HC Upholds FERA Conviction in 2001 Despite FEMA Enactment, as FERA Stands Effective for 2 Years Post-FEMA

Case Details: Sk. Rustam v. T. K. Datta - [2024] 163 taxmann.com 460 (HC - Calcutta)

Judiciary and Counsel Details

• Ananya Bandyopadhyay, J.
• Dipanjan Dutta, Karan Dudhwewala & Surajit Saha for the Petitioner.
• Ms Debjani Roy & Ms Sohini Dey for the Respondent.

Facts of the Case

In the instant case, the Enforcement Directorate (ED) issued a memorandum in 1996 requiring the petitioner/exporter company to show cause for contravening sections 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973 (FERA) for not realizing export proceeds from its foreign purchasers and for not furnishing a declaration in the prescribed form for exporting goods. Accordingly, a penalty of Rs.1.5 lacs was imposed upon the petitioner.

A complaint for the petitioner’s failure to pay the penalty was filed before the Metropolitan Magistrate, which issued a summons to the petitioner. An order was passed in 2001 convicting him of 6 months imprisonment and a fine of Rs.5000.

The petitioner preferred a revision against the said order. However, the Additional Sessions Judge vide the impugned order dismissed the appeal. The petitioner filed the instant revision petition against the impugned order and submitted that the FERA Act was repealed in 1998 and replaced by FEMA, 1999 wherein all contraventions related to foreign exchange were made civil offences, and no imprisonment would be imposed in case of any violation of provisions of FEMA.

It was noted that FEMA operated from 01.06.2000; the memorandum was issued against the petitioner in 1996, which was prior to the promulgation of FEMA. In accordance with sections 49(3) and 49(4) of FEMA, the provisions of FERA would be applicable in the instant case.

High Court Held

The High Court held that since the process instituted against the petitioner was justified and not harassive in nature and the petitioner was legally incumbent and liable for a contravention of section 18 of FERA, which was proved, the petitioner’s conviction was to be upheld, and the sentence was to be modified to a fine of Rs.3 lacs. Thus, the instant revision petition was to be dismissed.

Further, the High Court held that actions taken by the competent authorities against the offences committed under the repealed Act, i.e. FERA, would continue to be effective and valid for a period of two years from the date of commencement of the FEMA.