FERA versus M/S. PREMIER LIMITED (FORMERLY PREMIER AUTOMOBILES LTD.) & ORS. on 29 January 2019

[2019] 2 S.C.R. 551

UNION OF INDIA & ORS.

v.

M/s. PREMIER LIMITED (FORMERLY PREMIERAUTOMOBILES LTD.) & ORS.

(Civil Appeal No. 3529 of 2008)

JANUARY 29, 2019

[ABHAY MANOHAR SAPRE AND INDIRA BANERJEE, JJ.]

Foreign Exchange Regulation Act, 1973 :

ss.9(1) (a), 9(1)(c), 16(1), 50-52 and 81 – Repeal of 1973Act-FERA – Appeals filed thereafter against order passed u/s.51 ofFERA – Proper appellate authority for deciding – Special Director(Appeals) u/s.17 of 1999 Act-FEMA (that replaced FERA) orAppellate Tribunal u/s.19 of FEMA – On 01.05.1991 show causenotice issued by the Special Director to respondent no.2 and its twodirectors, respondent nos.3 and 4 for allegedly contraveningprovisions of FERA– During the pendency of the proceedings, FERAwas repealed w.e.f 01.06.2000 and replaced by FEMA – On05.12.2003, adjudication order passed by the Deputy Director ofEnforcement under FEMA r/w s.51 of FERA, in relation to the showcause notice dtd. 01.05.1991, imposing penalty of Rs.15,50,000/-on respondent nos.2 to 4 – Appeal filed by respondent nos.2 to 4before the Special Director (Appeals) u/s.17 of FEMA, which wasdismissed as not maintainable – Writ petitions filed by respondentnos.2 to 4, which were allowed – Orders of the Special Director(Appeals) were quashed by the High Court holding that the appealsfiled by respondent nos.2 to 4 before the Special Director (Appeals)were maintainable – On appeal, held: Any appeal whether filedprior to 01.06.2000 or after 01.06.2000 against the order of theAdjudicating Officer passed u/s.51 of FERA in the proceedingsinitiated under FERA would lie before the Appellate Tribunal u/s.19 of FEMA – View taken by the High Court not concurred with –Appeal filed by respondent nos.2 to 4 against the order dtd.05.12.2003 passed by Deputy Director of Enforcement u/s.51 ofFERA will lie and was, therefore, maintainable only before theAppellate Tribunal u/s.19 of FEMA – Appeals filed by respondentnos.2 to 4 before the Special Director (Appeals) accordinglytransferred to the Appellate Tribunal for disposal on merits – Foreign

A

B

C

D

E

F

G

H

552 SUPREME COURT REPORTS [2019] 2 S.C.R.

AExchange Management Act, 1999 – ss.17-19, 35 and 49 – ForeignExchange Regulation Act, 1947 – s.23 – Interpretation of Statutes– Purposive Interpretation.

Allowing the appeal, the CourtHELD: 1.1 Section 49(5)(b) of Foreign ExchangeBManagement Act, 1999 (FEMA) deals with repeal and saving inrelation to the action taken and to be taken under ForeignExchange Regulation Act, 1973 (FERA). Reading of this Sectionshows that the legislature has equated the Appellate Boardconstituted under FERA with the Appellate Tribunal constitutedunder FEMA for disposal of the appeals filed under Section 52(2)Cof FERA against an order passed under Section 51 of FERA whichwere pending before the Appellate Board as on 01.06.2000. Suchappeals stood transferred from the Appellate Board to theAppellate Tribunal for their disposal in accordance with law. Thereason as to why a specific provision for transfer of such pendingDappeals was made for their disposal from the Appellate Board tothe Appellate Tribunal was that the Appellate Board constitutedunder FERA stood dissolved by Section 49(1) of FEMA with effectfrom 01.06.2000. [Paras 19, 20][566-G-H; 567-A]

1.2 It is this dissolution of the Appellate Board, whichEnecessitated the legislature to make a corresponding provisionin the new Act (FEMA) so that the consequences arising out ofthe dissolution of the Appellate Board constituted under FERAis taken care of by another appellate authority constituted underthe FEMA and all pending appeals are automatically transferredto the Appellate Board for their disposal under FEMA. AnyFappeal filed after 01.06.2000 against the order of the AdjudicatingOfficer passed under Section 51 of FERA in the proceedingsinitiated under FERA would lie before the Appellate Tribunalunder Section 19 of FEMA. [Paras 21, 22][567-B-D]

1.3 This is for more than one reason. First, if theGAdjudicating Officer had passed an order under Section 51 ofFERA prior to 01.06.2000, then the appeal against such orderwas required to be filed before the Appellate Board under Section52 (2) of FERA. In other words, if the Adjudicating Officer hadpassed the order under Section 51 of FERA prior to 01.06.2000

