Corporate liability under FERA may survive mandatory imprisonment limits through purposive construction and reading down of penal provisions.

The commentary addresses whether a company can be prosecuted and convicted for contravention of the Foreign Exchange Regulation Act, 1973 where section 56 contemplates mandatory imprisonment, and whether the earlier view on that question should be reconsidered by a Constitution Bench. It explains that excluding companies from prosecution merely because imprisonment cannot be imposed on a juristic person may defeat legislative intent and create reverse discrimination. Applying purposive construction, it suggests the provision may be read down so that conviction of a company remains possible while recognising the limits on sentencing a corporate entity. It also notes the distinction between conviction and sentence and the role of section 69 in post-conviction consequences.

---

---

Issues: Whether the company could be proceeded against and convicted for contravention of the Foreign Exchange Regulation Act, 1973 despite the presence of mandatory imprisonment under section 56; and whether the correctness of the earlier decision on this point required reconsideration by a Constitution Bench.

Analysis: The order considered that the authorised dealer company was alleged to have committed contraventions of the statutory scheme under the Act and that section 56 contains both offences punishable with imprisonment or fine and offences attracting mandatory imprisonment and fine. It reasoned that excluding prosecution of a company merely because mandatory imprisonment cannot be imposed may frustrate legislative intent and produce reverse discrimination. The order further applied purposive construction and the principle that the statute should be read so as to remain workable, including the possibility of reading down section 56 so that conviction may be recorded against a company even though mandatory imprisonment cannot be imposed on a juristic person. It also noticed the argument that conviction and sentence are distinct stages and that section 69 contemplates consequences upon conviction.

Conclusion: The correctness of the earlier decision required reconsideration by a Constitution Bench, and the matter was referred accordingly.

Final Conclusion: The order does not finally decide the substantive prosecutability issue under the Act and leaves it for authoritative determination by a Constitution Bench.

Ratio Decidendi: A statutory provision should be construed purposively and, if necessary, read down so that a company may be convicted under a penal statute even where mandatory imprisonment cannot be imposed on a juristic person, if that construction is necessary to make the statute workable.

---