JUDGMENT This Rule is directed against a notice dated 3rd August, 1974 issued under sub-rule 3 of the Adjudication Proceedings and Appeal Rules, 1974 informing the petitioner Bank that after considering the cause shown by the Bank to the show cause notice, the Special Director of Enforcement was of the opinion that the adjudication proceedings as contemplated in Section 51 of the Foreign Exchange Regulation Act, 1973 (Section 23D of the Repealed Foreign Exchange Regulation Act, 1947) should be held against the petitioner in accordance with the procedure laid down in Rule 3 of the Adjudication Proceedings and Appeal Rules, 1974, and accordingly, the case was fixed for personal hearing before the Special Director of Enforcement on 21st August, 1974 in the Office of the Directorate at Calcutta. 2. The petitioner United Commercial Bank is an existing company and has been carrying on banking business. It is a scheduled bank. It has extensive foreign exchange business. Hindustan Motors Limited approached the Main Branch of the petitioner at Calcutta in the last week of May, 1966, with a request to book a forward exchange contract for the sale of foreign currency for imports under import licences worth over Rs. 2 crores hold by them. Although the import licences were for about Rs. 1.82 crores, the petitioner was satisfied considering the document of the evidence produced before it, for booking a forward exchange contract only to the extent of Rs.1.25 crores i.e. £9,32,617. On 4th of June, 1966 the forward exchange contract being contract No. 130/66 for Rs. 1.25 crores i.e. £9,32,617 was booked by the petitioner for six months' delivery. 3. Hindustan Motors Limited at the material time manufactured commercial vehicles, being Bedford Trucks and had collaboration arrangement with M/s. Vauxhall Motors Limited, London for the manufacture of such vehicles. The East India Produce Company Limited were the purchasing agents, of the Hindustan Motors Limited in Londan and the company had obtained the sanction of the Reserve Bank of India, for, their appointment and reappointment from time to time. On 22nd of December, 1966 the Deputy Controller, Reserve Bank of India, Exchange Control Department informed the Manager of the petitioner-bank that the permission was granted to the bank to take delivery of £700.00 under the aforesaid contract dated the 4th of June, 1966. On 22nd of December, 1966 the Deputy Controller, Reserve Bank of India, Exchange Control Department informed the Manager of the petitioner-bank that the permission was granted to the bank to take delivery of £700.00 under the aforesaid contract dated the 4th of June, 1966. It appears that in view of the certain queries raised by the Reserve Bank of India regarding the said contract No. 130/66, the Sterling Import Bills received near about the 27th September, 1956 or thereafter, from East India Produce Company Ltd. and Vauxhall Motors were provisionally converted by the petitioner at the devalued current rate instead of the agreed rate mentioned in the said contract and corresponding recoveries were made from Hindustan Motors Limited. Such conversion of Sterling pounds at the new rate instead of the contracted rate went on till permission was granted by the Reserve Bank of India by the aforesaid letter dated 22nd December, 1966. Upon receipt of such permission on or about 22nd January, 1967, the excess recoveries made from the company being the difference between the contract rate and the new rate were refunded and credited to the account of Hindustan Motors Limited. Thereafter, the General Manager and the Manager, Calcutta Main Branch of the petitioner were apprehended by the Enforcement Directorate for the alleged offences under the Repealed Act. They were enlarged on bail by the Chief Presidency Magistrate. The allegations against the said two persons were alleged contravention of Section 4 (2) of the Foreign Exchange Regulation Act, 1947 (since repealed) in respect of the said contract No. 130/66. Ultimately no charges were framed or any complaint was filed 'against any of the said two persons. By an order dated 8th June, 1974, the Chief Presidency Magistrate, Calcutta discharged the complaint and set them at liberty. In the meantime, by a memorandum dated November 3, 1972 a show-cause notice was issued by the respondent No. 1 and served an the petitioner at Calcutta. In that show-cause notice the petitioner was directed to show cause within 14 days from the date of the receipt of the said memorandum why adjudication proceedings contemplated under Section 23D of the Repealed Act should not be held against it far the alleged contravention of Section 4 (2) of the said Repealed Act in connection with the said contract No. 130/66. On November 18, 1972 the petitioner's Solicitor wrote to the Director asking for inspection of certain documents and prayed for three months time to submit reply. Between December 30, 1972 and January 31, 1974, the petitioner took time for inspection of documents, took photostat copies