Proceedings Under FEMA Do Not Abate On Death Of Accused; Rights And Obligations Devolve On Legal Representatives: Delhi High Court
The High Court noted that Section 43 of FEMA expressly preserves the right of legal representatives to continue pending proceedings, stating that any appeal or liability does not abate with the death or insolvency of a party.
The Delhi High Court held that proceedings arising under the Foreign Exchange Management Act, 1999, do not abate upon the death of an accused or appellant and that all rights and obligations of the deceased devolve upon his legal representatives under Section 43 of FEMA.
The Court was hearing an application filed by the son of a deceased appellant seeking condonation of delay and impleadment as a legal representative in an appeal filed under Section 35 of FEMA against an order of the Appellate Tribunal.
A Single Judge Bench comprising Justice Swarana Kanta Sharma, while examining the provisions of FEMA 1999, noted that “Section 43 makes it abundantly clear that any proceeding, liability, or appeal arising under FEMA shall not abate upon the death or insolvency of a party, and the rights and obligations shall devolve upon the legal representatives or other competent substitutes.”
Advocates R.K. Handoo and Vivek Gurnani appeared for the applicant and the Directorate of Enforcement, respectively.
Background
A Show Cause Notice was issued by the Directorate of Enforcement against an organisation and its President for alleged contravention of provisions of the Foreign Exchange Regulation Act, 1973. Though FERA stood repealed, adjudication continued by virtue of Section 49(3) of FEMA, permitting cognisance within two years of repeal.
Penalties were imposed under Section 50 of FERA. The Directorate of Enforcement filed a revision under Section 52(4) of FERA, read with Sections 19(6) and 49(4) of FEMA. The Appellate Tribunal quashed the adjudication order and remanded the matter. Aggrieved, separate appeals were filed before the High Court.
Thereafter, an interim order was granted in favour of the appellants, after which the appeals were placed in the category of regular matters and remained unheard for several years. During this period, the appellant passed away. When the matter was listed again after over a decade, the applicant sought substitution as legal heir and requested condonation of the delay.
The Directorate of Enforcement opposed the request, arguing that delay could not be condoned as FEMA does not contain a provision permitting such an extension, and that litigants must remain vigilant of proceedings.
Court’s Observation
The Delhi High Court rejected the Enforcement Directorate’s objection and held that the statutory scheme of FERA and FEMA expressly preserves the right of legal representatives to continue appeals pending before the High Court.
Quoting Section 43 of FEMA, the Court noted that “any proceeding, liability, or appeal arising under the provisions of section 13 shall not abate by reason of death or insolvency of the person liable under that section and upon such death or insolvency such rights and obligations shall devolve on the legal representative of such person…”
The Court further examined Section 55 of FERA, which similarly continues appellate rights of legal heirs. It noted that neither provision prescribes any limitation period for substitution and therefore the right cannot be curtailed on the ground of delay.
The Court also observed that the appeal had remained in “regular matters” for nearly thirteen years, during which it was never listed for hearing. By referring to Perumon Bhagvathy Devaswom v. Bhargavi Amma, the Court highlighted that litigants cannot be expected to continuously monitor cases that have remained unlisted for years in High Courts.
Accordingly, the Court held that the delay was satisfactorily explained and that once substitution rights are statutorily preserved, an application filed upon acquiring knowledge of the appeal cannot be rejected. The absence of a limitation provision under FEMA further supported the applicant’s plea.
Conclusion
Holding that proceedings do not abate on account of the death of a party and that rights devolve upon legal representatives, the Court condoned the delay and allowed impleadment of the applicant as legal heir.
The application was disposed of, and the appeal was directed to be listed for hearing on the scheduled date.
Cause Title: Abdul Hameed Rehmani v. Special Director Enforcement Directorate (Neutral Citation: 2025:DHC:9358)
Appearances
Petitioner: R.K. Handoo, Advocate
Respondent: Vivek Gurnani, Advocate