H

when FERA was in force, the appeal against such order wasmaintainable only under Section 52 (2) before the Appellate Boardunder FERA. Second, if such appeal had remained pending beforethe Appellate Board on 01.06.2000, the same would have beentransferred to the Appellate Tribunal constituted under FEMAin terms of Section 49 (5)(b) of FEMA for its disposal. Third, afortiori, any appeal, if filed after 01.06.2000 and against the similarorder, i.e., an order passed under Section 51 of FERA shouldalso be held to lie before the Appellate Tribunal under Section19 of FEMA alike the appeals filed prior to 01.06.2000 and whichwere transferred to the Appellate Tribunal by virtue of Section49(5)(b) of FEMA. Fourth, the reason behind this simultaneousstatutory transfer of pending appeals to the Appellate Tribunalunder FEMA appears to be that the legislature did not intend toprovide two separate Appellate Authorities under FEMA forchallenging the adjudication order passed under Section 51 ofthe FERA, i.e., one appeal before the Special Director (Appeals)and the other appeal before the Appellate Tribunal under FEMA.[Paras 22-27][567-D-F; G; 568-A-B]

1.4 In other words, the legislature did not intend to make adistinction between the two appeals for their disposal by twodifferent appellate authorities under FEMA only because oneappeal was filed prior to 01.06.2000, therefore, it will lie beforethe Appellate Tribunal whereas the other appeal which was filedafter 01.06.2000 though against the similar order, it will lie beforethe Special Director (Appeals). There does not appear to be anyjustifiable reason to make such distinction for filing of appealsfiled against the similar order passed under FERA before twodifferent appellate authorities under FEMA. This intention of thelegislature is strengthened when one reads Section 49 (5)(b) ofFEMA and Section 81(c) of FERA.[Paras 28, 29][568-C-D]

1.5 Section 49(5)(b) of FEMA specifically provides that theappeals filed under Section 52(2) of FERA against the orderpassed under Section 51 of FERA will be decided by the AppellateTribunal under FEMA. Section 81(c) of FERA, 1973 deals withRepeal and Saving of FERA, 1947. Clause (c) of Section 81specifically provides that all the appeals filed under Section 23 ofFERA, 1947, whether pending on the date of Repeal or/and those AB

C

D

E

F

G

H

Afiled after the repeal of FERA, 1947, shall be disposed of by theAppellate Board constituted under FERA, 1973. It is true thatSection 49(5)(b) of FEMA is not worded alike Section 81(c) ofFERA, yet, it shows the intention of the legislature that all suchappeals have to be heard by the Appellate Board under the FERA.Indeed, when similar occasion arose at the time of repealing ofBFERA, 1947 by a new Act- FERA, 1973 on 01.01.1974, thelegislature provided in Section 81(c) of FERA, 1973 that allappeals filed under Section 23(E)(2) of FERA, 1947 and pendingbefore the Appellate Board including those appeals which arefiled against the order passed after 01.01.1974 shall be disposedCof by the Appellate Board under FERA, 1973. [Paras 30-32, 35][568-E-G; 569-C]

1.6 Perusal of Scheme of FEMA would show that the SpecialDirector (Appeals) is subordinate in hierarchy to the AppellateTribunal prescribed under Section 49(5)(2) of FEMA. It is,Dtherefore, not possible to hold that one appeal would bemaintainable before the Appellate Tribunal and the other appealarising out of similar order would be maintainable before theSpecial Director (Appeals), who is subordinate in hierarchy tothe Appellate Board. Such distinction does not stand for anylogic. [Para 37][569-E, F]E

1.7 Applying the principle of purposive interpretation, theappellate forum for deciding the appeals arising out of the orderpassed under Section 51 of FERA whether filed prior to01.06.2000 or filed after 01.06.2000 must be the same, i.e.,Appellate Tribunal under FEMA. The view taken by the HighFCourt cannot be concurred with and accordingly it is held thatthe appeal filed by respondent nos. 2 to 4 against the order dated05.12.2003 passed by Deputy Director of enforcement underSection 51 of FERA will lie and was, therefore, maintainable onlybefore the Appellate Tribunal under Section 19 of FEMA.[Paras 40, 41][570-C-D]G

1.8 The appeals which respondent Nos.2 to 4 had filedbefore the Special Director (Appeals) are accordingly transferredto the concerned Appellate Tribunal constituted underFEMA for their disposal on merits in accordance with law.[Para 42][570-E]H

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3529of 2008.

From the Judgment and Order dated 13.07.2006 of the High Courtof Judicature at Bombay in Writ Petition Nos.2780-2782 of 2004 andWrit Petition No.1567 of 2005 respectively.

K. Radhakrishnan, Sr. Adv., Ms. Rashmi Malhotra, Rajesh Ranjan,Ms. Sunita Rani Singh, Sumit Teterwal, Chakitan Vikram Shekher Papta(for B. Krishna Prasad), Advs. for the Appellant.

