2019 (1) TMI 1502 - SC - FEMA

Maintainability of appeal before Special Director (Appeals) - proper appellate authority for deciding the appeals filed after repeal of FERA on 01.06.2000 against the order passed under Section 51 of FERA - contravention of Sections 9 (1) (a), 9(1)(c) and Section 16(1) of the Foreign Exchange Regulation Act, 1973 - imports and exports of certain commodities made with two foreign parties, viz., M/s Fingrain, S.A., Geneva and M/s Continental Grain Export Corporation, New York - whether appeal against the order passed by the Deputy Director of Enforcement (Adjudicating Officer) under Section 51 of FERA read with FEMA would lie only to the Appellate Tribunal under Section 19 of FEMA but not before the Special Director (Appeals) under Section 17 of FERA? Held that - Any appeal filed after 01.06.2000 against the order of the Adjudicating Officer passed under Section 51 of FERA in the proceedings initiated under FERA would lie before the Appellate Tribunal under Section 19 of FEMA. The legislature did not intend to make a distinction between the two appeals for their disposal by two different appellate authorities under FEMA only because one appeal was filed prior to 01.06.2000, therefore, it will lie before the Appellate Tribunal whereas the other appeal which was filed after 01.06.2000 though against the similar order, it will lie before the Special Director (Appeals). In our view, there does not appear to be any justifiable reason to make such distinction for filing of appeals filed against the similar order passed under FERA before two different appellate authorities under FEMA - this intention of the legislature is strengthened when we read Section 49 (5)(b) of FEMA and Section 81(c) of FERA. So far as Section 49(5)(b) of FEMA is concerned, it specifically provides that the appeals filed under Section 52 (2) of FERA against the order passed under Section 51 of FERA will be decided by the Appellate Tribunal under FEMA - So far as Section 81(c) of FERA, 1973 is concerned, it deals with Repeal and Saving of FERA, 1947. Clause (c) of Section 81 specifically provides that all the appeals filed under Section 23 of FERA, 1947, whether pending on the date of Repeal or/and those filed after the repeal of FERA, 1947, shall be disposed of by the Appellate Board constituted under FERA, 1973. Since Section 49(5)(b) of FEMA is not identically worded on the pattern of Section 81(c) of FERA, that itself would justify that the legislature intended to provide two appellate authorities in FEMA for filing two types of appeals arising out of a similar order - it is not possible to accept the submission of learned counsel for the respondents(assessees) that by interpretative process this Court can uphold creation of another appellate authority for the disposal of the appeals filed against the order passed under Section 51 of FERA after 01.06.2000 which do not fall under Section 49 (5)(2) of FEMA. There is no reason as to why the same legislative intent while interpreting the provisions of FERA, 1973 and FEMA, 1999 is applied for deciding the identical question now arising in the case. The appellate forum for deciding the appeals arising out of the order passed under Section 51 of FERA whether filed prior to 01.06.2000 or filed after 01.06.2000 must be the same, i.e., Appellate Tribunal under FEMA - the appeal filed by respondent Nos. 2 to 4 against the order dated 05.12.2003 passed by Deputy Director of enforcement under Section 51 of FERA will lie and was, therefore, maintainable only before the Appellate Tribunal under Section 19 of FEMA - appeal allowed.

Summary

Issues Involved:
1. Jurisdiction of the Special Director (Appeals) under FEMA.
2. Applicability of FERA provisions post-repeal.
3. Proper appellate authority for orders passed under Section 51 of FERA.

Detailed Analysis:

1. Jurisdiction of the Special Director (Appeals) under FEMA:
The core issue was whether the Special Director (Appeals) had jurisdiction to hear appeals against orders passed under Section 51 of FERA. The High Court had previously ruled that such appeals were maintainable before the Special Director (Appeals). However, the Supreme Court disagreed, emphasizing that appeals against orders passed under Section 51 of FERA should be heard by the Appellate Tribunal under Section 19 of FEMA. The Court reasoned that the legislature did not intend to create two separate appellate authorities under FEMA for similar orders, as doing so would lead to an illogical and anomalous situation.

2. Applicability of FERA provisions post-repeal:
The case involved the transition from FERA to FEMA and the applicability of FERA provisions after its repeal. The Court noted that FERA was repealed and replaced by FEMA on 01.06.2000. Section 49(5)(b) of FEMA provided that appeals pending before the Appellate Board under FERA should be transferred to the Appellate Tribunal under FEMA. The Court held that this legislative intent indicated that all appeals, whether filed before or after the repeal of FERA, should be heard by the Appellate Tribunal under FEMA.

3. Proper appellate authority for orders passed under Section 51 of FERA:
The Court examined the relevant provisions of both FERA and FEMA to determine the appropriate appellate authority. It concluded that any appeal filed after 01.06.2000 against an order passed under Section 51 of FERA should lie before the Appellate Tribunal under Section 19 of FEMA. The Court reasoned that the legislature did not intend to provide two separate appellate authorities for similar orders and that such a distinction would not stand for any logical reason. The Court also noted that the Special Director (Appeals) is subordinate in hierarchy to the Appellate Tribunal, and it would be illogical to have one appeal before the Appellate Tribunal and another before the Special Director (Appeals) for similar orders.

Conclusion:
The Supreme Court set aside the High Court's order and held that the appeals filed by the respondents against the order dated 05.12.2003 passed by the Deputy Director of Enforcement under Section 51 of FERA should be heard by the Appellate Tribunal under Section 19 of FEMA. The appeals were transferred to the concerned Appellate Tribunal for disposal on merits in accordance with the law. The appeal by the Union of India was allowed, and the impugned order was set aside.