Foreign exchange remittance immunity is limited: preliminary inquiry is permitted to test whether the transaction falls within the statutory protection.

Immunity under the Remittances of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunities and Exemptions) Act, 1991 applies only where the receipt is a protected remittance within Section 2(b) and the recipient falls within the protected class. The bar on inquiry or investigation is therefore not absolute: the Enforcement Directorate may conduct a preliminary inquiry to determine whether the transaction answers the statutory definition of remittance. If the material suggests a prima facie violation of foreign exchange law, that material can support further inquiry, and if the amount is found not to be protected remittance, investigation is not barred.

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Issues: Whether the immunity under the Remittances of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunities and Exemptions) Act, 1991 bars the Enforcement Directorate from making a preliminary inquiry or investigation where the received amount is alleged not to be a protected remittance within Section 2(b).

Analysis: The immunity provision operates only when the amount received answers the statutory definition of "remittance" and the recipient falls within the protected class. The bar against inquiry or investigation is therefore not absolute; it does not preclude an inquiry limited to determining whether the transaction is in fact a remittance within the meaning of Section 2(b). If the material collected by the investigating agencies indicates prima facie violation of the foreign exchange law, that material may form the basis of a preliminary inquiry by the Enforcement Directorate. Where such inquiry shows that the amount does not constitute protected remittance, formal inquiry or investigation is not barred. An interpretation that disables examination of the basic jurisdictional fact would make the foreign exchange restrictions ineffective.

Conclusion: The immunity under the Act does not prevent the Enforcement Directorate from proceeding with a preliminary inquiry and, if warranted, further investigation.

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