Ajay Aggarwal, Ms. Mallika Joshi, Rajan Narain, Manish K.Bishnoi, Archit Gupta, Ms. Tanvi Sapra, Narinder K. Verma, AnuragBhatt, Advs. for the Respondents.

The Judgment of the Court was delivered by ABHAY MANOHAR SAPRE, J.

1. This appeal is filed by the Union of India against the finaljudgment and order dated 13.07.2006 passed by the High Court ofJudicature at Bombay in Writ Petition Nos. 1567 of 2005, 2780, 2781 &2782 of 2004 wherein the High Court allowed the writ petitions andquashed the orders passed by the Special Director (Appeals).

2. The controversy involved in this appeal is short. However, inorder to appreciate the same, few undisputed facts need mentionhereinbelow.

3. On 01.05.1991, a memorandum to show cause notice was issuedby the Special Director to respondent Nos. 2, 3 and 4, namely, M/sGodrej Industries Ltd. [formerly known as Godrej Soaps Ltd. (R-2)]and its two Directors (R-3 and R-4) for allegedly committing contraventionof Sections 9 (1) (a), 9(1)(c) and Section 16(1) of the Foreign ExchangeRegulation Act, 1973 (hereinafter referred to as “FERA”) in respect ofimports and exports of certain commodities made with two foreignparties, viz., M/s Fingrain, S.A., Geneva and M/s Continental Grain ExportCorporation, New York during the year 1977-78.

4. During the pendency of the proceedings, FERA was repealedwith effect from 01.06.2000. It was, however, replaced by ForeignExchange Management Act, 1999 (hereinafter referred to as “FEMA”).

5. On 05.12.2003, an adjudication order was passed by the DeputyDirector of Enforcement under FEMA read with FERA in relation tothe show cause notice dated 01.05.1991. By this order, penalty of

A

B

C

D

E

F

G

H

556 SUPREME COURT REPORTS [2019] 2 S.C.R.

ARs.15,50,000/- was imposed on M/s Godrej Industries Ltd. and its twoDirectors for contravening the provisions of Sections 9 (1)(a) and 9(1)(c)read with Section 16 (1) of FERA.

6. On 15.01.2004, the respondent Nos. 2 to 4 felt aggrieved bythe adjudication order dated 05.12.2003 and filed appeal before the SpecialBDirector (Appeals) under Section 17 of FEMA.

7. On 08.09.2004 and 08.11.2004, the Special Director (Appeals)dismissed the appeals as being not maintainable. He held that the SpecialDirector (Appeals) has no jurisdiction to hear the appeals against theadjudication order passed under Section 51 of FERA.

C8. Respondent Nos. 2 to 4 felt aggrieved by orders dated 08.09.2004and 08.11.2004 and filed writ petitions before the High Court of Bombayat Mumbai. By impugned common order, the High Court allowed thewrit petitions and quashed the orders of the Special Director (Appeals).The High Court held that the appeals filed by respondent Nos.2 to 4before the Special Director (Appeals) against the adjudication order datedD05.12.2003 were maintainable inasmuch as the Special Director(Appeals) possessed the jurisdiction to decide the appeals on merits.

9. It is against this order of the High Court, the Revenue has feltaggrieved and filed the present appeal by way of special leave beforethis Court.

E10. Heard learned counsel for the parties.

11. Learned counsel for the appellant (Union of India) whileassailing the legality of the impugned order contended that on properreading of relevant provisions of FERA and FEMA and especially Section81 of FERA and Sections 17, 19 and 49 of FEMA in juxtaposition, it isFclear that the appeal against the order dated 05.12.2003 passed by theDeputy Director of Enforcement (Adjudicating Officer) under Section51 of FERA read with FEMA would lie only to the Appellate Tribunalunder Section 19 of FEMA but not before the Special Director (Appeals)under Section 17 of FERA.

12. It is this submission, the learned counsel elaborated in hisGargument by referring to various provisions of FERA and FEMA.

13. In reply, learned counsel for the respondents(assessees)supported the view taken by the High Court and contended that theappeal was rightly held maintainable under Section 17 of FEMA before H

UOI v. M/s. PREMIER LTD. (FORMERLY PREMIER AUTOMOBILES LTD.)[ABHAY MANOHAR SAPRE, J.]

the Special Director (Appeals) against the order dated 05.12.2003 passedby Deputy Director of Enforcement as an Adjudicating Officer for itsdisposal. Learned counsel also referred to the provisions of FERA andFEMA to support his arguments.

14. Having heard the learned counsel for the parties and on perusalof the record of the case including the written submissions, we findforce in the submissions of learned counsel for the appellants-UOI.

15. The question, which arises for consideration in this appeal,is - which is the proper appellate authority for deciding the appeals filedafter repeal of FERA on 01.06.2000 against the order passed underSection 51 of FERA in the proceedings initiated prior to 01.06.2000,viz., is it the “Special Director (Appeals)” under Section 17 of FEMA oris it the “Appellate Tribunal” under Section 19 of FEMA.

