2018 (12) TMI 2001 - AT - FEMA

Order of seizure u/s 37-A of FEMA - Competent Authority's power and the scope of adjudication under Section 37-A - clash between a general provision and a specific provision - HELD THAT - The powers of the Appellate Tribunal are general in nature and does not have any specific powers. Whereas Section 37-A (4) is a specific provision. In a clash between a general provision and a specific provision, the specific provision would prevail. The decision of the Supreme Court of India in the case of Suresh Nanda vs. CBI 2008 (1) TMI 876 - SUPREME COURT dealt with the issue of a special Act with the specific subject and a general Act. It laid down where there is a special Act dealing with specific subject, resort should be had to that Act instead of general Act providing for the matter connected with the specific Act. The golden rule of interpretation of statues stipulates that no law or any part thereof can be so interpreted to make the other part redundant. The appellant s plea of setting aside the seizure would tantamount to that. Whether Section 37-A will have retrospective effect or not ? - As there are decisions of the Supreme Court and other courts on the issue whether a law can have retrospective effect. In Vatika Township (P) Ltd. 2014 (9) TMI 576 - SUPREME COURT held Law passed today cannot apply to the events of the past. Retrospective operation should not be given to a statute so as to take away or impair an existing right or create any obligation or impose a new liability. While seizure is a measure which is taken as an immediate action it does not bestow the power of appropriation until and unless it is confiscated. The law, before Section 37-A came into being did not give any right to the parties to get their property seized and thereafter agitate as provided under Section 37-A(3) and Section 37-A (4) before the concerned authorities but was more draconian in the sense that they were straightaway confiscated. Section 37-A has in fact enlarged the rights of the parties with regard to the properties etc. which has supposedly contravened the provisions of law, in the present case Section 4. It is nobody s case that Section 4 did not exist prior to the introduction of Section 37-A and there is no dispute on that. Section 37-A has therefore given more rights to the parties and more channels for them to agitate their case. It has mellowed down the impact of Section 13(2), as presently, there would be a separate procedure involving two different stages of adjudication as stipulated under Section 37-A (3) and 37-A (4). The provisions are beneficial to the parties and has extended their rights further than that was provided in law earlier. As the adjudication proceedings u/s 37-A (4) are yet to be finalised and the law stipulates that the seizure shall continue till the disposal of the adjudication proceedings and because of the issue of retrospectivity will not remain see no legal ground to interfere with the orders of the Competent Authority at this stage. In any case, the appellants will have the liberty to file appeal against the adjudication order as and when passed, under Section 19 of FEMA, when it would be open to them to agitate all the issues raised before the adjudicating authority, if they are aggrieved. I, therefore, dismiss the appeal as rejected.

Summary

Issues Involved:
1. Validity of the seizure order under Section 37-A of FEMA.
2. Retrospective application of Section 37-A.
3. Mutual exclusivity of Sections 37 and 37-A of FEMA.
4. Competent Authority's power and the scope of adjudication under Section 37-A.

Issue-wise Detailed Analysis:

1. Validity of the Seizure Order under Section 37-A of FEMA:
The appellant argued that the seizure order dated 15.12.2017 is fallacious as it relies on investigations, which Section 37-A does not authorize. They contended that Section 37-A (1) should only involve "information," "reason to believe," "suspicion of the authorized officer," and "recording reasons in writing for the seizure." The respondent countered that Sections 37 and 37-A are part of the same chapter and are not mutually exclusive. The Competent Authority's order is based on valid reasons recorded in writing, as required under Section 37-A (1).

2. Retrospective Application of Section 37-A:
The appellant argued that Section 37-A, introduced in 2015, cannot have retrospective effect on actions taken between 2007-2009. They cited the Supreme Court's principle that a law should not apply retrospectively unless explicitly stated. The respondent referred to the Supreme Court's judgment in Gokak Patel Volkart Limited vs. Dundayya Gurushiddaiah Hiremath, arguing that the nature of the offense under Section 4 is continuous and ongoing, thus justifying the application of Section 37-A.

3. Mutual Exclusivity of Sections 37 and 37-A of FEMA:
The appellant claimed that Sections 37 and 37-A are mutually exclusive, with Section 37 dealing with investigation powers and Section 37-A not providing such powers. The respondent argued that both sections are part of Chapter VI of FEMA and should be read harmoniously. Section 37-A does not exclude the application of Section 37.

4. Competent Authority's Power and the Scope of Adjudication under Section 37-A:
The appellant contended that the Competent Authority's order dated 25.05.2018 exceeded its powers by relying on investigations, which Section 37-A does not permit. They argued that the seizure order should be quashed, and the seizure vacated. The respondent maintained that the Competent Authority acted within its powers, as the seizure order was based on valid reasons recorded in writing. The adjudication proceedings under Section 37-A (4) are yet to be finalized, and the seizure should continue until then.

Judgment:
The Tribunal dismissed the appeal, stating that the Competent Authority's order confirming the seizure attains finality only when the adjudicating authority disposes of the adjudication proceedings. The Tribunal emphasized that the seizure order is valid until the adjudication proceedings are completed. The Tribunal also noted that the retrospective application of Section 37-A is justified as it provides additional rights and channels for parties to agitate their case, thus not impairing any existing rights. The appellant's plea to set aside the seizure was rejected, and they were advised to file an appeal under Section 19 of FEMA if aggrieved by the final adjudication order.