2018 (4) TMI 421 - HC - FEMA

Violation of Section 9(1)(e) of Foreign Exchange Regulations Act, 1973 - failure to comply with the mandatory requirement of Section 61(2) of FERA - Held that - The subject complaint was filed on 29.05.2002. Since petitioners were never granted an opportunity, as mandated by Section 61(2) of FERA, there is clearly a breach of the mandate of law. Since the requirements of Section 61(2) of FERA have not been complied with, reliance placed by the respondent on the statement recorded at the time when proceedings under Section 40 of FERA were being undertaken and reliance on the same in the impugned order as sufficient compliance of Section 61(2) of FERA, is clearly misplaced. Since respondents have failed to comply with the mandatory requirement of Section 61(2) of FERA, the Trial Court clearly erred in taking cognizance. The impugned order on charge dated 11.07.2017 cannot be sustained and is liable to be set aside. The impugned order dated 11.07.2017 is, accordingly, quashed. The present petition is allowed.

Summary

Issues:
Challenge to framing of charges under Section 9(1)(e) of FERA due to non-compliance with mandatory requirements of Section 61(2)(ii) - Opportunity notice not served - Compliance with statutory provisions - Breach of legal mandate - Reliance on recorded statement under Section 40 of FERA - Incorrectly addressed opportunity notice - Jurisdiction of the Trial Court - Quashing of charge order.

Analysis:
The petitioners contested the framing of charges under Section 9(1)(e) of FERA, alleging non-compliance with the mandatory provisions of Section 61(2)(ii). The crux of the issue revolved around the failure to serve the opportunity notice, a crucial step mandated by law before taking cognizance of offences punishable under Section 56 or 57 of FERA. The petitioners argued that the incorrect addressing and non-service of the opportunity notice rendered the subsequent charge framing invalid. On the other hand, the respondent contended that the requirement of giving an opportunity did not necessitate a formal "opportunity notice," citing the petitioner's failure to produce requisite permissions during an earlier statement recording under Section 40 of FERA.

The court delved into the statutory provisions of Section 61 of FERA, emphasizing the mandatory nature of providing an opportunity to the accused before taking cognizance of certain offences. Referring to a precedent, the court reiterated that a magistrate is barred from taking cognizance unless the accused is afforded the opportunity to demonstrate permission availability. It underscored the principle that statutory mandates must be strictly adhered to, emphasizing the importance of procedural compliance in legal proceedings.

A crucial point of contention was the issuance of an "Opportunity Notice" by the respondents in 2002, which specifically required the petitioners to demonstrate permission compliance under FERA. However, it came to light that the notice was incorrectly addressed to a different location where the petitioners did not operate, highlighting a clear procedural lapse. The court emphasized that compliance with Section 61(2) was indispensable before initiating proceedings under Section 56 of FERA, stressing the magistrate's duty to ensure such compliance before proceeding with charges.

The court scrutinized the events surrounding the alleged offence in 1995 and subsequent actions, including the recording of the accused's statement and the issuance of the flawed opportunity notice. It concluded that the failure to comply with the mandatory provisions of Section 61(2) of FERA invalidated the Trial Court's decision to frame charges. Consequently, the court quashed the charge order dated 11.07.2017, highlighting the necessity of upholding legal mandates and ensuring procedural correctness in legal proceedings to safeguard the rights of the accused.