Retrospective penalty under foreign exchange law cannot punish an earlier transaction, and writ relief remains available despite appellate remedy.

Penalty under FEMA and the 2000 Regulations could not be sustained for a purchase made before those provisions came into force, because Article 20(1) bars retrospective punishment and a later regulatory regime cannot create penal liability for an earlier transaction. The earlier FERA restriction applied only to non-citizens, while the purchaser was a citizen when the property was bought; the impugned action was therefore contrary to constitutional protection against ex post facto penal enforcement. The availability of an appellate remedy under FEMA did not bar writ relief where the proceedings themselves violated constitutional rights, and the High Court exercised writ jurisdiction, quashed the penalty order and corrigendum, and allowed the petition with costs.

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Issues: (i) Whether penalty could be sustained under the Foreign Exchange Management Act, 1999 and the 2000 Regulations for a transaction of purchase made before those provisions came into force, having regard to Article 20(1) of the Constitution of India and the earlier regime under the Foreign Exchange Regulation Act, 1973; (ii) Whether the writ petition was liable to be declined on the ground of availability of the statutory appeal under Section 17 of the Foreign Exchange Management Act, 1999.

Issue (i): Whether penalty could be sustained under the Foreign Exchange Management Act, 1999 and the 2000 Regulations for a transaction of purchase made before those provisions came into force, having regard to Article 20(1) of the Constitution of India and the earlier regime under the Foreign Exchange Regulation Act, 1973.

Analysis: Article 20(1) prohibits punishment for an act which was not an offence when committed and also bars a greater penalty than that prescribed by the law then in force. The restriction under Section 31 of the Foreign Exchange Regulation Act, 1973 operated against persons who were not citizens of India, whereas the petitioner was a citizen of India when he purchased the property. The relevant regulations under the Foreign Exchange Management Act, 1999 came into force only later and could not be applied to the 1999 transaction. The Court further held that the subsequent change in the petitioner's status and the later regulatory regime could not retroactively create penal liability for the earlier purchase.

Conclusion: The penalty and adjudication could not be sustained, and the action was held to be contrary to Article 20(1) of the Constitution of India.

Issue (ii): Whether the writ petition was liable to be declined on the ground of availability of the statutory appeal under Section 17 of the Foreign Exchange Management Act, 1999.

Analysis: Although an appellate remedy was available, the Court treated the case as one involving violation of constitutional rights and an untenable initiation of proceedings after an earlier closure of the matter. In those circumstances, the existence of an alternative remedy did not justify refusal to exercise writ jurisdiction.

Conclusion: The preliminary objection was rejected and writ jurisdiction was exercised.

Final Conclusion: The impugned penalty order and corrigendum were quashed, and the petition was allowed with costs.

Ratio Decidendi: A penal provision or regulatory restriction cannot be applied retrospectively to punish a transaction completed before the provision came into force, and the existence of an appellate remedy will not preclude writ relief where enforcement is in clear violation of constitutional protection against ex post facto penal action.

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