Appeal Against Penal Sanction Rooted In FERA Contravention Maintainable On Criminal Side Under FEMA: Calcutta High Court

The Court was hearing four criminal appeals challenging a March 5, 2008 order of the Appellate Tribunal for Foreign Exchange, which affirmed an adjudication order imposing a penalty of ₹2 lakh upon the appellants for alleged FERA contraventions.

A Bench of Justice Ananya Bandyopadhyay observed: “In view of the statutory scheme of Section 49(4) of FEMA, 1999 read with Section 6 of the General Clauses Act, 1897, and supported by the judicial parity established in CRLA No. 330 of 2008, this Court holds that the present appeals, assailing a penal sanction rooted in FERA contraventions, are maintainable as a Criminal Appeal before this Court. The preliminary objection raised by the respondent regarding maintainability stands overruled.”

Advocate Amitabh Shukla appeared for the appellants. Advocates Vipul Kundalia appeared for the Enforcement Directorate.

Background

The Special Director of the Enforcement Directorate passed an adjudication order on May 28, 2007, imposing a pecuniary penalty of ₹2 lakh upon each appellant. The Appellate Tribunal dismissed their appeals and affirmed the penalty in March 2008.

At the threshold, the Enforcement Directorate objected to the criminal appeals’ maintainability. It submitted that an appeal under Section 35 of FEMA had to be instituted on the High Court’s Original Side as a civil revenue matter under the applicable Original Side Rules.

The Enforcement Directorate relied upon Union of India v. Jagadish Prasad Nandalal (2012), in which a Special Bench considered the procedural route for statutory appeals arising under FEMA.

The appellants contended that the proceedings, show-cause notice and penalties arose from alleged FERA contraventions. They argued that Section 49 of FEMA, read with Section 6 of the General Clauses Act, preserved the accrued liabilities, legal proceedings and penal character of the earlier statutory regime.

Court’s Observations

Underlying Liability Determines Appellate Jurisdiction

The Court observed that although Section 35 of FEMA permits an appeal to the High Court on a question of law, it does not by itself determine whether that appeal must be filed on the civil or criminal side.

The procedural route depended upon the character of the underlying statutory liability. Contraventions initiated directly under FEMA ordinarily carried civil penalties, while adjudications arising under the repealed FERA regime remained connected to penal sanctions preserved by the savings provisions.

The Court explained: “While Section 35 of FEMA designates the High Court as the appellate forum on questions of law, the procedural routing of such appeals—whether on the Civil Original Side or within the Criminal Appellate Jurisdiction—is inexorably linked to the nature of the underlying statutory liability. FEMA inherently contemplates civil penalties for contraventions of foreign exchange regulations. However, where an appeal emanates from an adjudication under the repealed FERA regime, the nature of the liability remains anchored to penal sanctions and statutory savings.”

Repeal Did Not Alter Accrued Penal Liability

The Court observed that Section 49 of FEMA preserved offences and penal contraventions committed under FERA. It held that Section 6 of the General Clauses Act similarly protected accrued rights, liabilities, penalties, punishments, legal proceedings and remedies unless the repealing legislation disclosed a contrary intention.

The Court held that invoking Section 35 of FEMA as the procedural route for an appeal did not extinguish the substantive penal character of the underlying FERA adjudication.

The Court stated: “Section 6 of the said Act ensures the repeal of an enactment does not extinguish accrued liabilities or alter the nature of pending legal remedies unless a contrary legislative intention appears. Under the FERA framework, contraventions carried penal consequences and were subjected to criminal procedural oversight under the Code of Criminal Procedure. By command of Section 6(e) of the said Act, both the liability and the corresponding procedural remedy survive repeal.”

Referring to M/s P.V. Mohammad Barmay Sons v. Director of Enforcement (1993), the Court observed that repeal accompanied by a saving clause preserved the legal consequences of acts committed and liabilities incurred under FERA. It held that pending proceedings concerning pre-repeal contraventions continued under the saved statutory framework.

The Court also relied upon Rakesh Jain v. Union of India (2014), in which the Delhi High Court examined the transition from FERA to FEMA and recognised the continuity of legal remedies relating to pre-repeal adjudications.

FEMA Civil-Revenue Precedent Was Inapplicable

The Court distinguished Union of India v. Jagadish Prasad Nandalal (2012). It observed that the Special Bench decision concerned appeals arising directly from FEMA’s civil framework and did not address penal adjudications originating under FERA and preserved after its repeal.

The Court held: “The Special Bench considered the applicability of Chapter XXXVIII, Part 20 of the Original Side Rules governing references and statutory appeals under Section 35 of FEMA, holding that appeals arising strictly from civil contraventions and monetary adjudications initiated directly under the modern civil framework of FEMA are governed by revenue appeal rules on the Original Side. However, that decision addressed pure revenue appeals and did not deal with saved penal adjudications originating under Section 18(2) read with Section 68 of FERA, where accrued liabilities carry statutory continuity under Section 49(4) of FEMA, 1999.”

The Court consequently held that the civil-revenue route recognised in that decision did not govern the present appeals.

Identical Penal Order Was Challenged Through Criminal Appeals

The Court further observed that the corporate entity and another employee proceeded against under the same adjudication order had filed criminal appeals before the Delhi High Court. Those appeals were entertained under its Criminal Appellate Jurisdiction and allowed on merits in May 2014.

The Court stated: “Identical criminal appeals were preferred by the co-accused corporate entity (MMTC Ltd.) and co-employee (Sri B.C. Mallick) against the exact same Adjudication Order dated 28.05.2007 and Appellate Tribunal Order dated 05.03.2008 in CRLA No. 330 of 2008 and CRLA No. 584 of 2008 before the High Court of Delhi. The High Court of Delhi entertained those challenges under its Criminal Appellate Jurisdiction as Criminal Appeals and, by a judgment dated 23.05.2014 delivered by Justice S. Muralidharan, allowed the appeals on merits and set aside both impugned orders.”

The Court also noted that one appellant had initially approached the Delhi High Court through a criminal appeal and had withdrawn it with liberty to file before the High Court possessing territorial jurisdiction over his residence in West Bengal. It held that the challenge had therefore retained its criminal character throughout.

Conclusion

The High Court overruled the Enforcement Directorate’s preliminary objection and held that the appeals were maintainable before its Criminal Appellate Jurisdiction.

The Court did not decide the appeals on merits. It directed that they be listed for a merits hearing on December 11, 2026.

Cause Title: Barun Kumar Chattopadhyay v. Special Director, Enforcement Directorate and Connected Appeals

Appearances

Appellants: Advocates Amitabh Shukla, Dipankar Aditya, Prakash Pandey and Aishwarya Priya Raha

Respondent: Advocates Vipul Kundalia, Uneaza Ali, Dhirodatto Chaudhuri and Debjani Roy

Click here to read/download Judgment