16. In other words, the question is, if the Adjudicating Officer haspassed an order after the repeal of FERA in the proceedings initiatedprior to 01.06.2000, whether an appeal against such order will lie beforethe “Special Director (Appeals)” under Section 17 of FEMA or beforethe “Appellate Tribunal” under Section 19 of FEMA.

17. In order to answer the question involved in this appeal, it isnecessary to take note of some relevant provisions of FERA (sincerepealed) and FEMA under which the issue was dealt with. ThoughRules are also framed under FEMA prescribing the manner in which theappeals are to be prosecuted but for deciding the question, it may not benecessary to examine the Rules.

18. The relevant Sections are Sections 50, 51, 52, 54 and 81 ofFERA and Sections 17, 18, 19 and 49 of FEMA which read as under:

“FERA

Section 50

Penalty-If any person contravenes any of the provisionsof this Act other than section 13, clause (a) of sub-section(1) of section 18, section 18 A and clause (a) of sub-section(1) of section 19 or of any rule, direction or order madethereunder, he shall be liable to such penalty not exceedingfive times the amount or value involved in any suchcontravention or five thousand rupees, whichever is moreas may be adjudged by the Director of Enforcement or any

A

B

C

D

E

F

G

H

558 SUPREME COURT REPORTS [2019] 2 S.C.R.

A

B

C

D

E

F

G

other officer of Enforcement not below the rank of anAssistant Director of Enforcement specially empowered inthis behalf by order of the Central Government (in eithercase hereinafter referred to as the adjudicating officer).

Section 51

Power to adjudicate- For the purpose of adjudging undersection 50 whether any person has committed acontravention of any of the provisions of this Act (otherthan those referred to in that section) or of any rule,direction or order made thereunder, the adjudicating officershall hold an inquiry in the prescribed manner after givingthat person a reasonable opportunity for making arepresentation in the matter and if, on such inquiry, he issatisfied that the person has committed the contravention,he may impose such penalty as he thinks fit in accordancewith the provisions of that section.

Section 52

Appeal to Appellate Board- (1) The Central Government,may by notification in the Official Gazette, constitute anAppellate Board to be called the Foreign ExchangeRegulation Appellate Board consisting of a Chairman [beinga person who has for at least ten years held a civil judicialpost or who has been a member of the Central LegalService (not below Grade 1) for at least three years or whohas been in practice as an advocate for at least ten years]and such number of other members, not exceeding four tobe appointed by the Central Government for hearingappeals against the orders of the adjudicating officer madeunder section 51.

(2) Any person aggrieved by such order may, on paymentof such fee as may be prescribed and after depositing thesum imposed by way of penalty under section 50 and withinforty-five days from the date on which the order is servedon the person committing the contravention, prefer anappeal to the Appellate Board:

H

UOI v. M/s. PREMIER LTD. (FORMERLY PREMIER AUTOMOBILES LTD.)[ABHAY MANOHAR SAPRE, J.]

Provided that the Appellate Board may entertain anyappeal after the expiry of the said period of forty-five days,but not after ninety days from the date aforesaid if it issatisfied that the appellate was prevented by sufficient causefrom filing the appeal in time:

Provided further that where the Appellate Board is ofopinion that the deposit to be made will cause unduehardship to the appellant, it may, in its own discretion,dispense with such a deposit either unconditionally orsubject to such conditions as it may deem fit.

(3) On receipt of an appeal under sub-section (2) theAppellate Board may, after making such further inquiry asit deems fit, confirm, modify or set aside the order appealedagainst and the decision of the Appellate Board shall,subject to the provisions of section 54, be final and if thesum deposited by way of penalty under sub-section (2)exceeds the amount directed to be paid by the Appellate Board, the excess amount shall be refunded.

(4) The Appellate Board may, for the purpose ofexamining the legality, propriety or correctness of any ordermade by the adjudicating officer under section 50 read withsection 51 in relation to any proceeding, on its own motionor otherwise, call for the records of such proceeding andmake such order in the case as it thinks fit.

(5) No order of the adjudicating officer made undersection 50 read with section 51 shall be varied by theAppellate Board so as to prejudicially affect any personwithout giving such person a reasonable opportunity formaking a representation in the matter; and subject theretothe Appellate Board shall follow such procedure, in respectof the proceedings before it, as may be prescribed.

(6) The powers and functions of the Appellate Board maybe exercised and discharged by Benches consisting of twomembers and constituted by the Chairman of the AppellateBoard:

A

B

CD

E

F

G

H

560 SUPREME COURT REPORTS [2019] 2 S.C.R.

A

Provided that if the members of the Bench differ on anypoint or points, they shall state the point or points on whichthey differ and refer the same to a third member (to bespecified by the Chairman) for hearing on such point orpoints and such point or points shall be decided accordingto the opinion of that member:

B

Provided further that it shall be competent for theChairman or any other member of the Appellate Boardauthorised by the Chairman in this behalf to exercise thepowers and discharge the functions of the Appellate Boardin respect of any appeal against an order imposing a penaltyof an amount not exceeding two lakhs and fifty thousandrupees.

