2015 (5) TMI 939 - HC - FEMA

Maintainability of appeal - whether the appeals were dealt with by the Appellate Tribunal (which is the new avatar of the Appellate Board) under FERA or FEMA - Held that - Language of Section 49(5)(b) of FEMA is suggestive of the fact that it is only an appeal, which was pending before the Appellate Board, and which could not be disposed of before the commencement of the Act (i.e., FEMA), would stand transferred to the Appellate Tribunal. Therefore, to suggest that the subject appeals, were disposed of by the Appellate Tribunal, based on the said provision, in my view, does not appear to be, on a plain reading of the provision, the correct position of law. - since the subject appeals were not pending on the date of commencement of FEMA, the Appellate Tribunal, which got constituted after the dissolution of the Appellate Board, had exercised powers under FERA and not had taken recourse to the provisions of the FEMA. In so far as Section 35 of the FEMA is concerned, it gives a right to an aggrieved party to prefer an appeal against any order or decision of the Appellate Tribunal. Therefore, an appeal, even against an interim order of the Appellate Tribunal, will be available to the petitioners. The appeal, however, will have to be preferred, by the aggrieved party (in this case the petitioners herein) before the concerned High Court. The explanation to Section 35 of the FEMA, sets out, as to which High Court would be the appropriate court in a given case. It is not the petitioners case that they are ordinarily residents of Delhi or, they carry on business or personally work for gain within the jurisdiction of this court. That being so, this court is not the appropriate court where an appeal under Section 35 of FEMA can be preferred by the petitioners - Appeal not maintainable - Appeal disposed of .

Summary

Issues:
1. Maintainability of writ petitions challenging Tribunal's order
2. Applicability of FEMA or FERA in the case
3. Jurisdiction of the High Court under Section 35 of FEMA

Issue 1: Maintainability of writ petitions challenging Tribunal's order:
The writ petitions challenged a common order by the Appellate Tribunal for Foreign Exchange (the Tribunal) dated 08.12.2014, which ruled on the petitioners' prayer to waive the pre-deposit of penalties imposed by the Adjudicating Authority. The petitioners argued that the only available remedy was a petition under Article 226 of the Constitution, as an appeal under FERA was not possible due to the interim nature of the impugned order. The respondent contended that a statutory appeal under Section 35 of FEMA was available to the petitioners, citing relevant Supreme Court judgments. The court noted that where an alternate remedy exists, a writ court should refrain from intervention unless there is a lack of jurisdiction or breach of natural justice. As the Supreme Court had clarified that appeals under FEMA could be filed even against interim orders, the court declined to entertain the writ petitions, directing the petitioners to approach the concerned High Court.

Issue 2: Applicability of FEMA or FERA in the case:
The proceedings against the petitioners were initiated under FERA during the sun-set period, allowing the respondent to invoke FERA provisions. The show cause notice issued to the company and its directors referenced both FERA and FEMA provisions. The question arose whether the appeals were dealt with under FERA or FEMA by the Appellate Tribunal. The respondent argued that the appeals were handled under FEMA, citing Section 49(5)(b). However, the court found the language of Section 49(5)(b) suggestive that only pending appeals transferred to the Appellate Tribunal. Despite the petitioners' reliance on Section 19 of FEMA in their appeals, the court, guided by the Supreme Court judgment, concluded that the Appellate Tribunal had exercised powers under FEMA, not FERA.

Issue 3: Jurisdiction of the High Court under Section 35 of FEMA:
Section 35 of FEMA provides the right to appeal against any order or decision of the Appellate Tribunal. The court clarified that even appeals against interim orders were permissible under Section 35, to be filed before the concerned High Court. Since the petitioners did not fall within the jurisdiction of the court, the appropriate court for appeal under Section 35 of FEMA was not the present High Court. Consequently, the court disposed of the writ petitions, granting the petitioners liberty to approach the relevant High Court within a specified time frame, with a warning of dissolving the liberty if no action was taken within the stipulated period.