JUDGMENT
Swamidurai, J.
1. This appeal is directed against the order of the Foreign Exchange Regulation Appellate Board, New Delhi made in Appeal No. 819/90, dated 26-8-1992 confirming the adjudication order No. SDE(R)/IV/98/90 dated 10-4-1990 whereby a total penalty of Rs. 5,00,000/- [Rs. 2,50,000/- for violation of Section 9(1)(b) and Rs. 2,50,000/- for violation of Section 9(1)(d) of the Foreign Exchange Regulation Act, 1973] was imposed on the appellant K.M. Seeni Mohamed.
2. For appreciating the contention of the appellant brief facts of the case have to be stated at the first instance. The Officers of the Enforcement Directorate, Madras searched the residential premises of K.M. Seeni Mohamed, the appellant herein on 12-5-1987 at No. 35, Gaffoor Sahib Street (1st floor), Royapettah, Madras and recovered and seized Indian currency of Rs. 12,740/- in cash and one bank draft for Rs. 5,000/- besides some other documents. While the search of the aforesaid premises of the appellant was in progress, one Mansoor Mohammed Ali Jinnah entered the said premises whose personal search resulted in the seizure of Indian currency of Rs. 5,010/- and five bank drafts totally valued at Rs. 15,000/- besides some other documents. On 24-5-1987, the Officers of the Enforcement Directorate, Madras also searched the residential premises of Mansoor Mohammed Ali Jinnah, situated at No. 1, Manicka Maistry St., Royapettah, Madras and recovered and seized Indian currency of Rs. 5,100/- in cash and six bank drafts totally valued at Rs. 36,000/- besides some other documents. From the statements dt. 12-5-1987 and 4-6-1987 given by the appellant it appeared that the appellant was engaged in receiving payments from various persons by order or on behalf of Ahmed Ibrahim and Hameed Dubai, both persons resident outside India and used to make payments to various persons, out of the amounts so received also by order or on behalf of the said Ahmed Ibrahim and Hameed of Dubai either on cash or though bank draft and he was assisted by S/Shri Mansoor Mohamed Ali Jinnah, S.M. Buhari and others in making the payments to various persons in India in the aforesaid manner. During November 1986 to 1987 the said K.M. Seeni Mohamed, a resident in India received various payments totalling to Rs. 2,25,43,630/- from various persons other than authorised dealers, by order on behalf of the said S/Shri Ahmed Ibrahim and Hameed of Dubai, both persons resident outside India, without the general or special exemption from the RBI and that the Indian currency totalling to Rs. 22,000/- seized from him and Shri Mansoor Mohamed Ali Jinnah and that the drafts totally valued at Rs. 36,000/- seized from him and Shri Mansoor Mohamed Ali Jinnah and that the drafts totalling valued at Rs. 89,552.84 were out of the aforesaid amount of Rs. 2,25,43,630/- received in the aforesaid manner and were meant for subsequent disbursement in the manner as aforesaid. During the aforesaid period from November, 1986 to May, 1987, the said Shri Seeni Mohamed, a resident of India, without the general or special exemption from the Reserve Bank of India made various payments totalling to Rs. 2,23,74,280/- to various persons out of the aforesaid amount of Rs. 2,25,43,630/- received in the manner as aforesaid, by order or on behalf of the said S/Sh. Ahmed Ibrahim and Hameed of Dubai, both residents of outside India.
