Enforcement Officers Appointed Under FERA Retain Authority To File Complaints For Offences Within 2-Year Sunset Period As Per S. 49 (3) Of FEMA: Supreme Court

A two judge Bench of Justice Abhay S. Oka and Justice Sanjay Karol held that during the two-year sunset period provided by sub-section (3) of Section 49 of FEMA, the authorization of Enforcement Officers to file complaints under FERA remains valid. Sub-section (4) preserves the prosecution of offenses under FERA as if it had not been repealed, but only for offenses falling within the two-year period. The Court added, “Therefore, during the sunset period, the authorisation of the Enforcement Officers to file the complaints continues to be valid for the limited purposes of sub­section (3) of Section 49 of FEMA.”

On February 11, 2002, the first respondent, an Enforcement Officer under FERA, had filed a complaint against the appellants for various FERA and Indian Penal Code offences. The appellants sought discharge, but their applications were rejected by the Additional Chief Metropolitan Magistrate. A revision application was also dismissed. Subsequently, an application under Section 482 of the Code of Criminal Procedure was filed by the appellants, which was dismissed by a Single Judge of the Bombay High Court. Thus, the instant appeal was filed.

Senior Advocate Siddhartha Dave appeared for the Appellants and Advocate Aishwarya Bhati appeared for the Respondents.

The appellant's senior counsel argued that only authorized officers could file a complaint under FERA, as per Section 61(2)(ii). He contended that the appointment of officers under Section 3 of FERA was not saved by Section 49 of FEMA. Therefore, the Enforcement Officer who filed the complaint was not authorized to do so after June 1, 2000.

The Additional Solicitor General, representing the respondents, countered by referring to Section 49(4) of FEMA. She argued that Enforcement Officers appointed under FERA retained the authority to file complaints for FERA offenses until the sunset period specified in Section 49(3) of FEMA expired.

The Court examined the legislative intent behind FEMA, noting its aim to facilitate external trade and payments and promote orderly development of the foreign exchange market in India. The Court explained FEMA differs from FERA in its penalty provisions. The Court added, “A perusal of the provisions of FEMA shows that there is a difference between its scheme and the scheme of FERA. There are elaborate provisions for penalty under Chapter IV of FEMA, and the penal provision is confined to sub­section (1C) of Section 13 of FEMA. Whereas Section 56 and Section 57 of FERA were more stringent in the sense that they covered a very large category of violations.”

The Court further explained Section 61 of FERA provided the procedure for taking cognizance of offenses under Sections 56 and 57. It allowed complaints by specified officers, including Enforcement Officers, under sub-clause (b) of clause (ii) of sub-section (2) of Section 61. Section 49 of FEMA, titled "Repeal and Saving," contains provisions related to the repeal of FERA. Sub-section (4) of Section 49 states that all offenses committed under the repealed Act (FERA) shall continue to be governed by its provisions, subject to sub-section (3).

The Court noted that the cognizance was taken by the Magistrate within the sunset period of two years provided under sub­section (3) of Section 49 of FEMA.

The Court rejected the appellants' argument that the word "and" in sub-section (3) should be read as "or," as it would render the provision ineffective. It emphasized that statutory interpretation should not render any provision meaningless.

The Court also referred to a previous case (M/s. P.V. Mohammad Barmay Sons v. Director of Enforcement) to support its interpretation of FEMA's saving provisions.

The Court held that Enforcement Officers appointed under FERA retained the authority to file complaints for FERA offenses within the two-year sunset period specified in sub-section (3) of Section 49 of FEMA. The appeal was dismissed, and the Trial Court was directed to prioritize the disposal of the complaint.

Cause Title: First Global Stockbroking Pvt. Ltd. & Ors. v. Anil Rishiraj & Anr., [2023INSC845]

Click here to read/download Judgment