C

Section 54

Appeal to High Court- An appeal shall lie to the HighCourt only on questions of law from any decision or orderDof the Appellate Board under sub-section (3) or sub-section(4) of section 52:

Provided that the High Court shall not entertain anyappeal under this section if it is filed after the expiry ofsixty days of the date of communication of the decision orEorder of the Appellate Board, unless the High Court issatisfied that the appellant was prevented by sufficient cause from filing the appeal in time.

Explanation. —In this section and in section 55, “HighCourt” means-

(i) the High Court within the jurisdiction of which theaggrieved party ordinarily resides or carries on businessor personally works for gain; and F

(ii) where the Central Government is the aggrieved party,the High Court within the jurisdiction of which therespondent, or in a case where there are more than oneGrespondent, any of the respondents, ordinarily resides orcarries on business or personally works for gain.

Section 81

Repeal and Saving- (1) The Foreign ExchangeRegulation Act, 1947 (7 of 1947) is hereby repealed.

H

(2) Notwithstanding such repeal-

(a) anything done or any action taken or purported tohave been done or taken (including any rule, notification,inspection, order or notice made or issued, or anyappointment, confirmation or declaration made or anylicence, permission, authorisation or exemption granted orany document or instrument executed or any direction givenor any proceedings taken or any confiscation adjudged orany penalty or fine imposed) under the Act hereby repealedshall, in so far as it is not inconsistent with the provisionsof this Act, be deemed to have been done or taken underthe corresponding provisions of this Act;

(b) the provisions of section 60 of this Act shall apply inrelation to the contravention of any of the provisions of theAct hereby repealed or of any rule, direction or order madethereunder;

(c) any appeal preferred to the Foreign ExchangeRegulation Appellate Board under sub-section (2)of section23E of the Act hereby repealed but not disposed of beforethe commencement of this Act and any appeal that may bepreferred to the said Board against any order made or tobe made under section 23 of the Act hereby repealed maybe disposed of by any member of the Appellate Boardconstituted under this Act in accordance with the provisionsof sub-section (6) of section 52 of this Act; (d) every appeal from any decision or order of the ForeignExchange Regulation Appellate Board under sub-section(3) or sub-section (4) of section 23E of the Act herebyrepealed shall, if not filed before the commencement of thisAct, be filed before the High Court within a period of sixtydays of such commencement:

Provided that the High Court may entertain any suchappeal after the expiry of the said period of sixty days if it issatisfied that the appellant was prevented by sufficient causefrom filing the appeal within the said period.

(3) The mention of particular matters in sub-section (2)shall not be held to prejudice or affect the generalapplication of section 6 of the General Clauses Act, 1897(10 of 1897) with regard to the effect of repeal.

A

B

C

DE

F

G

H

AFEMASection 17

Appeal to Special Director (Appeals).—

(1) The Central Government shall, by notification, appointone or more Special Directors (Appeals) to hear appealsBagainst the orders of the Adjudicating Authorities underthis section and shall also specify in the said notificationthe matter and places in relation to which the SpecialDirector (Appeals) may exercise jurisdiction.

(2) Any person aggrieved by an order made by theAdjudicating Authority, being an Assistant Director ofEnforcement or a Deputy Director of Enforcement, mayprefer an appeal to the Special Director (Appeals).

C

(3) Every appeal under sub-section (1) shall be filed withinforty-five days from the date on which the copy of the ordermade by the Adjudicating Authority is received by theDaggrieved person and it shall be in such form, verified insuch manner and be accompanied by such fee as may beprescribed:

Provided that the Special Director (Appeals) mayentertain an appeal after the expiry of the said period ofEforty-five days, if he is satisfied that there was sufficientcause for not filing it within that period.

(4) On receipt of an appeal under sub-section (1), theSpecial Director (Appeals) may after giving the parties tothe appeal an opportunity of being heard, pass such orderFthereon as he thinks fit, confirming, modifying or settingaside the order appealed against.

(5) The Special Director (Appeals) shall send a copy ofevery order made by him to the parties to appeal and to theconcerned Adjudicating Authority.

(6) The Special Director (Appeals) shall have the samepowers of a civil court which are conferred on the AppellateTribunal under sub-section (2) of section 28 and—

G

(a) all proceedings before him shall be deemed to bejudicial proceedings within the meaning of sections 193 and228 of the Indian Penal Code (45 of 1860); H

(b) shall be deemed to be a civil court for the purposesof sections 345 and 346 of the Code of Criminal Procedure,1973 (2 of 1974).