3. During January, 1987 to March, 1987, Shri Mansoor Mohd. Ali Jinnah, son of Pakkir Mohamed, resident of No. 1, Manicka Maistry St., Royapettah, Madras, without any general or special exemption of the Reserve Bank of India abetted the said Shri Seeni Mohamed, in Making payments totalling to Rs. 7,00,000/- by order or on behalf of the said S/Shri Ahmed Ibrahim and Hameed of Dubai, both persons resident outside India. During January, 1987 to May, 1987, Shri Mansoor Mohd. Ali Jinnah S/o Pakkir Mohamed, resident of No. 1, Manicka Maistry Street, Royapettah, Madras, resident of India, without any general or special exemption of the Reserve Bank of India, abetted the said Shri Seeni Mohamed, in making payments totalling to Rs. 7,00,000/- by order or on behalf of the said S/Shri Ahmed Ibrahim and Hameed of Dubai, both persons resident outside India and that the Indian currency and the funds for purchasing the II draft valued at Rs. 51,000/- seized from him were provided to him by Shri Seeni Mohamed for distributing the same to the person communicated by Shri Seeni Mohamed. S.S.M. Bukhari, son of Shri K.M. Seeni Mohamed of No. 35 (1st floor), Gaffoor Sahib St., Royapettah, Madras, Resident of India, without any general or special exemption from the Reserve Bank of India, abetted Shri K.M. Seeni Mohamed in making payments totalling to Rs. 4,00,000/- by order or on behalf of S/Shri Ahmed Ibrahim and Hameed of Dubai, both persons resident outside India. By receiving the aforesaid payments totalling to Rs. 2,25,43,630/- and by making the aforesaid payments totalling to Rs. 2,23,74,280/- in the manner as aforesaid, the said Shri K.M. Seeni Mohamed appeared to have contravened the provisions of Section 9(1)(b) and 9(1)(d) respectively of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as “the FERA”). By abetting the said K.M. Seeni Mohamed in making payments totalling to Rs. 7,00,000/- in the manner as aforesaid, the said S. Mansoor Mohd. Ali Jinnah appeared to have contravened the provisions of Section 9(1)(d) read with section 64(2) of the FERA. By abetting the said Shri K.M. Seeni Mohamed in making payments totalling to Rs. 4,00,000/- in the manner as aforesaid, the said Shri S.M. Bukhari appeared to have contravened the provisions of Section 9(1)(d) read with Section 64(2) of the FERA. The said S/Sh. K.M. Seeni Mohamed, Manzoor Mohd. Ali Jinnah and S.M. Bukhari were required to show cause in writing within 50 days of the proceedings as contemplated in Section 51 of the Foreign Exchange Regulation Act, 1973 should not be held against them for the aforesaid contravention and S/Shri K.M. Seeni Mohamed and Mansoor Mohd. Ali Jinnah were further required to show cause as to why the Indian currency totalling to Rs. 22,850/- seized from them and why the proceeds totalling to Rs. 1,45,582.82 of the drafts which have been blocked, being the amounts involved in the aforesaid contravention should not be confiscated to the Central Government in terms of Section 63 of the FERA. As the appellant did not give any reply to the show cause notice, adjudicating proceedings were drawn against him. The adjudicating Officer found him guilty of having contravened the provisions of Section 9(1)(b) and Sec. 9(1)(d) of the FERA and imposed the aforementioned penalty by adjudication order, dated 10-4-1990.
4. The appellant filed Appeal No. 819/90 before the Foreign Exchange Regulation Appellate Court, New Delhi aggrieved with the order of the Adjudicating Officer and challenging the adjudication order mainly on following grounds :
(i) The order is illegal, arbitrary and opposed to the principles of natural justice;
(ii) the adjudicating Officer has not followed the mandatory provisions of the Act and the rules framed thereunder and the order, therefore, is vitiated and liable to be set aside;
(iii) Show cause notice was not properly served on the appellant as the mandatory statutory provisions had not been followed;
(iv) reasonable opportunity envisaged under section 51 of the FERA was not given to the appellant.
