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2023 (7) TMI 1126 - HC - FEMAValidity of proceedings under FERA, 1973 post introduction of FEMA, 1999 - contention of the appellants that the department had invoked the provisions of the repealed Act of 1973 subsequent to the Act of 1999 coming into force requires consideration - appellants contented that since the department did not act in terms of Section 49 of the Act of 1999 in invoking the provisions of FERA within the time period prescribed, therefore, the act of the department is invalid - HELD THAT - Sub Section (3) of Section 49 of the Act of 1999 casts an embargo upon a Court from taking cognizance of an offence under the Act of 1973 and on the Adjudicating Officer from taking notice of any contravention under Section 51 of the Act of 1973, after the expiry of a period 2 years from the date of commencement of the Act of 1999. The Act of 1973 has contemplated civil liability for contravention with the power to adjudicate on the same being vested with the Adjudicating Officer under Section 51. Section 56 of the Act of 1973 has provided that, without prejudice to any award of penalty by the Adjudicating Officer, if a person contravenes any of the provisions of the Act of 1973, other than Section 13, 18 (1) (a), 18 A, 19 (1) (a), 44 (2), 57 and 58 or any rule, direction or order made thereunder, such person upon conviction by a Court, be punishable with the quantum of punishment as has been prescribed. The Act of 1973 has therefore contemplated both civil and criminal liability for contraventions of the provisions of the Act of 1973 to be scenario specific. Some contraventions are purely civil in nature while others entail both civil and criminal liability. Therefore, the Act of 1973 does not contemplate that in respect of a particular case, there must be simultaneous taking of notice of contravention by an Adjudicating Officer and cognizance of the same by the Court. The functions of the two Adjudicating authorities have been prescribed to be disjoint. In such circumstances, it would be appropriate to construe the word and used in Section 49 (3) of the Act of 1999 as or . Any other construction would militate against the scheme of the Act of 1973 and would do violence thereto. Appellants in the first appeal had sold foreign currency on sponsoring of fictitious firms who in turn sponsored fake names between the period April 1, 2000 and May 6, 2000. The records produced in court have established that, Manas Kumar Moitra and Mrs Rooma Maitra had formed some fictitious firms/companies who gave certain names or sponsored persons for purchase of foreign currency projecting their impending foreign business tour but all such persons were not traceable. These persons had been sponsored repeatedly within a short period of time. Similar is the case in the next two appeals where Manas Kumar Maitra along with 4 others had been involved in creating fake firms/companies for sponsoring persons for alleged business travel within a short period of time. In both the set of cases, both at the level of the Adjudicating Officer as also at the level of the Appellant Authority, there is a concurrent finding that, the appellants had acted without due care and in violation of the guidelines of the Reserve Bank of India in selling foreign currency to those persons. It has been concurrently held that, the appellants had failed to discharge their duty of reasonable care in selling foreign currencies to those persons involved when such currencies were sought for within such a short period of time with same dates of travel. In all the three appeals, there have been on current finding on facts. The adjudicating officer in all the proceedings had found violations of the guidelines of the Reserve Bank of India by the appellants, in their dealings with the sale of foreign currency to the delinquents. The findings returned by the adjudicating officer and by the appellate authority on such factual aspects have not been established to be perverse in these appeals. Thus the appeals FEA 5 of 2008, FEA 22 of 2009, FEA 23 of 2009 being without any merit are dismissed without any order as to cost.
Issues Involved:
1. Validity of the memorandum issued on May 31, 2002, under the Foreign Exchange Regulation Act, 1973 (FERA) post the enactment of the Foreign Exchange Management Act, 1999 (FEMA). 2. Jurisdiction and authority of the adjudicating officer. 3. Compliance with Reserve Bank of India (RBI) guidelines by the appellants. 4. Interpretation of Section 49 of FEMA and its implications on the proceedings initiated under FERA. Summary: Issue 1: Validity of the Memorandum Issued on May 31, 2002 The appellants contended that the memorandum dated May 31, 2002, was issued beyond the prescribed period, and thus, invoking FERA provisions was invalid post-FEMA enactment. The court examined Section 49 of FEMA, emphasizing that no court shall take cognizance of an offence under FERA, nor shall any adjudicating officer take notice of any contravention under Section 51 of FERA after May 31, 2002. The court concluded that the adjudicating officer took notice of the contraventions on May 31, 2002, thereby complying with the time limit specified by Section 49(3) of FEMA. Issue 2: Jurisdiction and Authority of the Adjudicating Officer The appellants argued that the adjudicating officer lacked jurisdiction, as the impugned order was passed beyond the prescribed time. The court noted that the adjudicating officer issued the memorandum on May 31, 2002, within the time limit. The court also referred to the notification of 2003, which designated personnel to discharge functions under FERA, affirming the validity of the adjudicating officer's actions. Issue 3: Compliance with RBI Guidelines The appellants contended that they followed RBI guidelines in selling foreign currency and that there were no allegations from RBI regarding violations. The court found that the appellants sold foreign currency to fake passengers sponsored by fictitious firms without due care, violating RBI guidelines. The concurrent findings by the adjudicating officer and the appellate authority were upheld, as the appellants failed to discharge their duty of reasonable care. Issue 4: Interpretation of Section 49 of FEMA The court interpreted Section 49(3) of FEMA, stating that it casts an embargo on courts from taking cognizance of offences under FERA and on adjudicating officers from taking notice of contraventions after May 31, 2002. The court rejected the appellants' contention that both conditions must be fulfilled simultaneously. It held that the adjudicating officer's notice of contraventions on May 31, 2002, was sufficient to continue proceedings under FERA. Conclusion: The appeals FEA 5 of 2008, FEA 22 of 2009, and FEA 23 of 2009 were dismissed, with the court finding no merit in the appellants' arguments. The court upheld the concurrent findings of the adjudicating officer and the appellate authority regarding the violations of RBI guidelines by the appellants.
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