Section 18

Appellate Tribunal.— The Appellate Tribunal constitutedunder sub-section(1) of Section 12 of the Smugglers andForeign Exchange Manipulators (Forfeiture of Property)Act, 1976 (13 of 1976), shall, on and from thecommencement of Part XIV of Chapter VI of the FinanceAct, 2017, be the Appellate Tribunal for the purposes ofthis Act and the said Appellate Tribunal shall exercise thejurisdiction, powers and authority conferred on it by or underthis Act.

Section 19

Appeal to Appellate Tribunal.—

(1) Save as provided in sub-section (2), the CentralGovernment or any person aggrieved by an order made byan Adjudicating Authority, other than those referred to insub-section (1) of section 17, or the Special Director(Appeals), may prefer an appeal to the Appellate Tribunal:

Provided that any person appealing against the order ofthe Adjudicating Authority or the Special Director (Appeals)levying any penalty, shall while filing the appeal, depositthe amount of such penalty with such authority as may benotified by the Central Government:

Provided further that where in any particular case, theAppellate Tribunal is of the opinion that the deposit of suchpenalty would cause undue hardship to such person, theAppellate Tribunal may dispense with such deposit subjectto such conditions as it may deem fit to impose so as tosafeguard the realisation of penalty.

(2) Every appeal under sub-section (1) shall be filed withina period of forty-five days from the date on which a copy ofthe order made by the Adjudicating Authority or the SpecialDirector (Appeals) is received by the aggrieved person orby the Central Government and it shall be in such form,verified in such manner and be accompanied by such fee asmay be prescribed:

A

BC

D

E

F

G

H

A

Provided that the Appellate Tribunal may entertain anappeal after the expiry of the said period of forty-five daysif it is satisfied that there was sufficient cause for not filingit within that period.

(3) On receipt of an appeal under sub-section (1), theAppellate Tribunal may, after giving the parties to the appealan opportunity of being heard, pass such orders thereon asit thinks fit, confirming, modifying or setting aside the orderappealed against.

B

(4) The Appellate Tribunal shall send a copy of everyorder made by it to the parties to the appeal and to theCconcerned Adjudicating Authority or the Special Director(Appeals), as the case may be.

(5) The appeal filed before the Appellate Tribunal undersub-section (1) shall be dealt with by it as expeditiously aspossible and endeavour shall be made by it to dispose ofDthe appeal finally within one hundred and eighty days fromthe date of receipt of the appeal:

Provided that where any appeal could not be disposed ofwithin the said period of one hundred and eighty days, theAppellate Tribunal shall record its reasons in writing fornot disposing of the appeal within the said period.

E

(6) The Appellate Tribunal may, for the purpose ofexamining the legality, propriety or correctness of any ordermade by the Adjudicating Authority under section 16 inrelation to any proceeding, on its own motion or otherwise,call for the records of such proceedings and make suchForder in the case as it thinks fit.

Section 35

Appeal to High Court.—Any person aggrieved by anydecision or order of the Appellate Tribunal may file anappeal to the High Court within sixty days from the date ofcommunication of the decision or order of the AppellateTribunal to him on any question of law arising out of suchorder:

G

Provided that the High Court may, if it is satisfied thatthe appellant was prevented by sufficient cause from filing H

the appeal within the said period, allow it to be filed withina further period not exceeding sixty days.

Explanation.—In this section “High Court” means—

(a) the High Court within the jurisdiction of which theaggrieved party ordinarily resides or carries on businessor personally works for gain; and

(b) where the Central Government is the aggrieved party,the High Court within the jurisdiction of which therespondent, or in a case where there are more than onerespondent, any of the respondents, ordinarily resides orcarries on business or personally works for gain.

Section 49

Repeal and saving.—

(1) The Foreign Exchange Regulation Act, 1973 (46 of1973) is hereby repealed and the Appellate Boardconstituted under sub-section (1) of section 52 of the saidAct (hereinafter referred to as the repealed Act) shall standdissolved.

(2) On the dissolution of the said Appellate Board, theperson appointed as Chairman of the Appellate Board andevery other person appointed as Member and holding officeas such immediately before such date shall vacate theirrespective offices and no such Chairman or other personshall be entitled to claim any compensation for thepremature termination of the term of his office or of anycontract of service.

(3) Notwithstanding anything contained in any other lawfor the time being in force, no court shall take cognizanceof an offence under the repealed Act and no adjudicatingofficer shall take notice of any contravention under section51 of the repealed Act after the expiry of a period of twoyears from the date of the commencement of this Act.

(4) Subject to the provisions of sub-section (3) all offencescommitted under the repealed Act shall continue to begoverned by the provisions of the repealed Act as if thatAct had not been repealed.

