2025 (6) TMI 538 - HC - FEMA

Foreign Exchange Appeals Get Green Light: Formal Order Notification Determines Limitation Period Under FEMA Section 50

Bank of Baroda, Doha Bank Q.P.S.C., Industrial Development Bank of India (IDBI) Ltd., Versus Union of India, through Enforcement Director.

HC analyzed jurisdiction under FEMA 1999 regarding appeal limitation periods. The court held that limitation period commences from formal order ... Interim Application filed by Bank of Baroda seeking a condonation of delay in preferring the Appeal u/s 35 of FEMA 1999 - HELD THAT:- As can be seen from Section 35 of the FEMA 1999, the limitation starts to run from the date of communication of the decision or order of the Appellate Tribunal. In the facts of the present case, it is the argument of the Appellants that the impugned order of the Appellate Tribunal was never communicated to them. Bank of Baroda became aware of this order only when they checked the website of the Appellate Tribunal wherein the impugned order dated 24th September 2024 was uploaded. When the Appeals of Bank of Baroda and Doha Bank Q.P.S.C. had come up on 27th February 2025, the learned Special P.P appearing for the Enforcement Directorate was unable to definitively inform the Court whether the impugned order dated 24th September 2024 was communicated to the Appellants, and if so on what date. To take necessary instructions, the matter was adjourned from time to time. Now, the Registrar of the Appellate Tribunal has filed a report before this Court on 7th April 2025. From this report, it is clear that the impugned order passed in the Appeals filed by Bank of Baroda and Doha Bank Q. P. S. C. (before the Appellate Tribunal) was never communicated to them. Considering these facts and circumstances, we find that all these Appeals have been filed within the total period of 120 days as stipulated under Section 35 of the FEMA 1999. Accordingly, Interim Application is allowed to condone the delay on 44 days in filing the Appeal to challenge the impugned order. As far as IDBI is concerned, in light of what is stated hereinabove, there is in fact no delay in filing the above Appeal. Hence, the Applicant has not filed any application seeking the condonation of delay. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Court were:(a) Whether the High Court has the jurisdiction under Section 35 of the Foreign Exchange Management Act, 1999 ('FEMA 1999') to condone delay in filing an appeal beyond the prescribed limitation period of sixty days from the date of communication of the Appellate Tribunal's order, and if so, to what extent;(b) Whether the appellants-Bank of Baroda and Doha Bank Q.P.S.C.-were duly communicated the impugned order of the Appellate Tribunal dated 24th September 2024, which is a prerequisite for the limitation period under Section 35 to commence;(c) Whether the delay in filing the appeals by the said appellants can be condoned based on the non-communication of the impugned order, thereby allowing the appeals to be entertained within the extended period of limitation;(d) Whether the appeal filed by IDBI was within the limitation period, given the date on which it became aware of the impugned order.2. ISSUE-WISE DETAILED ANALYSISIssue (a): Jurisdiction of the High Court to condone delay under Section 35 of FEMA 1999The relevant legal framework is Section 35 of FEMA 1999, which mandates that any person aggrieved by an order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the order. The proviso allows the High Court to condone delay in filing the appeal for a further period not exceeding sixty days if sufficient cause is shown.The Court examined the language of Section 35 and noted that the total permissible period for filing an appeal, including any condonation of delay, cannot exceed 120 days from the date of communication of the Appellate Tribunal's order. This interpretation is consistent with precedents interpreting similar provisions in other statutes, such as Section 42 of the Prevention of Money Laundering Act, 2002 and Section 74(1) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, which have analogous limitation and condonation clauses.The Court referenced prior judgments where it was held that the High Court's power to condone delay is circumscribed and cannot extend beyond the maximum 120-day period. This principle was applied to the present case.Issue (b) and (c): Communication of the impugned order and its effect on limitation periodThe appellants contended that the impugned order dated 24th September 2024 was never communicated to them in the usual manner. They became aware of the order only when it was uploaded on the Appellate Tribunal's website. This raised the question of when the limitation period under Section 35 would commence.The Court emphasized that the limitation period under Section 35 starts from the date of communication of the Appellate Tribunal's order to the aggrieved party. If no communication is made, the limitation period does not begin to run.To verify the facts, the Court sought information from the Registrar of the Appellate Tribunal. The Registrar's report confirmed that the impugned order was never formally communicated to Bank of Baroda and Doha Bank Q.P.S.C. This factual finding was critical in determining the limitation period.Accordingly, the Court held that since the appellants were not communicated the order, the limitation period had not commenced, and the appeals were filed within the permissible 120-day period when counted from the date they became aware of the order via the website.The Court also considered the submissions of the Enforcement Directorate, which could not definitively establish communication of the order to the appellants. The Court gave due weight to the Registrar's report over the absence of contrary evidence.Issue (d): Limitation period for IDBI's appealIDBI contended that it became aware of the impugned order only upon receipt of a Demand Notice dated 24th January 2025, which was received on 10th February 2025. The appeal was filed on 18th March 2025, which falls within the 60-day limitation period prescribed under Section 35.Since IDBI's appeal was filed within the limitation period, no application for condonation of delay was necessary or filed. The Court noted this and found no delay in IDBI's filing.3. SIGNIFICANT HOLDINGSThe Court held:'From the language of Section 35, it is clear that the High Court has no power to condone the delay beyond the total period of 120 days.''The limitation starts to run from the date of communication of the decision or order of the Appellate Tribunal.''The impugned order passed in the Appeals filed by Bank of Baroda and Doha Bank Q.P.S.C. was never communicated to them.''Considering these facts and circumstances, we find that all these Appeals have been filed within the total period of 120 days as stipulated under Section 35 of the FEMA 1999.'Accordingly, the Court allowed the interim applications seeking condonation of delay for Bank of Baroda (44 days) and Doha Bank Q.P.S.C. (52 days), permitting their appeals to be entertained. No delay was found in IDBI's appeal.The Court further clarified that there would be no order as to costs in these applications.