2022 (12) TMI 15 - HC - FEMA

Maintainability of appeal before High court - hierarchy of forums provided for the parties to redress their grievances - violation of the provisions of Section 4 of FEMA - shares as well as some immovable properties of the alleged contravener were attached - petioner driven to go before the Tribunal by invoking Section 37A(5) of the FEMA Act - HELD THAT - The parties aggrieved against the order to be passed by the Tribunal can very well invoke the further appeal provision under Section 35 of the FEMA Act to prefer an appeal to the High Court. Therefore, instead of filing a second appeal, the petitioner has taken the route of filing the appeal by way of these two writ petitions, which is not acceptable. Thus, the very remedy available to both the parties to go before the Appellate Tribunal would be unnecessarily lost, which would go against the very scheme of the Act, under which, the order to be passed by the Authorized Officer has to be approved by the Competent Authority and the order of the Competent Authority has to be evaluated by the Tribunal under Section 37A(5) of the FEMA Act, as against which, the aggrieved person can prefer an appeal before the High Court. This kind of hierarchy of forums provided for the parties to redress their grievances cannot be permitted to be omitted, which would result in loss of chance to the other party to invoke the appeal remedy before the other forum. This Court has no hesitation to hold that, since the Tribunal has been functioning with the Chairman from 26.09.2022, the petitioner can prefer an appeal before the Tribunal against the impugned orders and in this regard, this Court feels that some reasonable time, i.e., 45 days, can be granted to the petitioner department to prefer an appeal before the Tribunal. The learned Senior Counsel appearing for the contravener, on instructions, given an undertaking before this Court that, the alleged contravener would not encumber or meddle with the subject properties of the attachment orders, which are impugned herein. Order - Since the petitioner department can very well file an appeal under Section 37A(5) of the FEMA Act before the Appellate Tribunal, both these writ petitions cannot be proceeded further by this Court to decide the issue on merits by invoking the extraordinary power under Article 226 of the Constitution of India. The petitioner department is granted liberty to prefer an appeal before the Tribunal under Section 37A(5) of the FEMA Act, within a period of 45 days from the date of receipt of a copy of this order, where it is open to the petitioner to seek for any interim order. Till such time, i.e, till the petitioner approaches the Tribunal, there shall be an interim protection to the effect that the alleged contravener shall not exploit the movable and immovable properties which are attached in the impugned orders

Issues:
1. Challenge to attachment orders under Section 37A(1) of the FEMA Act.
2. Competent Authority setting aside attachment orders.
3. Entertaining writ petitions without exhausting appeal remedy.
4. Functioning of the Tribunal and its impact on the case.
5. Consideration of principles of natural justice by the Competent Authority.
6. Timeliness of filing appeals before the Tribunal.
7. Availability of further appeal remedy under Section 35 of the FEMA Act.
8. Protection of attached properties during appeal process.

Analysis:

1. The petitioner, an Assistant Director of the Directorate of Enforcement, challenged attachment orders under Section 37A(1) of the FEMA Act regarding violations by the alleged contravener during specific financial years.

2. Competent Authority set aside the attachment orders, prompting the petitioner to file writ petitions challenging these decisions.

3. The issue of entertaining writ petitions without exhausting the appeal remedy was raised, with the petitioner invoking extraordinary jurisdiction under Article 226 of the Constitution due to the non-functioning of the Tribunal at the time of filing.

4. The functioning of the Tribunal, especially with the appointment of a Chairman, became crucial in determining the course of action for the petitioner, leading to considerations regarding appeal procedures under the FEMA Act.

5. Concerns were raised about the Competent Authority not adequately considering the petitioner's pleas, potentially leading to orders passed without following principles of natural justice.

6. The timeliness of filing appeals before the Tribunal within the prescribed 45-day limit from the date of receipt of the orders was highlighted to ensure compliance with statutory provisions.

7. Emphasis was placed on the availability of a further appeal remedy under Section 35 of the FEMA Act, underscoring the hierarchical forum structure for addressing grievances.

8. Measures were taken to protect the attached properties during the appeal process, with undertakings provided by the alleged contravener's counsel to prevent any interference with the subject properties.

In conclusion, the High Court dismissed the writ petitions, directing the petitioner to prefer an appeal before the Tribunal within 45 days. The interim protection for the attached properties was maintained until the petitioner approached the Tribunal, ensuring the preservation of assets during the appeal process.

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