Show Cause Notice Can Be Challenged In Writ Jurisdiction In Exceptional Cases : Supreme Court

The Supreme Court has reiterated that although courts ordinarily do not entertain writ petitions challenging a show cause notice (SCN), this principle is not absolute, and interference at the notice stage is permissible in exceptional circumstances.

The Court observed that judicial review under Article 226 of the Constitution can be invoked where the show cause notice is vitiated by fundamental legal infirmities that could result in manifest injustice.

The Court stated that while the general rule discourages challenges to show cause notices, the High Courts are empowered to intervene where the notice suffers from a patent lack of jurisdiction, reflects non-application of mind, is issued with a predetermined or premeditated approach, amounts to an abuse of the process of law, or violates the principles of natural justice.

The Bench emphasized that in such situations, the High Court would be justified in exercising its writ jurisdiction to prevent injustice, underscoring that the rule against interference at the show cause notice stage is a rule of prudence rather than a rigid bar.

 A bench comprising Justice Vikram Nath and Justice Sandeep Mehta observed :

"This Court has consistently held that although ordinarily a writ petition against an SCN may not be entertained, however, the said proposition is not an inviolable rule. Interference at the stage of SCN is permissible in exceptional circumstances, such as where the notice suffers from patent lack of jurisdiction, reflects non-application of mind, is issued with a pre-determined or premeditated approach, amounts to an abuse of the process of law, or results in a violation of the principles of natural justice. In such situations, the High Court would be justified in exercising its jurisdiction under Article 226 of the Constitution to prevent manifest injustice."

Reliance was placed on the judgment in Union of India v. VICCO Laboratories (2007) 13 SCC 270 which observed :

"Where a show- cause notice is issued either without jurisdiction or in an abuse of process of law, certainly in that case, the writ court would not hesitate to interfere even at the stage of issuance of show-cause notice."

The Court made these observations in the context of a challenge to a show-cause notice in adjudication proceedings under the Foreign Exchange Management Act.

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