FEMA enforcement and immovable property seizure: police cannot seal business premises or rely on Section 102 CrPC

Police cannot use alleged FEMA contraventions as a basis for FIR, investigation, seizure or sealing, because FEMA establishes a civil regulatory regime enforced through RBI, the Central Government and adjudicating authorities. The court further held that Section 102 CrPC does not extend to immovable property; it applies only to property capable of seizure and directly connected with an offence. As the business premises was an immovable property and not stolen or offence-related property, sealing was unlawful. The order refusing unsealing was therefore unsustainable, and the premises had to be unsealed so business could continue lawfully.

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Issues: (i) Whether contravention of the Foreign Exchange Management Act, 1999 could be investigated by the police or form the basis for police seizure and sealing of the business premises; (ii) Whether the police could seal an immovable business premises under Section 102 of the Code of Criminal Procedure, 1973 and whether the order refusing unsealing was sustainable.

Issue (i): Whether contravention of the Foreign Exchange Management Act, 1999 could be investigated by the police or form the basis for police seizure and sealing of the business premises.

Analysis: The Foreign Exchange Management Act, 1999 was held to create a civil regulatory regime. Its scheme vests inspection and adjudication powers in the Reserve Bank of India, the Central Government and the adjudicating authority, and provides for penalty, compounding and civil imprisonment upon enforcement of penalty orders. The Act does not confer power on the police to register an FIR, investigate contravention of the Act, or take coercive steps such as inspection, seizure or confiscation for FEMA violations.

Conclusion: The police had no authority to act upon alleged FEMA contraventions by sealing the premises.

Issue (ii): Whether the police could seal an immovable business premises under Section 102 of the Code of Criminal Procedure, 1973 and whether the order refusing unsealing was sustainable.

Analysis: Section 102 of the Code of Criminal Procedure, 1973 authorises seizure of property suspected to be stolen or linked with an offence, but the expression "property" in that provision does not include immovable property. The business premises was neither stolen property nor an object of the offence nor directly connected with the alleged offence. The sealing of the premises therefore fell outside the statutory power under Section 102, and the refusal to unseal ignored the legal position and the admitted renewal status of the licence.

Conclusion: The sealing of the immovable premises was unlawful and the order refusing unsealing was unsustainable.

Final Conclusion: The impugned order was quashed and the premises were directed to be unsealed so that the business could continue lawfully.

Ratio Decidendi: Police power under Section 102 of the Code of Criminal Procedure, 1973 extends only to movable property suspected to be stolen or directly connected with an offence, and cannot be used to seal immovable premises or to enforce alleged contraventions of the Foreign Exchange Management Act, 1999.

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