Case BriefsSupreme Court

Supreme Court: The bench of AM Sapre and Indira Banerjee, JJ has held that the appellate forum for deciding the appeals arising out of the order passed by the Adjudicating Officer under Section 51 of Foreign Exchange Regulation Act, 1973 (FERA) whether filed prior to 01.06.2000 or filed after 01.06.2000 must be the same, i.e., Appellate Tribunal under Foreign Exchange Management Act, 1999 (FEMA)

Going into the legislative intent behind Section 49 (5)(b) of FEMA, that deals with repeal and saving in relation to the action taken and to be taken under FERA, 1973, the Court noticed that the legislature has equated the Appellate Board constituted under FERA with the Appellate Tribunal constituted under FEMA for disposal of the appeals filed under Section 52(2) of FERA against an order passed under Section 51 of FERA which were   pending   before   the   Appellate   Board   which was dissolved on 01.06.2000.  Such appeals stood transferred from the Appellate Board to the Appellate Tribunal for their disposal in accordance with law.

The Court noticed that the Special Director (Appeals) is subordinate in hierarchy to the Appellate Tribunal prescribed under Section 49(5)(2) of FEMA and hence, said that if the argument that the appellate forum in this case for filing appeal is ­ “Special Director (Appeals)” and not the “Appellate Tribunal” under FEMA is accepted, then it will result in anomalous situations which will again be incongruous. The Court explained:

“the orders passed by the Appellate Tribunal in the appeals, which stood transferred to the Appellate Tribunal by virtue of Section 49 (5)(b), are appealable to the High Court under Section 35 of FEMA whereas the orders passed by the Special Director (Appeals) in the   appeals   filed   after   01.06.2000 are not appealable to the High Court under Section 35 of FEMA. So, against the same order, one appellant has a right of appeal to the High Court but the other appellant has no such right of appeal because he suffered   dismissal   of his appeal from Special Director (Appeals) against whose order appeal does not lie under Section 35 to the High Court.”

It was, hence, held that it was not possible to hold that one appeal would be maintainable before the Appellate Tribunal and the other appeal arising out of similar order would be maintainable before the Special Director (Appeals),  who is subordinate in hierarchy to the Appellate Board.  [Union of India v. Premier Ltd., 2019 SCC OnLine SC 95, decided on 29.01.2019]

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench of the Delhi High Court comprising of Sanjeev Sachdeva, J., allowed a Criminal Revision Petition before it. The petition alleged failure of the respondents to comply with Section 61(2)(ii) of the Foreign Exchange Regulations Act, 1973 (hereinafter ‘FERA’) which prohibits taking cognizance by a court of offences punishable under Section 56 and 57 of FERA unless opportunity is provided to the accused to prove that they had the requisite permission.

The petitioners argued that no such opportunity was provided, therefore, the trial court could not have taken cognizance and framed charges against the petitioners resulting in the proceedings thereto liable to being quashed. The counsel for the respondent, in response, conceded to the argument that there is a requirement of giving an opportunity to the accused to show that they had the requisite information and that it was provided when the accused had appeared before the Authority for recording his statement under Section 40 of FERA, however, the counsel submitted that the accused had failed to produce the permission when enquired about it. She further submitted that there is no mandatory requirement of giving an “opportunity notice”.

The statement was admittedly recorded in 1996, while the offence was alleged to have been committed in 1995. An “Opportunity Notice” was interestingly issued by respondents in 2002 which specifically asked the petitioners to show if they had the requisite permission in accordance with Section 61(2)(ii). However, on reviewing the statements on record, and the document itself, it was found that the notice was neither sent to the correct address nor served on the petitioner. The Court, while observing that there would have been no need to serve a notice in 2002 had an opportunity actually been provided to the petitioner earlier, rejected the arguments of the respondents. Petition allowed. Impugned order quashed. [United India Airways Ltd v. Chief Enforcement Officer, Enforcement Directorate, 2018 SCC OnLine Del 8233, decided on 05.04.2018]

Case BriefsSupreme Court

Supreme Court: In an appeal filed against the order of the Bombay High Court which had dislodged the order of discharge passed by the Chief Metropolitan Magistrate, Mumbai in the case where the company as well as its officer were facing trial for the offence punishable under Section 56(1)(i) of the Foreign Exchange Regulation Act, 1973 for the alleged contravention of the provisions of Sections 18(2) and 18(3) of FERA, the Court allowed the appeal, thereby, restoring the order of the Magistrate.

In the case where the appellants had purchased goods from Korea and Japan by spending foreign exchange, the Appellate Tribunal for Foreign Exchange (Tribunal) held that spending of foreign exchange in international trade by an Indian person is not forbidden by Section 19 of FERA. It was further held that there is no law whereby Indian resident is regulated from entering into international trade and hence, the appellant cannot be held guilty for Section 18(2) read with Section 18(3) of FERA. Hence, the Magistrate had discharged the appellants after application was filed under Section 245 of the Code of Criminal Procedure, 1973 for discharge of the accused. The High Court had, however, held that the order of the Tribunal was based on technical grounds and not merits.

The bench of Dipak Misra and Shiva Kirti Singh, JJ, hence, said that the High Court had totally erred in law as the judgment of the tribunal was decided on merits, inasmuch as findings had been recorded after analysis of facts and the conclusion had been arrived at that the appellants have not violated the provisions of the Act. [Videocon Industries Ltd.  v. State of Maharashtra, 2016 SCC OnLine SC 585, decided on 19.04.2016]