2011 (1) TMI 315 - HC - FEMA

Waiver of repatriation - The petitioner has complied with the order but has filed the present petition challenging the legality and validity of Sections 18(2) and 18(3) of FERA on the ground that they are manifestly arbitrary and irrational - The impugned Sections only raise a presumption against the exporter, but the same can be rebutted by the exporter - constitutional legality and validity of Sections 18(2)and 18(3) of FERA has already been upheld by the Supreme Court in Seema Silk & Sarees and Another vs. Directorate of Enforcement and Others, (2008) 5 SCC 580 - it is apparent that FERA finds place in the Ninth Schedule of the Constitution of India and in accordance with Article 31-B of the Constitution, none of the Acts specified in the Ninth Schedule can be held ultra vires even if the provisions of the said Act are inconsistent or abridge any of the fundamental rights contained in Part-III of the Constitution of India - The writ petition is dismissed

Summary

Issues:
Challenge to constitutionality of Sections 18(2) and 18(3) of FERA and Section 49(4) of FEMA.

Analysis:
1. The petitioner filed a writ petition seeking to quash a show cause notice and an adjudication order based on the alleged unconstitutionality of Sections 18(2) and 18(3) of FERA and Section 49(4) of FEMA. The petitioner exported goods but faced issues with non-repatriation of sale proceeds, leading to penalty imposition.

2. The petitioner contended that the provisions of FERA and FEMA are arbitrary and irrational, placing an impossible burden on exporters to ensure full repatriation of proceeds. The petitioner challenged the legality of these sections due to the presumption created against exporters for non-repatriation.

3. The petitioner argued that the presumption of non-repatriation due to any shortfall, even of one rupee, is unreasonable and places an unfair burden on exporters. The petitioner claimed that this presumption is unconstitutional and impossible to fulfill, invoking the maxim lex neminem cogit ad vana seu inutilia peragenda.

4. The court held that the impugned provisions of FERA do not mandate impossible acts but merely raise a rebuttable presumption against exporters. The court found the provisions valid and cited a previous Supreme Court judgment upholding the constitutionality of Sections 18(2) and 18(3) of FERA.

5. The Supreme Court judgment emphasized that the burden of proof in legal provisions is procedural and not unconstitutional solely due to a reverse burden. The court highlighted that statutory presumptions and reverse burdens exist in various statutes and can be rebutted by the accused.

6. Additionally, it was noted that FERA is protected under Article 31-B of the Constitution, and Acts in the Ninth Schedule cannot be held ultra vires even if they conflict with fundamental rights. The court dismissed the writ petition, directing the petitioner to pay costs and stating that other pleas on merit should be addressed before the Appellate Tribunal for Foreign Exchange.

In conclusion, the court upheld the constitutionality of Sections 18(2) and 18(3) of FERA and Section 49(4) of FEMA, dismissing the writ petition and emphasizing the procedural nature of burden of proof in legal provisions.