2015 (5) TMI 1033 - HC - FEMA

Nature of offences - whether Offences, punishment of which extend to seven years, under the Foreign Exchange Regulation Act, 1973 FERA) being noncognizable in terms of Section 62 of the Act, are bailable or nonbailable? - Held that - Under FERA the power in terms of Section 45 of the FERA though has been given to police officer and other officer to make search and arrest when warrant but no provision is there that if arrest is affected by the officer other than the police officer, he is required to forward the accused to the officerincharge either for him to admit him on bail or to produce before the Magistrate, rather the provision as contained in Section 35 relating to the arrest, does stipulate that enforcement officer if has reason to believe that one has committed offence punishable under the Act, he may arrest such person and may inform him of the ground for such arrest and the said officer in terms of Subsection (3) of Section 35 will have same power as that of the officerincharge of the police station. That apart, no such provision is there which does speak about the compounding of the offence as is there under the Central Excise Act and Custom Act. Under the circumstances, the offences under the Foreign Exchange Regulation Act, 1973 punishment of which extend to a period of seven years, cannot be taken to be bailable, rather in terms of the provision as referred to above and also in view of the Second part of Schedule I to Cr.P.C are held as nonbailable.

Summary

Issues Involved:
1. Whether offences under the Foreign Exchange Regulation Act, 1973 (FERA), punishable up to seven years, are bailable or non-bailable.

Issue-wise Detailed Analysis:

1. Background and Facts:
The case involves allegations against several individuals, including the petitioner, related to the fodder scam. During investigations, it was found that the petitioner and his family members had received significant foreign exchange remittances, allegedly in violation of FERA. Consequently, a complaint was lodged, and cognizance of the offence was taken under Section 56 of FERA, leading to the issuance of a non-bailable warrant against the petitioner.

2. Petitioner's Argument:
The petitioner argued that the primary objective of FERA is the regulation of foreign exchange rather than prosecution. Despite some offences under Section 56 of FERA being punishable by up to seven years, Section 62 of FERA classifies these offences as non-cognizable. The petitioner contended that in the absence of explicit provisions in FERA regarding the bailability of such offences, the first schedule of the Code of Criminal Procedure (CrPC) should apply. The petitioner referenced the Supreme Court's decision in "Om Prakash & Others vs. Union of India & Others" where similar provisions under the Central Excise Act and the Customs Act were interpreted to mean that non-cognizable offences are bailable.

3. Respondent's Argument:
The respondent argued that the absence of explicit provisions in FERA regarding bailability means the issue should be governed by the CrPC. According to the second part of Schedule I of the CrPC, offences punishable by imprisonment for three years and upwards but not more than seven years are cognizable and non-bailable. The respondent further contended that the decision in "Om Prakash & Others" is not applicable as the provisions under the Central Excise Act and the Customs Act are not in pari materia with FERA.

4. Analysis of Relevant Provisions:
The court examined relevant provisions of the Central Excise Act, 1944, including Section 9(A) (compounding of offences), Section 20 (procedure for arrest), and compared them with provisions under FERA such as Sections 35, 45, 56, and 62. It was noted that while the Central Excise Act provides explicit procedures for arrest and bail, FERA lacks similar provisions. Specifically, FERA does not contain provisions for compounding offences or a clear mandate for admitting arrested persons to bail.

5. Court's Conclusion:
The court concluded that unlike the Central Excise Act, FERA does not have provisions that explicitly make offences bailable. The absence of such provisions, combined with the second part of Schedule I of the CrPC, indicates that offences under FERA, punishable by up to seven years, are non-bailable. The court held that the analogy drawn from the "Om Prakash & Others" case is not applicable due to the differences in statutory provisions.

6. Final Judgment:
The court answered the framed question by declaring that offences under the Foreign Exchange Regulation Act, 1973, punishable by up to seven years, are non-bailable. The application was accordingly disposed of.