2024 (5) TMI 1224 - HC - FEMA

Exporter's conviction upheld under FERA Section 57 for non-realization of export proceeds, sentence modified to Rs. 3 lakh fine

S.K. Rustam Versus T.K. Datta

Calcutta HC upheld conviction under Section 57 of FERA for non-realization of export proceeds. The petitioner was originally sentenced to 6 months ... Conviction u/s 57 of FERA - Non-realization of export proceeds - Repeal of FERA and enactment of Foreign Exchange Management Act, 1999 (FEMA) - Applicability of FEMA provisions to offences committed under FERA - actions taken by the competent authorities against the offence committed under the repealed Act - sunset period - commission of an offence punishable under Section 57 of the Foreign Exchange Regulation Act, 1973 and sentencing petitioner to suffer imprisonment for 6 months and to pay fine of Rs. 5000/- in default to suffer simple imprisonment for 2 months more - HELD THAT:- The Foreign Exchange Management Act of 1999 effectively operated from 1st of June, 2000 as aforesaid. The memorandum as aforesaid was issued against the petitioner to show cause as to why adjudication proceedings under Section 51 of the F.E.R.A Act should not be initiated against him for contravention of Sections 18(2) and Section 18(3) of the Foreign Exchange Regulation Act, 1973 on 18.07.1996. The adjudicating authority as aforesaid found the petitioner guilty of violation of the aforesaid provisions on 16.05.1996 and imposed a penalty of Rs. 1.50 lakhs upon the petitioner. The petitioner preferred an appeal against such order on 09.07.1997 and was subsequently directed to deposit a sum of Rs. 33,000/- with prerequisite for admission of the appeal which was not complied with by the petitioner stating his financial constraint. The issuance of notice and subsequent adjudication determining the petitioner to be guilty of violation of Section 18(2) and Section 18(3) of the Foreign Exchange Regulation Act 1973 related to 18.07.1996 and 16.05.1997 prior to the promulgation of the Foreign Exchange Management Act, 1999 and according to Section 49 (3) and Section 49 (4) of the F.E.M.A. Act of 1999. The provisions of the F.E.R.A. Act of 1973 will be applicable in the instant case. A further sunset period of two years was granted to adjudicate the proceedings of the offences instituted under the F.E.R.A. Act deferring the applicability of the F.E.M.A. Act of 1999 as enumerated in Section 49 (3) of the F.E.M.A. Act. The contention of the Learned Advocate for the petitioners to deal with the instant offence of the petitioner leniently with a liberal approach considering the same to be of civil nature in consonance with the provisions of the F.E.M.A. Act of 1999 is redundant and inoperative. The inherent power of the High Court under Section 482 of the Code of Criminal Procedure is wide subject to certain criteria whereby the High Court cannot conduct a mini trial to determine the culpability of the offender. Moreover, the inherent power as aforesaid is to be exercised to secure ends of justice or for the prevention of abuse of process of any court. In the instant case the guilt of the petitioner has been conclusively determined by the Trial Court after adducing evidence. Moreover, the petitioner at the inception as well as on the second occasion of depositing a sum of Rs.33,000/- for admission of the appeal asserted his inability to pay the required sum of money for deficient funds. The process instituted against the petitioner was justified and not harassive in nature. The petitioner was legally incumbent and liable for contravention of Section 18(2) and Section 18(3) of Foreign Exchange Regulation Act 1973 which have been aptly proved. The aforesaid Section 57 of the said Act provides for a disjunctive clause. Considering the age of the petitioner to be 75 years and the incident relating to the year 1996 with a lapse of considerable period of time, the incarceration of the petitioner will not serve any further purpose. The conviction of the petitioner is upheld. However the sentence is modified to the extent of payment of fine of Rs. 3 lakhs within three months from the date. The instant criminal revisional application is dismissed. Sentence is modified to pay a fine of Rs. 3,00,000/- within three months from the date. Issues Involved:1. Validity of proceedings under FERA after its repeal by FEMA.2. Applicability of lenient punishment under FEMA for offences committed under FERA.3. Legitimacy of the conviction and sentence under Section 57 of FERA.Summary:Issue 1: Validity of proceedings under FERA after its repeal by FEMAThe petitioner was found guilty of violating Section 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973 (FERA) by the Assistant Director of Enforcement Directorate, Kolkata, and was penalized Rs. 1,50,000/- on 16.05.1997. Despite appealing to the FERA Appellate Board and filing a writ petition, no stay was granted. The petitioner failed to pay the penalty, leading to a conviction under Section 57 of FERA. The court noted that Section 49(4) of the Foreign Exchange Management Act, 1999 (FEMA) allows offences committed under FERA to be governed by its provisions even after its repeal, provided cognizance is taken within two years of FEMA's commencement.Issue 2: Applicability of lenient punishment under FEMA for offences committed under FERAThe petitioner argued for leniency under FEMA, which replaced FERA and treats foreign exchange violations as civil offences. The court referred to Section 49(3) and 49(4) of FEMA, which stipulate that offences committed under FERA before its repeal should continue to be prosecuted under FERA's provisions. The court rejected the petitioner's reliance on precedents like T. Barai vs. Henry Ah Hoe, emphasizing that the offences under FERA and FEMA are not identical, and the ex post facto law providing lesser punishment does not apply.Issue 3: Legitimacy of the conviction and sentence under Section 57 of FERAThe court upheld the conviction under Section 57 of FERA, which prescribes punishment for failure to pay penalties imposed by adjudicating officers. However, considering the petitioner's age (75 years) and the time elapsed since the offence (1996), the court modified the sentence. Instead of imprisonment, the petitioner was ordered to pay a fine of Rs. 3,00,000/- within three months.Conclusion:The revisional application was dismissed, and the conviction was upheld. The sentence was modified to a fine of Rs. 3,00,000/-, payable within three months. The court emphasized that the inherent powers under Section 482 Cr.P.C. are to prevent abuse of process and secure justice, not to conduct a mini-trial. The petitioner's failure to comply with the penalty payment and subsequent legal proceedings justified the conviction under FERA.