A

B

C

D

E

F

G

H

A(5) Notwithstanding such repeal,—

(a) anything done or any action taken or purported to havebeen done or taken including any rule, notification,inspection, order or notice made or issued or anyappointment, confirmation or declaration made or anyBlicence, permission, authorisation or exemption granted orany document or instrument executed or any direction givenunder the Act hereby repealed shall, in so far as it is notinconsistent with the provisions of this Act, be deemed tohave been done or taken under the correspondingprovisions of this Act;C

(b) any appeal preferred to the Appellate Board undersub-section (2) of section 52 of the repealed Act but notdisposed of before the commencement of this Act shall standtransferred to and shall be disposed of by the AppellateTribunal constituted under this Act;D(c) every appeal from any decision or order of the

(c) every appeal from any decision or order of theAppellate Board under sub-section (3) or sub-section (4)of section 52 of the repealed Act shall, if not filed beforethe commencement of this Act, be filed before the HighCourt within a period of sixty days of such commencement:EProvided that the High Court may entertain such appealafter the expiry of the said period of sixty days if it is satisfiedthat the appellant was prevented by sufficient cause fromfiling the appeal within the said period.

(6) Save as otherwise provided in sub-section (3), themention of particular matters in sub-sections (2), (4) andF(5) shall not be held to prejudice or affect the generalapplication of section 6 of the General Clauses Act, 1897(10 of 1897), with regard to the effect of repeal.”

19. Section 49 (5)(b) of FEMA deals with repeal and saving inrelation to the action taken and to be taken under FERA, 1973. ReadingGof this Section shows that the legislature has equated the Appellate Boardconstituted under FERA with the Appellate Tribunal constituted underFEMA for disposal of the appeals filed under Section 52(2) of FERAagainst an order passed under Section 51 of FERA which were pendingbefore the Appellate Board as on 01.06.2000. Such appeals stoodtransferred from the Appellate Board to the Appellate Tribunal for theirHdisposal in accordance with law.

20. The reason as to why a specific provision for transfer of suchpending appeals was made for their disposal from the Appellate Boardto the Appellate Tribunal was that the Appellate Board constituted underFERA stood dissolved by Section 49(1) of FEMA with effect from01.06.2000.

21. It is this dissolution of the Appellate Board, which necessitatedthe legislature to make a corresponding provision in the new Act (FEMA)so that the consequences arising out of the dissolution of the AppellateBoard constituted under FERA is taken care of by another appellateauthority constituted under the FEMA and all pending appeals areautomatically transferred to the Appellate Board for their disposal underFEMA.

22. Having examined the relevant provisions of FERA and FEMA,we are of the considered opinion that any appeal filed after 01.06.2000against the order of the Adjudicating Officer passed under Section 51 ofFERA in the proceedings initiated under FERA would lie before theAppellate Tribunal under Section 19 of FEMA. This we say for morethan one reason set out in detail hereinbelow.

23. First, if the Adjudicating Officer had passed an order underSection 51 of FERA prior to 01.06.2000, then the appeal against suchorder was required to be filed before the Appellate Board under Section52 (2) of FERA. In other words, if the Adjudicating Officer had passedthe order under Section 51 of FERA prior to 01.06.2000 when FERAwas in force, the appeal against such order was maintainable only underSection 52 (2) before the Appellate Board under FERA.

24. Second, if such appeal had remained pending before theAppellate Board on 01.06.2000, the same would have been transferredto the Appellate Tribunal constituted under FEMA in terms of Section 49(5)(b) of FEMA for its disposal.

25. Indeed, there can be no dispute to the legal position mentionedin the First and Second reasoning supra.

26. Third, a fortiori, any appeal, if filed after 01.06.2000 andagainst the similar order, i.e., an order passed under Section 51 of FERAshould also be held to lie before the Appellate Tribunal under Section 19of FEMA alike the appeals filed prior to 01.06.2000 and which weretransferred to the Appellate Tribunal by virtue of Section 49(5)(b) ofFEMA.

A

B

C

D

E

F

G

H

A

A27. Fourth, the reason behind this simultaneous statutory transferof pending appeals to the Appellate Tribunal under FEMA appears to bethat the legislature did not intend to provide two separate AppellateAuthorities under FEMA for challenging the adjudication order passedunder Section 51 of the FERA, i.e., one appeal before the Special Director(Appeals) and the other appeal before the Appellate Tribunal underBFEMA.

28. In other words, the legislature did not intend to make a distinctionbetween the two appeals for their disposal by two different appellateauthorities under FEMA only because one appeal was filed prior to01.06.2000, therefore, it will lie before the Appellate Tribunal whereasthe other appeal which was filed after 01.06.2000 though against thesimilar order, it will lie before the Special Director (Appeals). In ourview, there does not appear to be any justifiable reason to make suchdistinction for filing of appeals filed against the similar order passed underFERA before two different appellate authorities under FEMA.

C

29. In our opinion, this intention of the legislature is strengthenedwhen we read Section 49 (5)(b) of FEMA and Section 81(c) of FERA.

