APPEAL BERORE SPECIAL DIRECTOR (APPEALS) UNDER ‘FEMA, 1999’

[Mr. M. GOVINDARAJAN]

Special Director (Appeals)

Section 2(zc) defines the expression ‘Special Director (Appeals)’ as an officer appointed under section 18 of the Act.  Section 18 provides that the Central Government shall appoint Special Directors (Appeals) under this Act.   However section 18 has been substituted by a new section vide Finance Act, 2017 which deals with the Appellate Tribunal.

Appointment of Special Director (Appeals)

Section 17 of the Act provides for the appointment of Special Director (Appeals).  Section 17(1) provides that the Central Government shall, by notification, appoint one or more Special Directors (Appeals) to hear appeals against the orders of the Adjudicating Authorities.  In the said notification the Central Government shall also specify in the said notification the matter and places in relation to which the Special Director (Appeals) may exercise jurisdiction.

Appealable orders

Section 17(2) provides that any person aggrieved by an order made by the Adjudicating Authority, being-

• an Assistant Director of Enforcement; or
• a Deputy Director of Enforcement, 

may prefer an appeal to the Special Director (Appeals).

In ‘Shri Dilip Chandulal Shahv. The Special Directorate Of Enforcement, Ahmedabad’ - 2018 (9) TMI 669 – ATFEMA, the appellant contended that as the appeal was filed under FERA before FEMA came into existence, the appeal should be heard by the Tribunal as under FERA there was no such provision for appeals going to the Special Director (Appeals).  The Appellate Tribunal held that the legislature has provided that notwithstanding the repeal, actions taken under FERA shall be deemed to have been taken under the corresponding provisions of FEMA. In Section 49(5)(b) the legislature has provided that the appeals pending before the Appellate Board shall be transferred to the Appellate Tribunal constituted under FEMA. Reading Sub-section (a) and (b) of Section 49(5) of FEMA together, it is evident that unless specifically provided, all actions taken under FERA shall be deemed to have been taken under the corresponding provisions of FEMA. In this view of the matter, the adjudication orders passed by the Assistant Director/Deputy Director of Enforcement under FERA are deemed to be the adjudication orders passed under FEMA and accordingly the appeals against the orders passed by the Assistant Director/Deputy Director of Enforcement under FERA would be maintainable before the Special Director (Appeals)

Time limit

Section 17(3) provides that every appeal shall be filed within forty-five days from the date on which the copy of the order made by the Adjudicating Authority is received by the aggrieved person and it shall be in such form, verified in such manner and be accompanied by such fee as may be prescribed.

Delay condonation

The Special Director (Appeals) may entertain an appeal after the expiry of the said period of forty-five days, if he is satisfied that there was sufficient cause for not filing it within that period.

Qualification

Section 21 of the Act provides the qualifications for the appointment of Special Director (Appeals).  The said section provides that a person shall be qualified for appointment as a Special Director (Appeals) if he-

• has been a member of the Indian Legal Service and has held a post in Grade I of that Service; or
•  has been a member of the Indian Revenue Service and has held a post equivalent to a Joint Secretary to the Government of India.

Terms and conditions of service

Section 23 provides that the salary and allowances payable to and the other terms and conditions of service of the Special Director (Appeals) shall be such as may be prescribed.

Staff

Section 27 provides that The Central Government shall provide the office of the Special Director (Appeals) with such officers and employees as it may deem fit.   The officers and employees of the office of the Special Director (Appeals) shall discharge their functions under the general superintendence of the Special Director (Appeals). The salaries and allowances and other terms and conditions of service of the officers and employees of the office of the Special Director (Appeals) shall be such as may be prescribed.

The Special Director (Appeals) and other officers and employees of the Special Director (Appeals) shall be deemed to be public servants within the meaning of section 21 of the Indian Penal Code.

Regulate its own procedure

The Special Director (Appeals) shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908) but shall be guided by the principles of natural justice and, subject to the other provisions of this Act the Special Director (Appeals) shall have powers to regulate its own procedure.

Authorized representative

A person preferring an appeal to the  Special Director (Appeals) under this Act may either appear in person or take the assistance of a legal practitioner or a chartered accountant of his choice to present his case before the Special Director (Appeals).  The Central Government may authorize one or more legal practitioners or chartered accountants or any of its officers to act as presenting officers and every person so authorized may present the case with respect to any appeal before the Special Director (Appeals).

