2019 (5) TMI 1467 - HC - FEMA

Monetary limit for prosecution of FERA issues - Petitioner on trial for the offences under Section 18(2) r/w Section 18(3) of Foreign Exchange Regulation Act, 1973 and under Section 56 of Foreign Exchange Regulation Act, 1973 - Quashing of revisional court s order - pleas urged in this petition are that in view of the Circular of 5th July, 2001 issued under Section 56 of FERA, there can be no prosecution if the amount involved is less than ₹2 crores - HELD THAT - Since evidence of three witnesses out of six, has been already recorded and the case is now fixed in this month before the trial court for recording of the remaining evidence, therefore, the legality of the impugned order is not required to be tested, as the trial of the case has fairly progressed and existence of Circular of 5th July, 2001 is yet to be established. Moreover, the submissions advanced on behalf of petitioner are required to be considered, after the evidence is led in this case. Accordingly, this petition and the application are disposed of with liberty to petitioner to urge the pleas taken herein before the trial court at the stage of final arguments. It is made clear that this Court has not expressed any opinion on the merits of the case, lest it may prejudice either side before trial court.

Summary

Issues:
1. Quashing of revisional court's order and trial court's orders
2. Prosecution under Foreign Exchange Regulation Act, 1973
3. Applicability of Circular of 5th July, 2001
4. Evidence recorded in trial court
5. Disposal of petition with liberty to urge pleas before trial court

Analysis:

1. The petitioner sought the quashing of the revisional court's order dated 17th November, 2017, and the trial court's orders of 11th May, 2017, and 30th May, 2017. The trial court had put the petitioner on trial for offenses under Section 18(2) r/w Section 18(3) of Foreign Exchange Regulation Act, 1973, and under Section 56 of FERA. The petitioner had challenged the trial court's order before the revisional court unsuccessfully.

2. The petitioner argued that prosecution should not proceed as per the Circular of 5th July, 2001, issued under Section 56 of FERA, which states that there can be no prosecution if the amount involved is less than ?2 crores. Reference was made to a decision of a Coordinate Bench to support this argument. The petitioner contended that the offense in question had already been compounded, as evidenced by a report from the Directorate of Enforcement regarding outstanding G.R. Forms.

3. The respondent, represented by the Enforcement Directorate, opposed the petitioner's pleas, stating that the trial court had already recorded evidence of three witnesses out of six. The Circular of 5th July, 2001, relied upon by the petitioner, was deemed untraceable and its applicability to the petitioner's case was disputed.

4. The court noted that since evidence from three witnesses had been recorded and the trial was scheduled to proceed for the remaining evidence, the legality of the impugned order did not need immediate testing. The existence and applicability of the Circular of 5th July, 2001, remained to be established. The court emphasized that the petitioner's submissions would be considered after the evidence was led in the case.

5. Consequently, the petition was disposed of with liberty granted to the petitioner to raise the arguments before the trial court during the final arguments stage. The court clarified that it had not expressed any opinion on the case's merits to avoid prejudicing either party before the trial court.