2016 (4) TMI 715 - HC - FEMA

Special Director of Enforcement as Aggrieved Person for Revision under Foreign Exchange Laws

The court upheld the decision of the Appellate Tribunal for Foreign Exchange, ruling that the Special Director of Enforcement could be considered an ... Maintainability of revision/appeal by enforcement authority - aggrieved person for purpose of appeal - distinction between adjudicatory posts under FERA and appellate posts under FEMA - exercise of discretion by adjudicating authority - enhancement of penalty and confiscation by appellate tribunalMaintainability of revision/appeal by enforcement authority - aggrieved person for purpose of appeal - distinction between adjudicatory posts under FERA and appellate posts under FEMA - Whether the Revision filed by the Special Director, Enforcement before the Appellate Tribunal for Foreign Exchange was maintainable. - HELD THAT: - The Court examined the statutory scheme under the Foreign Exchange Regulation Act, 1973 and the Foreign Exchange Management Act, 1999 and observed that the post and appellate structure under the two statutes differed. Under FERA there was no post of Special Director as an appellate authority, whereas FEMA created Special Director as an appellate authority and expressly conferred a right of appeal on an 'aggrieved person.' The Court held that the Department (through the Special Director) could be regarded as an aggrieved person for the purposes of filing the appeal under the later statutory scheme and that the appeal to the Tribunal was therefore maintainable. The decisions relied on by the appellant (which held that an adjudicating authority exercising quasi judicial functions could not itself be aggrieved and prefer an appeal) were distinguished on the basis of the differing statutory frameworks and the existence under FEMA of appellate posts and rights not present under FERA. [Paras 20]Preliminary objection to maintainability rejected; the Revision/appeal filed by the Special Director before the Tribunal was maintainable.Exercise of discretion by adjudicating authority - enhancement of penalty and confiscation by appellate tribunal - Whether the Appellate Tribunal was justified in modifying the Adjudicating Officer's order by increasing the penalty and directing confiscation of the seized amount. - HELD THAT: - The Court noted that the appellant and the accomplice had not challenged the Adjudicating Officer's finding of guilt, which had become final. The Adjudicating Officer's decision to impose a minimal penalty by reference to the passage of time and an asserted endeavour to complete old proceedings was found to be unsustainable. The Tribunal's view that the original authority's purported discretion was either non existent or improperly exercised was endorsed. In view of the misconduct found and the inadequacy of the lenient reasoning of the Adjudicating Officer, the Tribunal's enhancement of the penalty and direction for confiscation did not call for interference. [Paras 21, 22]Tribunal's modification of the penalty and order of confiscation upheld; appeal dismissed on merits.Final Conclusion: The High Court dismissed the appeal. The preliminary objection to maintainability of the Revision by the Special Director was rejected, and on merits the Tribunal's enhancement of penalty and direction for confiscation were affirmed; the appeal was dismissed with no costs. Issues:1. Maintainability of Revision filed by Special Director of Enforcement before the Appellate Tribunal for Foreign Exchange.2. Interpretation of the term 'Adjudicating Officer' under the Foreign Exchange Regulation Act, 1973.3. Comparison of provisions between the Foreign Exchange Regulation Act, 1973 and the Foreign Exchange Management Act, 1999.Issue 1: Maintainability of Revision:The case involved a revision filed by the Special Director of Enforcement before the Appellate Tribunal for Foreign Exchange, challenging the penalty imposed on the appellant. The appellant contended that the Special Director, as an adjudicating authority, cannot be considered an aggrieved person entitled to file a revision. The appellant relied on past judgments to support this argument, emphasizing that quasi-judicial authorities should not be allowed to appeal against orders setting aside their decisions. However, the court analyzed the provisions of both Acts and concluded that the Special Director could be treated as an aggrieved person under the Foreign Exchange Management Act, 1999, thereby rejecting the preliminary objection raised by the appellant.Issue 2: Interpretation of 'Adjudicating Officer':The judgment delved into the definition and role of the 'Adjudicating Officer' under the Foreign Exchange Regulation Act, 1973 and the Foreign Exchange Management Act, 1999. It highlighted the hierarchy of officers and the appeal mechanisms under both Acts. The court clarified that while the Foreign Exchange Regulation Act, 1973 did not have a provision for a Special Director, the Foreign Exchange Management Act, 1999 introduced the role of a Special Director as an appellate authority. This distinction was crucial in determining the maintainability of the revision filed by the Special Director in this case.Issue 3: Provisions Comparison:A detailed comparison between the provisions of the two Acts was conducted to establish the legitimacy of the Special Director's appeal. The court noted the absence of a Special Director under the Foreign Exchange Regulation Act, 1973, and the creation of the role under the Foreign Exchange Management Act, 1999. This comparison was pivotal in dismissing the appellant's argument based on previous judgments, as the Department was considered an aggrieved party with the right to appeal under the newer Act. The judgment ultimately upheld the decision of the Appellate Tribunal, emphasizing the lack of merit in the appellant's appeal and dismissing it without costs.