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.Also from the judgment - FEMA | Non-Confirmation Of Seizure By Competent Authority Under S.37A Has Bearing On Adjudication Proceedings : Supreme CourtHeadnoteForeign Exchange Management Act, 1999 – Section 37A and Section 16 – Interplay between Seizure Proceedings and Adjudication – The Supreme Court set aside the final adjudication order and the High Court judgment that dismissed challenges to a Show Cause Notice (SCN) issued under FEMA - Supreme Court held that where the Competent Authority has refused to confirm a seizure of assets under Section 37A(3) based on a finding that no "reason to believe" exists regarding a contravention of Section 4, the Adjudicating Authority cannot simply bypass or "undo" that order while an appeal against it is still pending before the Appellate Tribunal - Such a course of action amounts to abdicating the powers of the Appellate Authority.Foreign Exchange Management Act, 1999 – Section 37A(4) – Interpretation of "Confirming Seizure" – Supreme Court clarified that while Section 37A(4) allows adjudication to proceed and remain unaffected by a confirmed seizure, the statute is silent on situations where the seizure is not confirmed - If a Competent Authority records a substantive finding of no evidence of violation, that finding has a direct bearing on the outcome of the adjudication proceedings.Constitution of India – Article 226 – Writ Jurisdiction against Show Cause Notice – Reiterated that while courts ordinarily do not interfere at the SCN stage, it is not an "inviolable rule" - Interference is permissible in exceptional circumstances, including patent lack of jurisdiction, abuse of process of law, or where the notice reflects a pre-determined approach. [Relied on Union of India v. VICCO Laboratories (2007) 13 SCC 270; Paras 30-40]Cause Title: J. SRI NISHA VERSUS THE SPECIAL DIRECTOR, ADJUDICATING AUTHORITY, DIRECTORATE OF ENFORCEMENT AND ANR.Citation : 2026 LiveLaw (SC) 320Click here to download judgmentAppearance: For Petitioner(s) : Mr. Siddharth Luthra, Sr. Adv. Mr. Harin P Raval, Sr. Adv. Mr. Hari P Raval, Sr. Adv. Mr. E. Sudarsanan, AOR Mr. K. Suresh, Adv. Mr. Rajendra Singvi, Adv. Mr. V. Ramesh, Adv. Mr. K. Stalin Raja, Adv. Mr. C. Balaji, Adv. Mr. R. M. Narendran, Adv. Mr. Sam Jayaraj Houston, Adv. Mr. S. Manoj Kumar, Adv. For Respondent(s) : Mr. Anil Kaushik, A.S.G. Mr. Zoheb Hussain, Adv. Mr. Arkaj Kumar, Adv. Mr. Bhuvan Kapoor, Adv. Mr. Animesh Upadhyay, Adv. Mr. Arvind Kumar Sharma, AOR Ms. Anushka Gupta, Adv. Ms. Aakriti Mishra, Adv.

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

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

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