Transfer of Case Due to Jurisdiction Change Doesn’t Bar Lower Authority’s Adjudication; Plea Dismissed | HC

Case Details: Auro Logistics Ltd. v. Assistant Director (SRO) - [2024] 161 taxmann.com 404 (HC- Madras)

Judiciary and Counsel Details

• S.M. Subramaniam, J.
• Jayant Mehta, Sr. Adv. for the Petitioner. 
• A. Kumaraguru for the Respondent.

Facts of the Case

In the instant case, a complaint was filed under section 16(3) of the FEMA against the petitioner company before the Special Director of the Enforcement Directorate (ED). A notification was issued u/s 16 of FEMA by the Ministry of Finance, enhancing pecuniary jurisdiction for the purpose of appointing an Adjudicating Authority.

A personal hearing notice was issued to the petitioner by the Additional Director of ED, directing them to appear before the Adjudicating Authority, i.e. the Additional Director.

The petitioner filed an instant writ petition, seeking to quash the said notice and submitted that the Adjudicating Authority was originally a Special Director and was of a higher authority than the Additional Director. Further, once a notice was issued by the Special Director in his capacity as an Adjudicating Authority, the said proceedings could not be further transferred to a lower authority.

It was noted that the petitioner’s case was transferred in view of the said notification. Further, once pecuniary jurisdiction underwent changes, the consequential action would be to transfer those cases to the appropriate Court holding pecuniary jurisdiction to deal with the case, irrespective of the fact whether it is a Superior Court or a Subordinate Court.

Therefore, the appointment of an Adjudicating Authority of a lower rank would not disentitle the said Authority from conducting an adjudication under the FEMA Act and rules.

High Court Held

The High Court observed that once the power to appoint an adjudicating authority is conferred on the Central Government and the Central Government, in the exercise of the power, issued a notification, no doubt the said notification is to be effected with prospective effect.

Further, the High Court observed that while giving prospective effect, the cases that are pending before the other authorities must be transferred to the appropriate authority with prospective effect for the purpose of the continuance of further adjudication in the manner known to the law.

Accordingly, in the present case, such a transfer was effected from the file of the Special Director to the Additional Director of Enforcement.

The High Court held that the Additional Director of Enforcement was empowered to deal with cases involving an amount up to 25 crores, but not less than 10 crores. In the case of the petitioner, the allegation was for a sum of 11 crores, and therefore, the said transfer of the case from the Special Director to the Additional Director of Enforcement was well within the provisions of the FEMA Act. Accordingly, the instant petition was to be dismissed.