CASE NO.: Appeal (crl.) 35 of 2004 PETITIONER: The Special Director and Anr. RESPONDENT: Mohd. Ghulam Ghouse and Anr. DATE OF JUDGMENT: 09/01/2004 BENCH: DORAISWAMY RAJU & ARIJIT PASAYAT JUDGMENT:
J U D G M E N T
(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.