Highlighiting the fact that the Appellate Tribunal for Foreign Exchange is not a Court, the Delhi High Court has held that the word ‘guilty’ used in an order passed by the Appellate Tribunal against the accused is to be considered as “redacted”.

The High Court was considering the appeals filed under Section 35 of the Foreign Exchange Regulation Act, 1973 (FERA), seeking to challenge the order passed by the Appellate Tribunal for Foreign Exchange, New Delhi.

The Single Bench of Justice Jasmeet Singh asserted, “The Appellant Tribunal for Foreign Exchange is an adjudicatory body, which performs quasi-judicial functions and act as administrators and adjudicators. They are not “courts”. While it is very much within their powers, to impose penalties for non-compliance of provisions of FERA, however, it does not lie within their domain to pronounce a person “guilty” of offences under the FERA Act.”

Senior Advocate C. Mohan Rao represented the Appellant while Central Government Standing Counsel-UOI Rakesh Kumar represented the Respondent.

Factual Background

M/s Sujana Steel Ltd. (SSL) (appellant) is a company registered under the Companies Act. Y.S. Chowdary was the chairman of the SSL, and S.T. Prashad was the Managing Director. During the period 1998-99, SSL acquired and remitted a sum of US $13,73,895 to M/s Techno Imports and Exports, Dubai, purportedly for the import of 8707 MT of Heavy Metal Scrap into India. However, no such material was imported. Consequently, an Opportunity Notice was issued to SSL alleging that SSL contravened sections 8 (3) and 8 (4) of FERA.

After the adjudicatory proceedings, the Special Director, ED imposed a penalty of Rs. 4 crore on SSL and Rs. 1 crore each on the chairman and the Managing Director of SSL. Thereafter, the appellants preferred an appeal before the Appellate Tribunal for Foreign Exchange, New Delhi. The Appellate Tribunal allowed the appeals and reduced the penalty from Rs 4 crore to Rs 1 crore as far as SSL was concerned and Rs.30 lakh each as far as the Chairman and Managing Director were concerned. The penalty as imposed by the Appellate Tribunal for Foreign Exchange, New Delhi, had been deposited.

Arguments

The Counsel appearing for the appellant restricted his prayer to the fact that the word “guilty” has been used in the order passed by the Appellate Tribunal for Foreign Exchange. It was submitted that the adjudicatory authorities under the FERA Act are not courts and the proceedings are not criminal, and hence, a person cannot be declared “guilty” for violation of section 8(3) and 8(4) of the Act. Reliance was placed upon the judgment in Director of Enforcement vs. M.C.T.M. Corporation Pvt. Ltd. and Others (1996).

Reasoning

The Bench agreed with the Appellant’s reliance on Director of Enforcement Case (Supra) and said, “A perusal of the aforesaid quoted text indicates that the proceedings under the FERA Act are not criminal proceedings but are adjudicatory in nature.” The Tribunal can impose penalties for non-compliance of the provisions of FERA, however, it can’t pronounce a person “guilty” of offences under the Act, it added.

“I am of the view that pronouncing a person 'guilty’ has serious consequences and to adjudicate and give a finding of ‘guilty’ lies within the exclusive domain of the competent courts of jurisdiction”, the Bench said.

Thus, upholding the penalty imposed by the Appellate Tribunal for Foreign Exchange, the Bench held, “...the word “guilty” used in the entire order 02.06.2016 against the appellants is to be considered as “redacted”.

Cause Title: Y S Chowdary v. Enforcement Directorate (Neutral Citation: 2025:DHC:1338)

Appearance

Appellants: Senior Advocate C. Mohan Rao, Advocates Ramesh Allanki, R. Chandrachud, Aruna Gupta, Dhuli Venkata, Krishna, Loheshkr Sharma, Syed Ahmad Naqvi

Respondents: Central Government Standing Counsel-UOI Rakesh Kumar, Special Counsel –ED, Anupam Sharma, Advocates Prakash Airan, Harpreet Kalsi, Sunil & Vashisht Rao

Click here to read/download Order


Delhi High CourtJustice Jasmeet Singh

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.