2018 (8) TMI 1693 - HC - FEMA

Tribunal wholly misdirected itself in failing to follow the settled law in relation to the imposition of penalty by ignoring the settled principle - Held that - At the hearing of these Notices of Motion, both sides agree that the order of the Tribunal impugned in these appeals suffers from non-consideration of crucial and vital materials. The matter would have to be decided in accordance with law and particularly in the light of what has been observed by this Court on 21st January, 2015, in a detailed order passed in the FEMA Appeals. Hence, without assigning any reasons, but by keeping all contentions open, the orders impugned in these appeals are quashed and set aside. The appeals are restored to the file of the Tribunal for a decision afresh on merits and in accordance with law. The decision be rendered, uninfluenced by any earlier observations, findings and conclusions. We keep open all contentions and clarify that no opinion is expressed thereon. The appeals are allowed accordingly. In the light of this order, nothing survives in the Notices of Motion and they are all disposed of.

Summary

Issues:
1. Challenge to order of the Appellate Tribunal under the Foreign Exchange Management Act, 1999.
2. Imposition of penalty and non-consideration of crucial materials.
3. Adjudication and appeal process under the Act.
4. Appeal to the High Court and jurisdiction for filing appeals.
5. Procedural issues related to filing and registration of appeals on the Original Side of the High Court.

Analysis:
1. The judgment pertains to various appeals challenging a common order passed by the Appellate Tribunal for Foreign Exchange under the Foreign Exchange Management Act, 1999. The central issue raised in these appeals was whether the Tribunal misdirected itself by not following settled legal principles regarding the imposition of penalties. The appellants argued that penalties could only be imposed if the ingredients of the offense were fully established, and there was a lack of specific evidence linking individuals to the alleged breaches.

2. During the hearing, both parties agreed that the impugned Tribunal order lacked consideration of crucial materials. Consequently, the High Court quashed and set aside the orders in question, restoring the appeals to the Tribunal for a fresh decision on merits and in accordance with the law. The Court emphasized that the new decision should not be influenced by any previous observations and should be made without expressing any opinion on the contentions raised.

3. The judgment highlighted the adjudication and appeal process under the Foreign Exchange Management Act, 1999. It explained the hierarchy of authorities involved, starting from the adjudicating authority to the Special Director (Appeals) and finally to the Appellate Tribunal. The High Court's jurisdiction as a Court of further appeal was outlined, emphasizing the specific provisions governing appeals to the High Court on questions of law arising from Tribunal decisions.

4. The judgment delved into the procedural aspects of filing appeals in the High Court, particularly distinguishing between the Original Side and the Appellate Side. It clarified that appeals under special statutes like FEMA and FERA, when brought before the High Court, were to be treated as First Appeals and heard by a Division Bench. The Court addressed the challenges faced in the Original Side Registry regarding the registration and processing of such appeals, advocating for consistency and efficiency in handling these matters.

5. To streamline the process and avoid complications, the High Court ruled that all appeals related to FEMA and FERA would be treated as filed on the Appellate Side, ensuring a more structured and effective handling of these cases. The judgment concluded by directing the forwarding of the order to the relevant registries for implementation and emphasizing the need for improved efficiency in dealing with such appeals.