The appellant seemed to have contended before the Appellate Board that the adjudicating order is not valid and legal as the appellant was not given an opportunity of being heard by the adjudicating Officer and that notice was not served on the appellant in accordance with the provisions contained in Rule 10(c) of the Adjudicating Proceedings and Appeal, Rules 1974 (hereinafter referred to as the Rules). Rule 10(c) of the Rules is attracted only after attempts have been made for effecting service under Rules 10(a) and 10(b) of the Rules, and, as such, adjudication order is vitiated as being against the principles of natural justice. Learned Central Government Standing Counsel contended that the show cause notice has been served on the appellant properly under Rule 10(c) of the Rules. Under Section 51 of the FERA, the adjudicating Officer is required to hold an enquiry in the prescribed manner after giving a reasonable opportunity for making a representation in the matter. Rule 3 of the Rules provides that in holding an enquiry under Section 51 of the FERA for the purpose of adjudicating under Section 50 of the FERA whether any person has committed contravention, as specified in Sec. 50 of the FERA, the adjudicating Officer shall, in the first instance, issue a notice to such persons requiring him to show cause within such period as may be specified in the notice (being not less than 10 days from the date of service thereof), why adjudicating proceedings should not be held against him. Sub-rule (3) of Rule 3 of the Rules provides that if, after considering the cause, if any, shown by such person, the adjudicating Officer is of the opinion that adjudication proceedings should be held, he shall issue a notice fixing a date for the appearance of that person either personally or through his lawyer or authorised representative. Sub-rule (6) of Rule 3 of the Rule provides that if any person fails, neglects or refuses to appear, as required by sub-section (3) before the adjudicating Office, the adjudicating Officer may proceed with the enquiry in the absence of such person after recording the reasons for doing so. Rule 10 of the Rules deals with service of notices and orders. This rule provides that a notice or an order issued under these Rules shall be served on any person in the following manner that is to say :
(a) by delivering or tendering the notice or order to that person or his duly authorised agent;
(b) by sending the notice or order to him by registered post with acknowledgment due to the address of his place of residence of his last known place or residence or the place where he carried on or last carried on, business or personally works, or last worked for gains; or
(c) if the notice or order cannot be served under clause (a) or clause (b), by affixing it on the outer door or some other conspicuous place of the premises in which that person resides or is known to have last resided, or carries on business or personally works or last work for gain and that written report thereof should be witnessed by two persons.
The adjudicating Officer has discussed in para 17 of his order about the opportunity that was given to the appellant.
5. Before the appellate authority, the appellant has challenged the adjudication order was passed in violation of the principles of natural justice. According to the appellant, the show cause notice was not properly served under Rule 10(c) of the Rules as no attempts were made for effecting service under sub-clause (a) and (b) of Rule 10 of the Rules. Mr. V.T. Gopalan learned Senior Counsel representing the respondents produced the file and on perusal of the same, it appears that the show cause notice sent to the appellant by registered post and acknowledgment due to the address of his place of residence at No. 35, Gaffoor Sahib Street, 1st Floor, Royapettah, Madras-14 was returned by the postal authorities undelivered with the remark ‘left’. It is also seen from the files that the adjudicating officer had also sent a letter, dated 22-3-1988 to the Deputy Director/Assistant Director, Enforcement Directorate, Madras enclosing therewith the show cause notice for service through local police/officers and we do not find whether the said show cause notice was served on the appellant though local police/officers. The case of the respondents is that the show cause notice was served on 5-10-1988 under Rule 10(c) of the Rule by affixing the same on the outer door of the residential premises of the appellant i.e. at No. 35, Gaffoor Sahib St., First Floor, Royapettah, Madras-14. It is contended by Mr. V.T. Gopalan, learned Senior Counsel appearing for the respondents that the notice under Rule 10(c) of the Rules was served on the appellant when the same could not be served under sub-clause (a) and (b) of Rule 10 of the Rules. The show cause notice seems to have been served on the appellant under Rule 10(c) of the Rules at the address of the appellant at Royapettah, Madras. The Appellate Authority observed in his order that it is not the case of the appellant that the show cause notice was sent to or served on the appellant under Rule 10(c) of the Rules at the wrong address. This observation of the appellate authority is wrong since the show cause notice was itself fixed at No. 35, Gaffoor Sahib St., First Floor, Royapettah, Madras when the postal authorities returned the show cause notice undelivered with the remarks ‘left’. Therefore, it is the contention of the learned Counsel for the appellant that the appellant was not at all residing at the address at Royapettah, Madras and so that any attempt to serve on the appellant at the address at Royapettah is not real. According to the appellant, he was not residing at the address at Royapettah for a long time, and his permanent address is No. 2/48-A, North St., Keelakarai, Ramanathapuram District. Therefore, Mr. V.T. Gopalan, learned Senior Counsel for the respondents submitted that the appellant was pursuing a writ petition only in that matter but he was not responding the show cause notice issued in respect of the adjudication proceedings.