D

30. So far as Section 49(5)(b) of FEMA is concerned, as mentionedabove, it specifically provides that the appeals filed under Section 52 (2)of FERA against the order passed under Section 51 of FERA will beEdecided by the Appellate Tribunal under FEMA.

31. So far as Section 81(c) of FERA, 1973 is concerned, it dealswith Repeal and Saving of FERA, 1947. Clause (c) of Section 81specifically provides that all the appeals filed under Section 23 of FERA,1947, whether pending on the date of Repeal or/and those filed after therepeal of FERA, 1947, shall be disposed of by the Appellate BoardFconstituted under FERA, 1973.

32. It is true that Section 49 (5)(b) of FEMA is not worded alikeSection 81 (c) of FERA, yet, in our view, it shows the intention of thelegislature that all such appeals have to be heard by the Appellate Boardunder the FERA. The legislative intent contained in Section 81 (c) canGbe taken into account for interpreting the relevant provisions of FERAand FEMA for deciding the question which is the subject matter of thisappeal.

33. We cannot, therefore, accept the submission of learned counselfor the respondents(assessees) that since Section 49(5)(b) of FEMA isHnot identically worded on the pattern of Section 81(c) of FERA, that itself would justify that the legislature intended to provide two appellateauthorities in FEMA for filing two types of appeals arising out of a similarorder.

34. In other words, it is not possible to accept the submission oflearned counsel for the respondents(assessees) that by interpretativeprocess this Court can uphold creation of another appellate authority forthe disposal of the appeals filed against the order passed under Section51 of FERA after 01.06.2000 which do not fall under Section 49 (5)(2)of FEMA.

35. Indeed, as mentioned above, when similar occasion arose atthe time of repealing of FERA, 1947 by a new Act- FERA, 1973 on01.01.1974, the legislature provided in Section 81(c) of FERA, 1973 thatall appeals filed under Section 23 (E)(2) of FERA, 1947 and pendingbefore the Appellate Board including those appeals which are filed againstthe order passed after 01.01.1974 shall be disposed of by the AppellateBoard under FERA, 1973.

36. Keeping in view this legislative intent, we are of the view thatthere is no reason as to why the same legislative intent while interpretingthe provisions of FERA, 1973 and FEMA, 1999 is applied for decidingthe identical question now arising in the case.

37. The aforementioned submission is not acceptable for yetanother reason. Perusal of Scheme of FEMA would show that theSpecial Director (Appeals) is subordinate in hierarchy to the AppellateTribunal prescribed under Section 49(5)(2) of FEMA. It is, therefore,not possible to hold that one appeal would be maintainable before theAppellate Tribunal and the other appeal arising out of similar order wouldbe maintainable before the Special Director (Appeals), who is subordinatein hierarchy to the Appellate Board. Such distinction does not stand forany logic.

38. This question can be examined from another angle also. Ifthe submission of the learned counsel for the respondents is acceptedthat the appellate forum in this case for filing appeal is - “Special Director(Appeals)” and not the “Appellate Tribunal” under FEMA then it willresult in anomalous situations which will again be incongruous.

39. The anomalous situation would be, the orders passed by theAppellate Tribunal in the appeals, which stood transferred to the AppellateTribunal by virtue of Section 49 (5)(b), are appealable to the High Courtunder Section 35 of FEMA whereas the orders passed by the Special A

B

C

D

EF

G

H

ADirector (Appeals) in the appeals filed after 01.06.2000 are not appealableto the High Court under Section 35 of FEMA. So, against the sameorder, one appellant has a right of appeal to the High Court but the otherappellant has no such right of appeal because he suffered dismissal ofhis appeal from Special Director (Appeals) against whose order appealdoes not lie under Section 35 to the High Court. In our view, suchBanomalous situation while interpreting the provisions of the Act shouldalways be avoided.

40. Applying the principle of purposive interpretation, we are ofthe view that the appellate forum for deciding the appeals arising out ofthe order passed under Section 51 of FERA whether filed prior toC01.06.2000 or filed after 01.06.2000 must be the same, i.e., Appellate Tribunal under FEMA.

41. In view of the foregoing discussion, we cannot concur withthe view taken by the High Court and accordingly hold that the appealfiled by respondent Nos. 2 to 4 against the order dated 05.12.2003 passedDby Deputy Director of enforcement under Section 51 of FERA will lieand was, therefore, maintainable only before the Appellate Tribunal underSection 19 of FEMA.

42. The appeals bearing Nos.SD/A/MUM/04-05/38,39,40 and SD/A/MUM/03-04/22 which respondent Nos. 2 to 4 had filed before theSpecial Director (Appeals) are accordingly transferred to the concernedEAppellate Tribunal constituted under Section 18 of FEMA for their disposalon merits in accordance with law.

43. The appeal is accordingly allowed. The impugned order is setaside.

FDivya Pandey

Appeal allowed.

G

H