2007 (4) TMI 377 - HC - Companies Law

Summary

Issues Involved:
1. Continuation of departmental proceedings under FERA.
2. Jurisdiction of departmental proceedings under FERA post-enactment of FEMA.
3. Double jeopardy and prejudice to defense in criminal trial.

Summary:

1. Continuation of Departmental Proceedings under FERA:
The petitioner sought a mandamus to restrain the respondents from continuing departmental proceedings initiated against him u/s 50 and 51 of the Foreign Exchange Regulation Act, 1973 (FERA). The petitioner argued that the continuation of these proceedings would prejudice his defense in the ongoing criminal trial u/s 56 of FERA. The petitioner relied on several Supreme Court judgments, including *Kendriya Vidyalaya Sangathan v. T. Srinivas*, *Capt. M. Paul Anthony v. Bharat Gold Mines Ltd.*, and *Tata Oil Mills Co. Ltd. v. Workmen*, to argue that adjudicatory proceedings should be stayed until the criminal trial concludes. However, the court noted that these judgments pertain to disciplinary proceedings in service jurisprudence and do not universally mandate staying departmental proceedings pending criminal trials. The court emphasized that adjudicatory proceedings under FERA are independent and not in substitution of criminal prosecution, as clarified in *Standard Chartered Bank v. Directorate of Enforcement*.

2. Jurisdiction of Departmental Proceedings under FERA Post-Enactment of FEMA:
The petitioner contended that the departmental proceedings under FERA are not maintainable after the enactment of the Foreign Exchange Management Act, 1999 (FEMA). He argued that the proceedings should now be conducted under FEMA, which provides for lesser penalties. The court rejected this argument, stating that section 49 of FEMA contains provisions for repeal and saving, which preserve actions taken under FERA within two years from the commencement of FEMA. The court clarified that the notice issued to the petitioner was within this two-year period, making the proceedings valid.

3. Double Jeopardy and Prejudice to Defense in Criminal Trial:
The petitioner argued that continuing departmental proceedings would amount to double jeopardy and prejudice his defense in the criminal trial. The court dismissed this argument, citing *Collector of Customs & Central Excise, Bhubneshwar, District Puri v. Paradip Port Trust*, which held that confiscation and penalty under fiscal laws can coexist with criminal prosecution. The court reiterated that adjudicatory proceedings under FERA are in addition to criminal prosecution and do not violate the principle of double jeopardy.

Conclusion:
The writ petition was dismissed, with the court holding that the departmental proceedings under FERA are valid and can continue independently of the criminal trial. The court found no merit in the arguments regarding double jeopardy and lack of jurisdiction post-FEMA.