Case Note & Summary
The petitioner, Shashank Vyankatesh Manohar, was the President of the Board of Control for Cricket in India (BCCI) from 2008 to 2011. During this period, BCCI conducted the Indian Premier League (IPL). The Directorate of Enforcement issued 11 show cause notices dated 25 November 2011 to BCCI, the petitioner, and six others alleging violations of the Foreign Exchange Management Act, 1999 (FEMA). The petitioner challenged these notices and a subsequent hearing notice dated 6 June 2013 on the grounds of lack of jurisdiction under Section 42 of FEMA and non-compliance with the Adjudication Rules. The court held that Section 42 of FEMA imposes vicarious liability on persons in charge of and responsible for the conduct of business of a company, and the petitioner as President was covered. The show cause notices were found to be valid as they sufficiently informed the petitioner of the allegations. The hearing notice was also valid as it complied with principles of natural justice. The petition was dismissed, allowing the adjudication proceedings to continue.
Headnote
A) Foreign Exchange Management Act - Section 42 - Vicarious Liability - Section 42 of FEMA, 1999 - The court examined whether the petitioner, as President of BCCI, could be held vicariously liable for alleged contraventions by BCCI. Held that Section 42 applies to every person who at the time of contravention was in charge of and responsible for the conduct of business of the company, and the petitioner being President is covered. (Paras 10-15) B) Foreign Exchange Management Act - Show Cause Notice - Validity - FEMA, 1999 - The court considered whether the show cause notices were invalid for not specifying the exact role of the petitioner. Held that the notices sufficiently indicated the allegations and the petitioner's capacity, and no prejudice was caused. (Paras 16-20) C) Foreign Exchange Management Act - Adjudication Proceedings - Notice of Hearing - FEMA, 1999 and Adjudication Rules, 2000 - The court examined whether the notice of hearing dated 6 June 2013 complied with the Adjudication Rules. Held that the notice was valid as it gave the petitioner an opportunity to be heard and the rules do not require a detailed statement of allegations at that stage. (Paras 21-25)
Issue of Consideration
Whether the show cause notices issued to the petitioner under Section 42 of FEMA are without jurisdiction and whether the notice of hearing dated 6 June 2013 is invalid for non-compliance with Adjudication Rules.
Final Decision
The petition is dismissed. The impugned show cause notices and the hearing notice are upheld. The adjudication proceedings shall continue.
Law Points
- Section 42 of FEMA applies to persons in charge of and responsible for the conduct of business of a company
- vicarious liability under FEMA
- show cause notice need not contain full details if sufficient notice of allegations is given
- adjudication under FEMA is quasi-judicial and must follow principles of natural justice
