2023 (9) TMI 1102 - SC - FEMA

Offences committed under the repealed FERA Act - prosecution for the offences punishable as committed prior to the repeal of FERA - purposes of the prosecution of offences punishable under Sections 56 and 57 of FERA - HELD THAT - What is material here is sub-section (4) of Section 49 of FEMA which provides that subject to the provisions of sub-section (3) all offences committed under the repealed Act shall continue to be governed by the provisions of the repealed Act as if that Act had not been repealed. Sub-section (3) of Section 49 saves the prosecution for the offences punishable under Sections 56 and 57 which have been committed prior to the repeal of FERA provided the competent Court takes its cognizance within two years from the date of coming into force of FEMA. In view of sub-section (4) of Section 49 for the purposes of the prosecution of offences punishable under Sections 56 and 57 of FERA by a legal fiction the provisions of the repealed Act will continue to apply. However the same will continue to apply only for the purposes of prosecution of the offences which are saved by sub-section (3) of Section 49 of FEMA. That is how the complaint filed by the Enforcement Officer duly authorised under clause (ii) of sub-section (2) of Section 61 of FEMA will continue to be valid inasmuch as by virtue of the legal fiction incorporated in sub-section (4) of Section 49 the prosecution will continue to be governed by the provisions of FERA as if the same had not been repealed. Therefore during the sunset period the authorisation of the Enforcement Officers to file the complaints continues to be valid for the limited purposes of sub-section (3) of Section 49 of FEMA. If the arguments of the appellants are accepted the officer nominated under sub-clause (b) of clause (ii) of sub-section (2) of Section 61 of FERA will not be empowered to file complaints for the offences punishable under FERA even within the sunset period of two years. Such interpretation will prevent the Court from taking cognizance after the repeal of FERA on a complaint filed after the repeal of FERA by an officer authorised under sub-clause (b) of clause (ii) of sub-section (2) of Section 61 of FERA. Thus no complaint can be filed during the sunset period of two years provided in sub-section (3) of Section 49 of FEMA. A Statute cannot be interpreted in such a manner that any provision thereof is rendered otiose. Therefore we are unable to accept the submissions made by the learned senior counsel appearing for the appellants. Any construction which will defeat the plain intention of the legislature must be rejected. The Court must adopt the interpretation which makes the provisions of a Statute workable. By FERA the Foreign Exchange Regulation Act 1947 (for short FERA 1947 ) was repealed. The repealing provision is provided under sub-section (1) of Section 81 of FERA. This Court in the case of M/s. P.V. Mohammad Barmay Sons v. Director of Enforcement 1992 (8) TMI 225 - SUPREME COURT interpreted clause (a) of sub-section (2) of Section 81 of FERA as held despite repeal of Act 7 of 1947 by operation of Section 6 of the General Clauses Act read with Section 81(2) the penalty incurred by the appellant continued to subsist and the respondents are entitled to institute the proceedings conduct investigation or enquiry and impose such penalty. The appeal fails and the same is accordingly dismissed. As the complaint remained stayed from 7th January 2011 we direct the Trial Court to give necessary out of turn priority to the disposal of the complaint which is the subject matter of this appeal.

Summary

Issues Involved:
1. Validity of the complaint filed by an Enforcement Officer under the repealed FERA.
2. Interpretation of the sunset period provided under Section 49 of FEMA.
3. Authority of Enforcement Officers post-repeal of FERA.

Summary:

Validity of the Complaint:
The appellants challenged the validity of a complaint filed under the Foreign Exchange Regulation Act, 1973 (FERA) by an Enforcement Officer after the act was repealed by the Foreign Exchange Management Act, 1999 (FEMA). They argued that the officer, appointed under FERA, was not authorized to file the complaint post-repeal. The Supreme Court noted that the complaint was filed within the two-year sunset period provided by Section 49(3) of FEMA, which allows for the continuation of prosecutions for offences committed under FERA.

Interpretation of the Sunset Period:
The appellants contended that the court could not take cognizance of the offence after the repeal of FERA. The Supreme Court disagreed, stating that Section 49(4) of FEMA ensures that offences committed under FERA continue to be governed by its provisions as if it had not been repealed, provided cognizance is taken within the two-year sunset period. The court emphasized that the legal fiction created by Section 49(4) allows for the prosecution of offences under FERA during this period.

Authority of Enforcement Officers:
The appellants argued that the Enforcement Officer, who was appointed under FERA, lost his authority to file complaints after the act's repeal. The Supreme Court held that the authorization of Enforcement Officers to file complaints continues to be valid during the sunset period for the purposes of prosecution under FERA. The court referenced a previous decision (M/s. P.V. Mohammad Barmay Sons v. Director of Enforcement) to support the view that the repeal of an act does not affect the authority of officers to enforce liabilities incurred under the repealed act.

Conclusion:
The Supreme Court dismissed the appeal, affirming that the complaint filed by the Enforcement Officer was valid and that the trial court should prioritize the disposal of the complaint, which had been stayed since 2011. The court emphasized the importance of interpreting statutes in a manner that preserves the legislative intent and ensures the provisions are workable.