FERA violation notices for machinery imports remain valid despite FEMA repeal under Section 49

The Telangana HC upheld the validity of FERA violation notices issued to petitioners regarding machinery imports from Germany. The court determined that although FERA was repealed under Section 49 of FEMA, proceedings could continue as they were initiated on 15.03.2002, within the two-year sunset period from FEMA's commencement on 01.06.2000. The impugned notices dated 26.07.2004 were merely continuation of the adjudicatory process, not fresh initiation of proceedings. The court ruled that FERA provisions would govern the ongoing violation proceedings against the petitioners.

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Issues:
Challenge to hearing notices under FERA, jurisdiction of impugned notices, interpretation of Section 49 of FEMA, initiation of proceedings under FERA before the sunset period.

Analysis:
The writ petition challenges hearing notices under FERA as illegal and without jurisdiction. The Petitioners argue that the impugned notices issued in 2004 are beyond the two-year limitation period post the commencement of FEMA in 2000. However, Respondents claim the initiation of proceedings under FERA before the sunset period. The central issue is whether the impugned notices were issued validly under the repealed FERA.

The Court delves into Section 49 of FEMA, which repeals FERA and sets a two-year limitation for taking cognizance of FERA offenses post the commencement of FEMA in 2000. Notably, all offenses committed under FERA within this period are to be governed by FERA provisions. The critical question is whether the proceedings against the Petitioners were initiated before the two-year limit.

The Court finds that proceedings were indeed initiated in 2002 when show cause notices were issued to the Petitioners. Case law from the Delhi High Court supports this stance, emphasizing that the initiation of proceedings under FERA is deemed from the issuance of show cause notices. This aligns with the legislative intent behind Section 49(3) of FEMA, preserving actions taken within the two-year window post-FEMA commencement.

Further judicial precedents reinforce that show cause notices within the two-year period validate the continuation of proceedings under FERA. Notably, cases have upheld the validity of proceedings initiated under FERA before the sunset period, even if subsequent notices were issued post the two-year mark. In this context, the Court dismisses the writ petition, upholding the validity of the impugned notices and affirming that proceedings under FERA against the Petitioners will be governed by FERA provisions.

In conclusion, the Court's analysis of Section 49 of FEMA, supported by legal precedents, establishes the validity of the impugned notices and the continuation of proceedings under FERA against the Petitioners. The judgment affirms the adherence to statutory timelines and the preservation of actions initiated within the specified period post the enactment of FEMA.

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