2019 (8) TMI 214 - HC - FEMA

Maintainability of petition - initiation of proceedings u/s 7(3) of the Foreign Exchange Management Act, 1999 - availability of alternative and efficacious remedy of appeal - HELD THAT - It is not in dispute that the proceedings are initiated by the Adjudicating Authority under Section 7(3) of the FEMA and the impugned order passed by the Adjudicating Authority on 31.8.2017 exercising the powers under Section 13(1) of the FEMA. Therefore, the petitioners have got an alternative and efficacious remedy of appeal before the Appellate Authority under Section 17 of the FEMA - Section 17(4) clearly depicts that on receipt of an appeal under sub-section (1), the Special Director (Appeals) may after giving the parties to the appeal an opportunity of being heard, pass such order thereon as he thinks fit, confirming, modifying or setting aside the order appealed against. The contention of the learned counsel for the petitioners that the Appellate Authority cannot expunge the adverse remarks passed by the Adjudicating Authority, cannot be accepted. The Appellate Authority has got every right to confirm, modify or set aside the order appealed against. The writ petitions are disposed of as not maintainable with liberty to the petitioners to avail the alternative remedy of appeal under the provisions of Section 17 of the FEMA within a period of three weeks from the date of receipt of copy of the order.

Summary

Issues:
1. Maintainability of writ petitions challenging order under FEMA
2. Adverse remarks made against petitioners in impugned order
3. Authority of Appellate Authority to expunge adverse remarks

Analysis:
The petitioners filed writ petitions seeking to quash an order passed by the Adjudicating Authority under Section 13(1) of FEMA. The Respondents raised a preliminary objection on the maintainability of the writ petitions, arguing that the petitioners have an alternative remedy of appeal before the Appellate Authority under Section 17 of FEMA. The petitioners contended that adverse remarks made against them in the impugned order cannot be expunged by the Appellate Authority. The Court noted that the proceedings were initiated under Section 7(3) of FEMA, and the order was passed under Section 13(1) of FEMA. It held that the petitioners indeed have an alternative and efficacious remedy of appeal before the Appellate Authority. The Court emphasized that the Appellate Authority has the authority to confirm, modify, or set aside the order appealed against, including expunging adverse remarks. Therefore, the petitioners were directed to avail the alternative remedy of appeal under Section 17 of FEMA within three weeks. They were also permitted to file an application for exclusion of time spent before the Court, which the Appellate Authority would consider while proceeding with the appeal.

In conclusion, the writ petitions were disposed of as not maintainable, with the petitioners directed to pursue the alternative remedy of appeal under FEMA. The Court clarified that the Appellate Authority has the power to address and potentially expunge any adverse remarks made against the petitioners in the impugned order.