2017 (8) TMI 423 - HC - FEMA

Court dismisses writ petition challenging penalty under Foreign Exchange Management Act, emphasizes statutory appeal process

N. Pandu Ranga Versus The Asst. Director, Directorate of Enforcement & Another

The High Court dismissed the writ petition challenging a penalty under the Foreign Exchange Management Act, 1999, directing the deceased petitioner's ... Alternative remedy of appeal - Guilty for contravention of the provisions of Section 3(c) of the Foreign Exchange Management Act, 1999 - Held that:- When the statutory alternative remedy of appeal is available, the High Court should not entertain an application under Article 226 of the Constitution of India. When a right or liability is created by the statute, the High Court must insist that before availing remedy under Article 226 of the Constitution of India, a person must exhaust the remedies available under the relevant statute. However, the same is subject to certain exceptions which do not attract the present case and do not call for interference to the facts of the instant case. Writ petition is disposed of directing petitioner Nos.2 to 4, who are the legal representatives of deceased petitioner No.1, to file an appeal before the Special Director (Appeals) under Section 17 of FEMA and if such an appeal is filed within a period of forty five (45) days from today, the appellate Forum shall consider the question of limitation having regard to the provision of Section 14 of the Limitation Act, 1963 and also having regard to the fact that petitioner Nos.2 to 4 were bona fidely pursuing their case under Article 226 of the Constitution of India before this Court. Along with the appeal, petitioner Nos.2 to 4 shall also make an application seeking interim order which shall also be dealt with. If an application seeking interim order is filed along with the appeal, the authority shall dispose of the same within a period of six (6) to eight (8) weeks from the date of filing of the said application in accordance with law. Issues:1. Challenge to order under Foreign Exchange Management Act, 19992. Jurisdiction of High Court in entertaining writ petition3. Availability of statutory alternative remedy of appealIssue 1: Challenge to order under Foreign Exchange Management Act, 1999The writ petition challenged an order imposing a penalty under Section 3(c) of the Foreign Exchange Management Act, 1999. The petitioner, who received a payment from abroad, was found guilty of contravention and directed to pay a penalty of Rs. 3,00,000. The petitioner's explanation was rejected by the Deputy Director, Directorate of Enforcement, leading to the filing of the writ petition.Issue 2: Jurisdiction of High Court in entertaining writ petitionThe High Court addressed the jurisdictional aspect of entertaining a writ petition when an alternative statutory remedy is available. Citing the United Bank of India vs. Satyawati Tondon case, the court emphasized that in matters involving recovery of dues, the High Court should insist on exhausting remedies under the relevant statute before resorting to Article 226 of the Constitution. The court highlighted the need for caution in granting stays that could impact public projects or financial institutions' dues.Issue 3: Availability of statutory alternative remedy of appealReferring to the Raj Kumar Shivhare case, the court reiterated that when an appeal is available under the statute, the High Court should not entertain a writ petition challenging the tribunal's order. The court emphasized that bypassing statutory provisions through writ petitions should be discouraged. The judgment underscored the importance of exhausting statutory remedies before seeking relief under Article 226 of the Constitution.In conclusion, the High Court disposed of the writ petition, directing the legal representatives of the deceased petitioner to file an appeal before the Special Director (Appeals) under Section 17 of FEMA within 45 days. The court instructed the appellate forum to consider the question of limitation sympathetically. The judgment reiterated the principle that statutory remedies should be exhausted before approaching the High Court under Article 226, except in exceptional circumstances not applicable to the present case.