TaxTMI 
TaxTMI 
2002 (4) TMI 789
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....er dated 2-11-2000, the High Court quashed and set aside the detention order on the ground that what was considered to be criminal violation of the Foreign Exchange Regulation Act, 1973 ('FERA') has ceased to be so on the repeal of the FERA, which is replaced by the Foreign Exchange Management Act, 1999 ('FEMA'). That order is challenged by filing this appeal. 3. In the detention order, it has been stated that upon receipt of information that B. Sankar was indulging in receiving and making payments in India on behalf of a resident of Riyadh (Saudi Arabia), a search was conducted at detenu's residential premises and also at his office premises on 22 and 23-9-1999. As a result of the search, Indian currency of about Rs. 42,90,000 (forty-two lakhs and ninety thousand) was seized. In his statement recorded by the officers, detenu stated that during the first week of June, 1999 one Rafeek, who was his friend, met him in his office and informed that he was doing business of collecting Saudi Riyals from Indians in Saudi Arabia and in equivalent thereof he was making arrangements for delivery of Indian rupees to various persons in India; that if he assists him in this business and receive....
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....f the FEMA are now only civil wrongs, a person cannot be continued to be preventively detained under COFEPOSA Act for violations of FERA after its repeal. According to him, contravention of FEMA is not an offence and a person cannot be prosecuted or punished for violations of any of its provisions. He referred to the preamble of FEMA which provides that 'it is an act to consolidate and amend the law relating to Foreign Exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange in India'. He also placed reliance on certain decisions of this Court which, in our view, are not relevant and, hence, not discussed. 6. For appreciating these contentions, we would refer to relevant provision of section 3 which reads thus:- "3. Power to make orders detaining certain persons.-(1) The Central Government or the State Government or any officer of the Central Government, not below the rank of a Joint Secretary to that Government, specially empowered for the purposes of this section by that Government, or any officer of a State Government, not below the rank of a Secretary to that Government, specially emp....
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....into any financial transaction in India as consideration for or in association with acquisition or creation or transfer of a right to acquire, any asset outside India by any person. Explanation.-For the purpose of this clause, 'financial transaction' means making any payment to, or for the credit of any person, or receiving any payment for, by order or on behalf of any person, or drawing, issuing or negotiating any bill of exchange or promissory note or transferring any security or acknowledging any debt." [Emphasis supplied] 8. Further, section 4 specifically provides that no person resident in India shall acquire, hold, own or possess or transfer any foreign exchange, foreign security or any immovable property situated outside India, except as otherwise provided under the Act. For the contravention of the Act, rules and regulations, penalty is provided under section 13 of the Act. This would certainly mean that dealing in foreign exchange de hors the statutory provisions, rules and regulations would be illegal. No doubt, the Act nowhere provides that such transactions constitute an offence. The High Court has arrived at the conclusion that as the act of detaining ceases to be a....
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.... out by the said provisions. 11. Other important aspect is that the COFEPOSA Act and the FEMA occupy different fields. The COFEPOSA Act deals with preventive detention for violation of foreign exchange regulations and the FEMA is for regulation and management of foreign exchange through authorised person and provides for penalty for contravention of the said provisions. The object as stated above is for promoting orderly development and maintenance of foreign exchange market in India. Preventive detention law is for effectively keeping out of circulation the detenu during a prescribed period by means of preventive detention, Poonam Lata v. M.L. Wadhawan [1987] 3 SCC 347. The power of detention is clearly a preventive measure. It does not partake in any manner of the nature of punishment. It is taken by way of precaution to prevent mischief to the community. Khudiram Das's case (supra). The Constitution Bench while dealing with the constitutional validity of the Maintenance of Internal Security Act, 1971 (MISA), in Haradhan Saha's case (supra) held:- "The power of preventive detention is qualitatively different from punitive detention. The power of preventive detention is a precau....