 Powers of Special Director (Appeals)

The Special Director (Appeals) shall have, for the purposes of discharging its functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908); while trying a suit, in respect of the following matters, namely:-

•  summoning and enforcing the attendance of any person and examining him on oath;
• requiring the discovery and production of documents;
•  receiving evidence on affidavits;
• subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872 (1 of 1872) requisitioning any public record or document or copy of such record or document from any office;
• issuing commissions for the examination of witnesses or documents;
• reviewing its decisions;
• dismissing a representation of default or deciding it ex parte;
• setting aside any order of dismissal of any representation for default or any order passed by it ex parte; and
• any other matter which may be prescribed by the Central Government.

Judicial proceeding

All proceedings before the Special Director (Appeals) shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code.

Execution of order

An order made by the Special Director (Appeals) under this Act shall be executable by the Special Director (Appeals) as a decree of civil court and, for this purpose, the Special Director (Appeals) shall have all the powers of a civil court.   The Special Director (Appeals) may transmit any order made by it to a civil court having local jurisdiction and such civil court shall execute the order as if it were a decree made by that court.

Civil court has no jurisdiction

No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Special Director (Appeals) is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.

Procedure for filing appeal

• Every appeal presented to the Special Director (Appeals) under section 17 of the Act shall be in the Form I signed by the applicant. 
• The appeal shall be filed in triplicate and accompanied by three copies of the order appealed against.
• Every appeal shall be accompanied by a fee of Rupees five thousand in the form of cash or demand draft payable in favour of the Special Director (Appeal).
• The appeal shall set forth concisely and under distinct heads the grounds of objection to the order appealed against without any argument of narrative and such grounds shall be numbered consecutively; and shall specify the address for service at which notice or other processes may be served on the applicant, the date on which the order appealed against was served on the applicant. 
• Where the appeal is presented after the expiry of the period of forty five days, it shall be accompanied by a petition, in triplicate, duly verified and supported by the documents, if any, relied upon by the applicant, showing cause how the applicant had been prevented from preferring the appeal within the said period of forty five days.
• Any notice required to be served on the applicant shall be served on him in the manner specified in rule 9 at the address for service specified in the appeal.
• On receipt of an appeal under rule 5, the Special Director (Appeals) shall send a copy of the appeal, together with a copy of the order appealed against, to the Director of Enforcement. 
• The Special Director (Appeals) shall, then, issue notices to the applicant and the Director of Enforcement fixing a date for hearing of the appeal. 
•  On the date fixed for hearing of the appeal or any other day to which the hearing of the appeal may be adjourned, the applicant as well as the presenting officer of the Directorate of Enforcement shall be heard. 
• Where on the date fixed, or any other day to which the hearing of the appeal may be adjourned, the applicant or the presenting officer fail to appear when the appeal is called for hearing, the Special Director (Appeals) may decide the appeal on the merits of the case.
• The Special Director (Appeals) may after giving the parties to the appeal an opportunity of being heard, pass such order thereon as he thinks fit confirming, modifying or setting aside the order appealed against.

Order

 The order of Special Director (Appeals) shall be in writing and shall state briefly the grounds for the decision.   The order shall be signed by the Special Director (Appeal) hearing the appeal.  The Special Director (Appeals) shall send a copy of every order made by him to the parties to appeal and to the concerned Adjudicating Authority.

Service of notices, requisitions or orders

A notice, requisition or an order issued under these rules shall be served on any person in the following manner-

• by delivering or tendering the notice or requisition or order to that person or his duly authorized person,
• by sending the notice or requisition or order to him by registered post with acknowledgement due to the address of his place of residence or his last known place or residence or the place where he carried on, or last carried on, business or personally works or last worked for gain, or
•  by sending the notice or requisition or order to him by registered post with acknowledgement due to the address of his place of residence or his last known place or residence or the place where he carried on, or last carried on, business or personally works or last worked for gain, or
• by affixing it on the outer door or some other conspicuous part of the premises in which the person resides or is known to have last resided or carried on business or personally works or last worked for gain and that written report thereof should be witnesses by two persons; or
• if the notice or requisition or order cannot be served under clause (a) or clause (b) or clause (c), by publishing in a leading newspaper (both in vernacular and in English) having vide circulation of area or jurisdiction in which the person resides or is known to have last resided or carried on business or personally works or last worked for gain.

Appeals

The Central Government or any person aggrieved by an order made by the Special Director (Appeals), may prefer an appeal to the Appellate Tribunal within 45 days from the date of the order of the Special Director (Appeals).

Direction for payment of proceeds

Rule 7(ii) of FEM (Encashment of Draft, Cheque, Instrument and Payment of Interest) Rules, 2000 provides that where it has been found during the course of appeal before the Special Director (Appeals) that any draft, cheque or other instrument is not considered relevant for such appeal, then, the Special Director (Appeals) pass such order specifying the person to whom the proceeds of the draft, cheque or other instruments may be paid.