1969 (1) TMI 77 - HC - FEMA

Court upholds Foreign Exchange Regulation Act, rejects challenge under Article 14.

New India Corporation Versus The Director, Enforcement Derectorate, Government of India and Anr.

The Court dismissed the petitioner's challenge to the validity of Sections 23 and 23-D of the Foreign Exchange Regulation Act under Article 14 of the ... - Issues:Challenge to the validity of Sections 23 and 23-D of the Foreign Exchange Regulation Act under Article 14 of the Constitution.Analysis:The petitioner, a sole proprietor trading under the name Messrs New India Corporation, filed four Writ Petitions challenging notices from the Director of Enforcement Directorate for alleged contraventions of the Foreign Exchange Regulation Act. The main contention was that Sections 23 and 23-D of the Act were invalid under Article 14 of the Constitution. The petitioner sought prohibition of adjudication proceedings, arguing that the choice between adjudication and criminal prosecution lacked guidance for the Director of Enforcement, citing the State of West Bengal v. Ansar Ali case principles.The key argument revolved around the provisions of Section 23 and Section 23-D of the Act. Section 23 outlined penalties for contraventions, including adjudication by the Director of Enforcement or court prosecution. The petitioner contended that the Director's discretion lacked guidance in choosing the appropriate procedure. The Adjudication Proceeding and Appeal Rules, 1957 governed the adjudication process under Section 23-D. However, the petitioner argued that the rules did not sufficiently guide the Director in making the choice between adjudication and court prosecution.The Court referred to the Supreme Court rulings in Shanti Prasad Jain and Union of India v. Sukumar Pyne cases, which upheld the validity of Sections 23 and 23-D. The Court highlighted that the Director's discretion to transfer cases to court under Section 23-D was not arbitrary and did not violate Article 14. The Court dismissed the petitioner's contentions, stating that the rulings of the Supreme Court had conclusively addressed the issues raised by the petitioner. Consequently, all four writ petitions were dismissed, and the petitioner was ordered to pay the respondents' costs.In conclusion, the Court rejected the petitioner's challenge to the validity of Sections 23 and 23-D of the Foreign Exchange Regulation Act under Article 14 of the Constitution. The judgment emphasized the guidance provided by the Act and the Adjudication Rules, affirming the Director's authority to choose between adjudication and court prosecution. The Court's decision was based on the precedent set by the Supreme Court's previous rulings, upholding the constitutionality of the relevant provisions of the Act.