Unguided discretion and vested rights: a statutory amendment could not retroactively deprive ordinary trial protections.

Unguided discretion under Section 23(1)(a) of the Foreign Exchange Regulation Act, 1947, allowing the Director of Enforcement to choose between adjudication and prosecution without any guiding principle, was held to create unequal treatment among similarly situated persons and to violate Article 14; Section 23D fell with it. The substituted Section 23(1)(a) was also held not to operate retrospectively, because it did not merely change forum but impaired a vested right to be tried by an ordinary court. On that basis, the adjudication proceedings were treated as without jurisdiction and quashed.

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Issues: (i) Whether Section 23(1)(a) of the Foreign Exchange Regulation Act, 1947 and the connected provision in Section 23D offended Article 14 of the Constitution of India by conferring unfettered discretion leading to discrimination; (ii) Whether the substituted Section 23(1)(a) could operate retrospectively so as to affect the petitioner's vested right to be tried by an ordinary court.

Issue (i): Whether Section 23(1)(a) of the Foreign Exchange Regulation Act, 1947 and the connected provision in Section 23D offended Article 14 of the Constitution of India by conferring unfettered discretion leading to discrimination.

Analysis: The provision vested an unrestricted choice in the Director of Enforcement to decide whether an offender would be proceeded against by adjudication or by a court. No guiding principle or policy was laid down for the exercise of that discretion. The result was unequal treatment of persons similarly situated, with different consequences and procedural safeguards depending on the mode selected. A statute that leaves such unguided discretion and permits inherent discrimination is inconsistent with the guarantee of equality.

Conclusion: The provision was held to be violative of Article 14 and therefore ultra vires the Constitution, and Section 23D also fell with it.

Issue (ii): Whether the substituted Section 23(1)(a) could operate retrospectively so as to affect the petitioner's vested right to be tried by an ordinary court.

Analysis: The amendment did not merely alter the forum in a neutral procedural sense. It enabled the Director of Enforcement, in his discretion, to deprive the person concerned of the right to a regular trial and the ordinary incidents of that remedy. A provision that impairs an existing substantive or vested right is not merely procedural and cannot be treated as retrospective unless such intention is expressed or necessarily implied.

Conclusion: The substituted provision was held not to have retrospective operation so as to extinguish the petitioner's vested right.

Final Conclusion: The adjudication proceedings were without jurisdiction and were quashed, with costs awarded to the petitioner.

Ratio Decidendi: A statutory provision that confers unguided discretion enabling discriminatory selection between similarly situated persons is unconstitutional under Article 14, and an amendment that impairs a vested substantive right cannot be treated as merely procedural or applied retrospectively without clear legislative intent.

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