By TIOL News Service

CHENNAI, MAY 04, 2016: THE appellant was held guilty of the charge under Section 9(1)(d) of the Foreign Exchange Regulation Act, 1973. However, by a strange reasoning to the effect that the case was 9 years old and that there was an endeavour to complete the adjudication proceedings initiated under the Foreign Exchange Regulation Act, 1973 within a time frame, after the new Act, namely Foreign Exchange Management Act, 1999, came into effect, the Adjudicating Officer imposed a penalty of Rs.25,000/- upon the appellant and Rs 1,00,000/- on the accomplice and ordered release of the currency.

The Special Director, Enforcement Directorate filed a Revision before the Appellate Tribunal for Foreign Exchange, under Section 54(2) of the Foreign Exchange Regulation Act, 1973. This Revision was allowed by the Tribunal, modifying the order of the Adjudicating Officer and increasing the penalty imposed upon the appellant from Rs.25,000/- to Rs.5,00,000/-. The Tribunal also directed the confiscation of the amount of Rs.10 lakhs to the Government of India, under Section 63 of the Foreign Exchange Regulation Act, 1973. It is against the said order that the appellant is before the High Court.

The appellant contended inter alia that a Special Director of Enforcement, entrusted with the duty of adjudication, cannot be treated to be an aggrieved person, so as to enable him to file a Revision or Appeal.

After hearing both sides, the High Court held:

+ The Department could be taken to be an aggrieved person and that the right of appeal under Section 19 of the Foreign Exchange Management Act, 1999 is conferred upon any aggrieved person. Since the Original Order of Adjudication was by the Collector of Customs, nominated under Section 16(1) of the Act, the appeal filed by the Special Director of Enforcement, before the Tribunal cannot be treated as not maintainable. The Department will come within the meaning of the expression "aggrieved person". Hence, the preliminary contention regarding the maintainability of the appeal filed by the respondents before the Tribunal, is liable to be rejected.

+ On merits, as rightly observed by the Tribunal, the appellant did not file any appeal as against the finding that he was guilty of violation of Section 9(1)(d) of the Act. The discretion supposedly exercised by the Original Authority to let off the appellant with a penalty of Rs.25,000/- cannot be approved. First of all, he had no such discretion. Even assuming that he had a discretion, the manner in which the first authority exercised the discretion and the reasoning given by him are wholly unsustainable. Therefore, the order of the Tribunal does not call for any interference.

(See 2016-TIOL-869-HC-MAD-FEMA)