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Court stays FEMA proceedings against Natwar

J. Venkatesan

Bench issues notice to Enforcement Directorate returnable in four weeks

No authoritative judgment on law of disclosure
Copies of documents sought not given

New Delhi: The Supreme Court on Monday stayed until further orders proceedings initiated by the Enforcement Directorate (ED) against the former Union Minister, K. Natwar Singh, under the provisions of the Foreign Exchange Management Act pursuant to the report of the Pathak Committee of Inquiry on the ‘oil-for-food scam.’

A Bench of Justice B.N. Agrawal and Justice G.S. Singhvi gave the stay order after hearing senior counsel Harish Salve and Mukul Rohatgi, appearing for Mr. Singh in a special leave petition (SLP).

The Bench issued notice to the ED returnable in four weeks.

Following the publication of the Volker Committee report on the oil-for-food programme of the United Nations in Iraq, the Centre appointed the Justice Pathak committee to probe the contents of the report. In August 2006, the Centre accepted the findings of the Pathak Committee and issued a notice to Mr. Singh alleging violation of provisions of FEMA. It asked him to show cause why action should not be taken against him.

The petitioner said that on receipt of the notice he requested the authorities to give him copies of all documents in the possession of the ED including those allegedly procured by Virender Dayal from the U.S. in connection with the case.

They were not made available to him. His petition challenging the denial of the documents was rejected by the Delhi High Court on March 28. The SLP is directed against this judgment.

Mr. Singh said there was no authoritative judgment on the law of disclosure of evidence in favour of an accused/noticee in the course of adjudication. Such laws form the bedrock of the right to a free and fair trial.

He said under the FEMA all materials relevant to the inquiry must be made available to the noticee to enable him to defend the case properly. But this right had been denied by the ED authorities by misinterpreting the provisions.

He said important questions of law were involved here — whether the High Court had erred in interpreting the FEMA rules in favour of the department; and whether requirements of a free and fair trial, interests of justice and pursuit of truth cast a duty on the department to disclose and furnish the materials sought.

He prayed for quashing the impugned judgment and an interim stay of all further proceedings.

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