2017 (8) TMI 423 - HC - FEMA

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

The High Court dismissed the writ petition challenging a penalty under the Foreign Exchange Management Act, 1999, directing the deceased petitioner's ... Discretionary restraint in exercise of writ jurisdiction under Article 226 - exhaustion of statutory remedies - appeal under FEMA as an alternative statutory remedy - judicial consideration of limitation under the Limitation Act - interim relief pending statutory appealDiscretionary restraint in exercise of writ jurisdiction under Article 226 - exhaustion of statutory remedies - appeal under FEMA as an alternative statutory remedy - Whether the High Court should entertain the writ petition challenging the enforcement order when an alternative statutory remedy of appeal under FEMA is available. - HELD THAT: - The Court applied the settled principle that where a statutory alternative remedy exists, the High Court should ordinarily refrain from exercising its writ jurisdiction under Article 226 and the petitioner must first exhaust the remedy provided by the statute. The judgment refers to precedents holding that rights and liabilities created by statute ought to be challenged through the statutory appellate mechanism rather than by bypassing it through writ petitions. The Court found no exception applicable in the present facts to justify retention of the writ petition and therefore declined to continue substantive adjudication of the challenge to the enforcement order. [Paras 6]Writ petition not maintainable on merits in view of the availability of the statutory appeal; petition disposed directing the legal representatives to pursue the statutory appeal.Interim relief pending statutory appeal - judicial consideration of limitation under the Limitation Act - Procedural directions regarding filing of the statutory appeal, consideration of limitation, and interim relief pending determination of the appeal. - HELD THAT: - Recognising that the petitioner (now deceased) had pursued relief by way of Article 226, the Court granted liberty to the legal representatives to file the statutory appeal within a specified time and directed the appellate authority to consider questions of limitation sympathetically in light of the Limitation Act. The Court also permitted an application for interim relief to be filed along with the appeal and directed the appellate authority to decide any such interim application within a short, specified period. Meanwhile, the interim order earlier made by this Court was directed to remain in force until the appellate authority decides the interim application. [Paras 7]Legal representatives directed to file the statutory appeal within forty-five days; appellate forum to consider limitation sympathetically and dispose of any interim application within six to eight weeks; existing interim order of this Court to remain in force until the appellate authority decides the interim application.Final Conclusion: Writ petition disposed on the ground that the statutory appeal under FEMA is the appropriate remedy; legal representatives of the deceased petitioner are directed to file the appeal within forty-five days, the appellate authority is to consider limitation sympathetically and decide any interim application within six to eight weeks, and the interim order of this Court shall remain in force until the appellate authority rules on the interim application. 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.