FERA Provisions Upheld for Pre-FEMA Offences: Conviction Maintained, Sentence Adjusted for Elderly Offender

Introduction

In a significant case, Sk. Rustam v. T. K. Datta[i] involved enforcing the Foreign Exchange Regulation Act, 1973 (‘FERA’), and the petitioner faced judicial scrutiny after his conviction for contravening its provisions. Despite failing to appeal against the order of the adjudicating authority, the petitioner struggled to comply with the penalties imposed by the adjudicating authorities. Finally, the petitioner was convicted by the Ld. Magistrate Court for the commission of an offence under s. 57 of the FERA, which the Sessions Court subsequently upheld, culminate in the current revisional application before the Hon’ble High Court of Calcutta (‘HC’), which challenges the lower courts’ decisions. The main issue revolved around the evolution of regulatory frameworks from FERA to the Foreign Exchange Management Act, 1999 (‘FEMA’), which formed the crux of this case, thus requiring careful judicial examination.

Brief Facts

• In 1996, the Deputy Director, Enforcement Directorate, FERA, issued a memorandum requiring the petitioner to show cause why the adjudication proceedings under s. 51 of the FERA Act should not be initiated against him. Upon hearing the petitioner, a penalty of Rs. 1.50 Lakhs was imposed on him, with a directive to deposit the amount within 45 days.

• The petitioner appealed to the Foreign Exchange Regulation Appellate Board in 1997 and applied for dispensing the penalty amount. However, the petitioner was ordered to deposit Rs. 30,000 as a pre-requisite for the admission of his appeal, which he failed to do. Consequently, his appeal was dismissed.

• Thereafter, in 2001, a case under s. 57 of the FERA was filed against the petitioner before the Ld. Metropolitan Magistrate’s Court in Calcutta (‘Ld. Trial Court’).

• The Ld.  Trial Court subsequently convicted the petitioner under s. 57 of FERA and sentenced to six months imprisonment and a fine of Rs. 5000, with a default sentence of two months simple imprisonment.

• The Ld. Additional Sessions Judge dismissed the criminal revision filed by the petitioner against the aforementioned conviction.

• Aggrieved by the same, the petitioner filed this revisional application under s. 482 of the Code of Criminal Procedure, 1973 (‘CrPC’) against the judgment and order dated 09.07.2013 (‘Impugned Judgement’), passed by the Ld. Additional Sessions Judge, which dismissed the revisional application and affirmed the judgment and order passed by the Ld. Trial Court.

Held

• The HC dismissed the criminal revisional application filed by the petitioner and upheld the conviction. However, considering the petitioner’s age (75 years) and the time elapsed since the incident, the HC modified the sentence to a fine of Rs. 3 lakhs, payable within three months.

• The HC observed that FEMA, which came into effect in 2000, did not apply retroactively to the petitioner’s case. It further observed that the petitioner’s contention for leniency under the FEMA was deemed redundant and inoperative. It emphasised the continuity of FERA provisions even after the introduction of the FEMA, under ss. 49(3) and 49(4) of FEMA.

• The HC noted that its inherent power under s. 482 of the CrPC was limited and could not be used to conduct a mini-trial to determine culpability. It was further observed that the petitioner was legally liable for contravention of ss. 18(2) and 18(3) of the FERA. It held that the Trial Court conclusively determined the petitioner’s guilt with evidence. Therefore, the actions against the petitioner were justified and not harassing.

Our Analysis

In this ruling, the HC delved deeply into the interpretation and applicability of the FERA provisions following the FEMA’s introduction, which repealed the FERA. The HC analysed the case in light of ss. 49(3) and 49(4) of FEMA, concluding that actions taken by competent authorities against offences committed under the repealed Act would remain effective and valid for two years from the commencement of FEMA. This ruling is significant because it highlights that even though a previous law was replaced by a new, more liberal statute where all contraventions were reclassified as civil offences with no imprisonment, offences committed under the repealed Act would still be effective if explicitly provided for in the new law. Furthermore, this ruling underscores the limitations of the High Court’s inherent powers under s. 482 of the CrPC.

End Note

[i] C.R.R. 2901 of 2013

Authored by Prashant Singh, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinion.