


furnished to a person facing the inquiry on the allegations


of contravention of the provisions of the Act etc., alleged


to have been committed by him. In addition, the Authority


may require attendance of any person acquainted with


the facts and circumstances of the case to give evidence


and to produce any documents which in its opinion, may


be useful for or relevant to the subject matter of the


inquiry. Only upon consideration of the entire evidence


produced, if the Adjudicating Authority is satisfied that the


person has committed the contravention, he may by order


in writing accordingly impose such penalty as he thinks fit


4



in accordance with the provisions of the Act which of


course is not final as it is subject to appeal.




Practice of inclusion of list of judgments in

compilat
ions not cited at the bar :



38.Before parting with the judgment, we are constrained to


observe with some reluctance about the recent practice


and procedure of including list of authorities in the


compilation without the leave of the Court. In many a


case, even the senior counsel may not be aware of


inclusion of such authorities in the compilation. In our


considered opinion, this Court is not required to consider


such decisions which are included in the compilation which


were not cited at the Bar. In the present case, number of


judgments are included in the compilation which were not


cited at the Bar by any of the counsel. We have not dealt


with them as we are not required to do so. At any rate, all


those judgments deal with the procedural aspects and


concern the interpretation for various provisions of the


Code of Criminal Procedure applicable to a criminal trial


4



and they are totally irrelevant for the purposes of deciding


the issue that had arisen for our consideration in the


present case.




CONCLUSIONS:




39.The appellants insisted for supply of all documents in


possession of the Authority and such demand is based on


vague, indefinite and irrelevant grounds. The appellants


are not sure as to whether they are asking for the copies


of the documents in possession of the Adjudicating


Authority or in possession of authorized officer who


lodged the complaint. The only object in making such


demand is obviously to obstruct the proceedings and the


appellants, to some extent, have been able to achieve


their object as is evident from the fact that the inquiry


initiated as early as in the year 2006 still did not even


commence.


40.We are constrained to take note of the fact that it is on


account of continuous unreasonable requests on the part


4



of the appellants, the Adjudicating Authority could not


deal with the complaint expeditiously which is required to


be disposed of within one year from the date of receipt of


the complaint. We accordingly direct the Adjudicating


Authority to deal with the complaint as expeditiously as


possible and every endeavor shall be made to dispose of


the complaint finally at the earliest. No unreasonable


request for adjournment shall be entertained by the


Adjudicating Authority.


However, we make it clear that the Authority shall


make inquiry into the allegations made in the complaint


strictly in accordance with the law and uninfluenced by the


observations if any made in this order. We have not


expressed any opinion whatsoever on the merits of the case.


The appellants are entitled to all the defence that may be


available to them in law.


41.For all the aforesaid reasons, the appeals are dismissed


with costs.


4



..............................................J.

(B. SUDERSHAN REDDY)





...............................................J.

(SURINDER SINGH NIJJAR)


NEW DELHI,

OCTOBER 5, 2010.