5. Mr. Kareem, learned Senior Counsel for the appellant brought to our notice that in almost all the correspondences and notices between the appellant and the respondents, the permanent address of the appellant at Keelakarai Ramanathapuram District has been noted. The call notice is, dated 11-1-1990 issued by the Enforcement Directorate to the appellant at Royapettah address. The mahazar, dated 14-2-1990 for the affixure of the show cause notice shows that the show cause notice was affixed at the outdoor of the premises of the appellant at No. 35. 1st Floor, Gaffoor Sahib Street, Royapettah, Madras-14. The mahazar reveals that the appellant and another S.M. Buhari involved in this case were not coming to the premises at No. 35, 1st Floor, Gaffoor Sahib Street, Royapettah for the last three years and that their whereabouts are not known to the neighbours of the said premises. After noting down the said fact in the mahazar, Mr. R.K. Samuel informed that the call notice must be pasted under Rule 10(c) of the Rules. The mahazar was prepared on 14-2-1990. Learned Counsel for the appellant sent a notice to the Assistant Registrar, FERA Board, Ministry of Law, Justice and Company Affairs, Government of India, New Delhi on 8-10-1992 giving the address of the appellant at Keelakarai. The same Counsel for the appellant sent another notice, dated 11-11- 1992 to the Assistant Legal Adviser, Enforcement Directorate, Madras-6 giving the address of the appellant at Keelakarai. The Assistant Legal Adviser of the Enforcement Directorate sent a reply, dated 16-11-1992 to Mr. M. Abdul Nazeer, learned Counsel for the appellant in which the address of the appellant has been mentioned at Keelakarai. In the appeal filed by the appellant before the FERA Board, he has given the address at Royapettah, Madras-14; whereas in the C.M.A. filed in this Court, the appellate has given his address at Keelakarai. In the statement given by him before the Enforcement Officer at Madras, the appellant has stated that his native place is Keelakarai and that his address is No. 2/4, North Street, Keelakarai. Summons were sent by the Enforcement Directorates to the appellant under Section 40 of the FERA to his Keelakarai address. The postal receipt, dated 29-7-1987 shows the address of the appellant at Keelakarai. The order was passed by the Joint Secretary to Government of India on 25-9-1987 and the same was communicated to the appellant to his address at Royapettah, Madras and also at Keelakarai.
6. Mr. Abdul Nazeer, Advocate informed the Deputy Director, Enforcement Directorate, Madras-6 by his letter, dated 19-2-1988 that the orders of arrest and the detention under the Foreign Exchange Regulation Act or COFEPOSA Act are cancelled with immediate effect in view of the judgment of this Court in W.P. No. 5796 of 1987. In the said letter the appellant’s address is given at Keelakarai. The appellant has given his address at Keelakarai in W.P. No. 6626/89 filed against the Union of India and the Deputy Director, Enforcement Directorate, Madras. Mr. Abdul Nazeer, Advocate sent another letter, dated 29-8-1989 on behalf of the appellant giving his address at North Street, Keelakarai to the Deputy Director, Enforcement Directorate, Shastri Bhavan, Madras-6. The Keelakarai Address of the appellant is also mentioned in the letter, dated 28-8-1989 of the Enforcement Directorate, Shastri Bhavan Madras addressed to Mr. Abdul Nazeer, Advocate for the appellant. In the letter, dated 10-11-1992 sent by the Shastri Bhavan, Madras-6 addressed to the appellant herein, the address of the appellant at Keelakarai [was] mentioned.
