2002 (12) TMI 606 - HC - FEMA

Summary

Issues:
Challenge to criminal prosecution under FEMA and FERA, Jurisdiction of Special Judge, Legality of taking cognizance under FEMA.

Analysis:
1. The petitioner sought to quash the criminal prosecution under FEMA and FERA initiated against him. The allegations involved defrauding government money and violating foreign exchange regulations. The petitioner admitted involvement in opening bank accounts and handling foreign exchange transactions for the main accused.

2. The petitioner's counsel challenged the order on three grounds. Firstly, prosecution should only follow adjudication proceedings, which had not been initiated. Secondly, FERA offenses are triable by lower courts, not a Special Judge. Lastly, the Special Judge lacked jurisdiction to take cognizance under FERA, as the case was registered as a FEMA case.

3. The respondents argued that the Special Judge was duly notified to try cases under FEMA, and criminal prosecution can proceed independently of adjudication. They highlighted the authority of the Enforcement Officer to institute the prosecution and cited Section 460 of the CrPC to support the legality of the order.

4. The Court noted the petitioner's admission of involvement and the absence of denial regarding the allegations. It emphasized the separate nature of adjudication and criminal trial, allowing for prosecution even if adjudication is pending. The Court also referenced the notification empowering the Special Judge to try cases under FEMA.

5. Section 49 of FEMA was analyzed, indicating that post-FEMA enactment, no court should take cognizance under the repealed FERA. However, the Special Judge, authorized to try FEMA cases, was deemed to have jurisdiction to take cognizance under FEMA.

6. The Court concluded that there was no bar to criminal trial without completed adjudication and upheld the jurisdiction of the Special Judge. The application to quash the prosecution was dismissed, finding no merit in the petitioner's contentions.