of some of them and ultimately on the 16th February, 1974 the petitioner replied to the said show cause notice. On 3rd August, 1974 the impugned notice was issued wherein the petitioner was informed that after considering the cause shown, the Special Director was of the opinion that adjudication proceedings should be held and fixed 21st of August, 1974 for personal hearing. The petitioner being aggrieved by the said notice moved this Court on August 19, 1974 obtained the present Rule and also an interim order of stay. On 11th March, 1976 an application was made by the respondents for vacating the interim order. On June 22, 1976 the aforesaid application came up for hearing. No order was made on the said application. The main Rule was fixed for hearing on 2nd July, 1976. Ultimately, the Rule was heard on 18th of November, 1976. 4. To appreciate the arguments of the parties it is necessary to set out certain provisions of the relevant statutes. 5. Section 4(2) of the Repealed Foreign Exchange Regulation Act, 1947 (hereinafter referred to as the 'Act') reads as follows ;- Except with the previous general or special permission of the Reserve Bank, no person whether an authorised dealer or otherwise, shall enter into any transaction which provides for the conversion of Indian currency into foreign currency or foreign currency into Indian currency at rates of exchange other than the rate for the time being authorised by the Reserve Bank. 6. Sub-section 3 of section 20 of the Act empowers the Reserve Bank of India to issue instructions necessary or expedient for the administration of exchange control. 7. Exchange Control Manual was published by the Reserve Bank of India under the powers vested in it by the aforesaid provisions. 8. Paragraph 13 of section 1 of the Manual (95th Edition) lays down that in pursuance of Section 4(2) of the Act the Reserve Bank of India has authorised that the rates of exchange governing transactions in or relating to Sterling shall be those published by the Foreign Exchange Dealers’ Association of India. 8. Paragraph 13 of section 1 of the Manual (95th Edition) lays down that in pursuance of Section 4(2) of the Act the Reserve Bank of India has authorised that the rates of exchange governing transactions in or relating to Sterling shall be those published by the Foreign Exchange Dealers’ Association of India. Procedures of entering into contracts for forward sales and purchase of foreign exchange are provided in Section XXVIII of the Manual. 9. Sub-paragraph (ii) of paragraph 3 of Section XXVIII of the Manual provides that the contract for forward sales against imports may be entered into only if (a) the applicant holds a valid import licence with an exchange control copy covering the proposed import or import is covered by an open general licence (b) either letter of credit covering the proposed import has been opened or firm order has been placed and accepted by the seller……… 10. It is contended by the learned Advocate General, appearing on behalf of the petitioner that the show-cause memo dated 3.11.72 on the face of it does not disclose contravention of section 4(2) of the Act. The rates for the time being authorised by the Reserve Bank of India mean the rates prescribed by the Foreign Exchange Dealers. Association and current at the time when the transaction was entered into. It is not disputed that the forward exchange contract No. 130/66 has been entered into at the rate which on the date thereof being the rate authoriacd by the Reserve Bank of India for the type of transaction in question. According to the learned Advocate General as the rate of exchange was not other than the rate for the time being authorised by the Reserve Bank of India. no previous general or special permission of Reserve Bank of India as required under Section 4(2) of the Act was necessary and as such there was no contravention of the said section. 11. Mr. Chakravarti, appearing on behalf of the respondents contended that the petitioner-Bank did not comply with the statutory requirements of entering into transaction for the conversion of Indian currency into foreign currency as provided in paragraph 3(ii) of section XXVIII of the Exchange Control Manual, in as much as the Bank did not satisfy itself that the firm orders were actually placed by the Hindustan Motors Limited and accepted by the sellers. It also did not verify the relating licence before booking the said forward exchange contract. It is contended that as the forward contract was entered into by the Bank without fulfilling the condition precedent, the approved forward contract rate viz 1-529/32=rupee 1/- would not be applicable to the said transaction. The conversion of foreign exchange ought to have been made at the rate viz. £4.795=Rs. 100/- enforce during the relevant period between 8.7.66 to 8.3.67 when the actual conversions of foreign exchange were made. 12. It is not disputed that on the 4th of June, 1966 the Forward Exchange Contract No. 130/66 was entered into at the rate for six month£ quoted by the Foreign Exchange Dealers' Association .of India. Procedures for entering into contract for forward sales and purchase of foreign exchange have been laid down in Section XXVIII of the Manual. In the show-cause notice it is stated that the said contract was entered into by the Bank without fulfilling the condition precedent laid down in the said Manual. When the contract becomes void for not complying with the provisions of paragraph 3(ii) of Section XXVIII of the Exchange Control Manual, the rates agreed upon by the parties in the said contract also became void. In that case the conversion of foreign exchange should have been made at the rate quoted by the Foreign Exchange Dealers' Association prevalent during the period 8.7.66 to 3.3.67. But the petitioner-Bank converted the foreign exchange without the previous or general permission of the Reserve Bank of India at the rate other than the rate for the time being authorised by the Reserve Bank of India. Thus the Bank converted the provisions of sub-section 2 of section 4 of the Repealed Act of 1947. Therefore, it cannot be said that the showcause memo on the face of it did not disclosed contravention of section 4(2) of the Act. 13. The next point urged by the learned Advocate General is that no personal hearing was given to the petitioner before issuing the notice under sub-rule (3) of rule 3 of the Adjudication Proceedings and Appeal Rules. 1974 According to him the proviso to sub-rule (7) contemplates that such personal hearing should be given. 13. The next point urged by the learned Advocate General is that no personal hearing was given to the petitioner before issuing the notice under sub-rule (3) of rule 3 of the Adjudication Proceedings and Appeal Rules. 1974 According to him the proviso to sub-rule (7) contemplates that such personal hearing should be given. Proviso to sub-rule (7) reads as follows Provided that the notice required to in sub-rule (1), and the personal hearing referred to sub-rules (3), (4) and (5) may, at the request of the person concerned, be waived. Sub-rule (3) provides that if after considering the cause, if any, shown by such person, the adjudicating officer is of the opinion that adjudication proceedings should be held, he shall issue a notice fixing a date for the appearance of that person either personally or through his lawyer or other authorised representative. In the instance case, that notice for personal hearing under sub-rule (3) of rule 3 has been issued. In my view, the rule does not contemplate that there should be another personal hearing at the time of consideration of the show-cause notice and before issuance of a notice under sub-rule (3). 14. It is true that the permission was granted by the Reserve Bank of India but in the show-cause memo it is stated that as a result of misrepresentation and false informations furnished by the petitioner bank the Reserve Bank of India was induced to give approval to the said bank for delivery of the foreign exchange. This Court cannot go into question whether the petitioner Bank placed the firm order before it got the approval of the Reserve Bank of India or whether actually there has been false information or misrepresentation by the petitioner bank to the Reserve Bank. These are matters of fact and cannot be gone into by the writ court. The Reserve Bank has not however, been made a party to this writ petition. Moreover, it appears that the show-cause notice was issued in November, 1972. Thereafter, facilities were accorded to the petitioner to take inspection and photostat copy of all the documents relied upon in the show-cause memorandum. Times were granted by the respondents to submit the reply to the show-cause. On the 16th of February, 1974 the petitioner replied to the show-cause. Moreover, it appears that the show-cause notice was issued in November, 1972. Thereafter, facilities were accorded to the petitioner to take inspection and photostat copy of all the documents relied upon in the show-cause memorandum. Times were granted by the respondents to submit the reply to the show-cause. On the 16th of February, 1974 the petitioner replied to the show-cause. Thereafter, 25th August, 1974 was fixed for personal hearing in terms of rule 3 of the Adjudication Proceeding and Appeal Rules, 1974. Against the order of adjudication officer there is a provision for an appeal before the Appellate Board and further appeal on point of law to this Court. If any adverse decision is made against the petitioner by the adjudication officer, the petitioner has ample remedy. So, at this stage no interference by this Court is called for. 15. I make it clear that I am not expressing any view as regards the merits of the case. 16. Accordingly, this Rule is also discharged. This judgment shall govern the other Rule obtained by Hindustan Motors Limited being C. R. 272(w) of 1976. 17. There will be no order for costs. Let the operation of the order in terms of the Rule be stayed for a period of six weeks from date, as prayed for.