7. Mr. Kareem, learned Sr. Counsel, therefore vehemently contended that in all the correspondences, the respondents have given the address of the appellant at Keelakarai, Ramanathapuram District and that in the show cause notice only, the respondents have wilfully given the address at Madras even though in the mahazar, dated 14-2- 1990 prepared by Mr. R.K. Samuel, Assistant Enforcement Officer, Enforcement Directorate, Madras address of the appellant is given at No. 35, 1st Floor, Gaffoor Sahib St., Royapettah, Madras-14 and especially when Mr. R.K. Samuel on enquiry came to know that the appellant and one S.M. Bukhari were not coming to the premises, namely, No. 35, 1st Floor, Gaffoor Sahib St., Royapettah for the last there years and that their whereabouts were not know to the neighbours of the said premises. Mr. R.K. Samuel, therefore informed the department that the call notices must be pasted under Section 10(c) of the Rules. Therefore, the contention of the appellant is that there was no service at all of the show cause notice under Rule 10(c) of the Rules.
8. Mr. V.T. Gopalan, learned Senior Counsel appearing on behalf of K. Ramakrishna Reddy, Additional Central Government Standing Counsel for the respondents submitted that the appellant was prosecuted under Section 61(2) of the Foreign Exchange Regulation Act and that he pleaded guilty before the court and that he did not raise the plea that he had not received the show cause notice even though he had an opportunity of raising such a plea before the Magistrate. According to him, the appellant is stopped from contending that he had not received the show cause notice. We are unable to agree with him for the reasons that in a criminal trial, in order to avoid attendance before criminal courts, the party might have pleaded guilty and suffered the sentence. In this case, it is stated that the appellant was imposed of fine only. But his plea of guilty before the criminal court, will not absolve the respondents of service the show cause notice on the appellant properly. We are unable to conceive the object of the respondents in not serving the notice at his notice address at Keelakarai, but they have chosen to paste the notice at Madras address especially when the Assistant Enforcement Officer came to know then that the appellant had left the place about three years ago.
8A. In the decision in the case of Jothimani Nadar v. Deputy Director, Enforcement Directorate reported in 1984 (3) ECC 319, this Court (S. Natarajan, J., as he then was) held as follows :-
“Section 51 of the Act is the relevant section regarding adjudication and it is a complete and independent provision by itself. Neither in Section 51 of the Act nor in Section 56 of the Act is there a provision that if a prosecution is to be launched, the adjudication proceedings must be stopped at the state of complaint and the criminal complaint alone should be proceeded with.
There is no basis in the proviso to Section 61(2) of the Act for holding that a second show cause notice should be given before filing a complaint. All that the proviso states is that before a Court takes a cognizance of an offence which relates to the contravention of any provision of the Act which prohibits the doing of act without permission, the complainant must have given an opportunity to the accused to show cause that he had such a permission. What follows from this is that at some point of time prior to the filing of the complaint, the accused must have been given opportunity to show that he had obtained the requisite permission and he had not contravened the provisions of the Act in any manner. It is, however, not necessary that the show cause notice must have been issued immediately before the filing of the complaint. If a show cause notice had been issued before adjudication proceedings were started, it would undoubtedly constitute a valid notice under the proviso to Section 61(2) of the Act. Criminal prosecution is not a continuation of the adjudication proceedings. As such, a prosecution cannot amount to second stage of the proceedings warranting the issue of a second show cause notice. Section 61(2) of the Act does not provide for two procedures and the opportunity contemplated by the proviso to the section can also be afforded in the course of an adjudication.
Even assuming that the appellant has not raised the plea that he had not received the show cause notice, in the criminal prosecution that would absolve the respondents from serving the show cause notice properly at his last known residence. Admittedly, the show cause notice was affixed at Madras Address when the appellant was not residing there. Therefore, there is no proper service of the show cause notice and consequently the appellant was not given opportunity to put forth his defence and that the appellant was also not heard by the first respondent. This follows that the order of the first respondent, dated 10-4-1990 imposing a penalty of Rs. 2,50,000/- for the alleged contravention of Section 9(1)(b) of the FERA and Rs. 2,50,000/- under Section 9(1)(d) of the FERA cannot be sustained. The order of confiscation made by the first respondent pursuant to his order cannot be upheld. The order of the appellate authority, namely, the second respondent confirming the order of the first respondent has also to be set aside and it is accordingly set aside. The appellant is entitled to get refund of the penalty amount paid by him and also the confiscated sum of Rs. 22,850/-.
9. In the result, the appeal is allowed. In the circumstances, there is no order as to costs.