An example of flagrant violation of the process of law

It has been learnt from the documents obtained through an application under Right to Information Act, 2005 that 12652 cases of alleged contravention of the provisions of the Foreign Exchange Regulation Act, 1973, in short FERA, have either already been adjudicated or in the process of adjudication, after the repeal of FERA by the Foreign Exchange Management Act, 1999, in short FEMA. 

But the said adjudications were held without jurisdiction and thousands of crore of rupees penalties were unlawfully imposed upon the alleged contraveners. This is simply due to the fact that the very appointment of the officers to adjudicate the said cases of alleged contravention of the provisions of FERA was without jurisdiction and in this respect flagrant violation of law has been committed by the Central Government: The said adjudicating officers were purportedly appointed on 28.8.2003 invoking the provisions of FERA. As FERA was already repealed three years earlier with effect from 1.6.2000, therefore, the Central Government had no authority to speak of to invoke any provision of FERA after its repeal under any circumstances. The Central Government has acted without jurisdiction in the acts of:

1. Issuing and publishing notifications in the official Gazette purportedly in exercise of powers conferred under FERA, even though the said Act ceased to be in force at the relevant point of time when the aforesaid notifications were issued and published.

2. Misrepresenting the facts and misleading the people with ulterior motive to the false conception that FERA was still in force even after its repeal.  

3. Extorting thousands of crore of rupees from unsuspecting alleged contraveners of the provisions of FERA, staging false, colourful and illegal adjudication proceedings based on illegal memorandum / show cause notices and imposing and extracting astronomical sums of money as penalties, which are actions that have no sanction of any law whatsoever.

4. Directing the alleged contraveners of the provisions of FERA to appeal against the illegal adjudication orders to the Appellate Tribunal for Foreign Exchange established under Section18 of FEMA, whereas the said Tribunal does not have jurisdiction to hear any such appeal as the said orders were not made by any Adjudicating Authority or Special Director (Appeals) appointed under the provisions of FEMA.

5. Ruining 12652 companies and individuals by holding adjudication proceedings without jurisdiction and causing wrongful losses to their reputations and money, affecting huge number of peoples' jobs and livelihood and making wrongful gain for the purpose of filling the Government coffer by hook or by crook. 

6. Misleading the judiciary and abusing the process of law, and sending a number of persons to prison branding them as criminals, who were prosecuted without jurisdiction under Section 56 of FERA at a time when the said Section 56 was void and inoperative due to commencement of FEMA, in which, unlike FERA, there is no such provision for prosecution.

An elaboration of the aforesaid contentions is given below: 

A. It is the fundamental duty of every citizen of India "to develop the scientific temper, humanism and the spirit of inquiry and reform' as enshrined in Clause (h) of Article 51-A of the Constitution.

B. It has been held by the Supreme Court in Gajanan Visheshwar Birjur Vs. Union of India & Ors., JT 1994 (5) SC: "It is not the function of our Government to keep the citizen from falling into error; it is the function of the citizen to keep the Government from falling into error."

C. In Kiran Singh and Ors Vs. Chaman Paswan and Ors, 1954 AIR 340, it has been also held by the Supreme Court of India that:

'It is a fundamental principle well established that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree, and such a defect cannot be cured even by consent of parties.'

D. The so-called adjudication orders made by the purportedly appointed Adjudicating Officers under FERA, when the said Act ceased to be in force, are without jurisdiction and hence nullity. Therefore, its invalidity can be set up based on the following grounds amongst others:

(I) The aforesaid memorandum / show cause notices were purportedly issued from Enforcement Directorate under Adjudication Proceedings and Appeal Rules, 1974 by Special Directors. This act of issuing the said memorandum / show cause notices is not only patently illegal  but also absurd, which will be evident from the reasoning given below. 

The repeal and saving clause under section 49 of FEMA has provided: 

Repeal and saving

49. (1) The Foreign Exchange Regulation Act, 1973 (46 of 1973) is hereby repealed and the Appellate Board constituted under sub-section (1) of Section 52 of the said Act (hereinafter referred to as the repealed Act) shall stand dissolved.

(2) On the dissolution of the said Appellate Board, the person appointed as Chairman of the Appellate Board and every other person appointed as Member and holding office as such immediately before such date shall vacate their respective offices and no such Chairman or other person shall be entitled to claim any compensation for the premature termination of the term of his office or of any contract of service.

(3) Notwithstanding anything contained in any other law for the time being in force, no court shall take cognizance of an offence under the repealed Act and no adjudicating officer shall take notice of any contravention under Section 51 of the repealed Act after the expiry of a period of two years from the date of the commencement of this Act.

(4) Subject to the provisions of sub-section (3) all offences committed under the repealed Act shall continue to be governed by the provisions of the repealed Act as if that Act had not been repealed.

(5) Notwithstanding such repeal, -

(a) anything done or any action taken or purported to have been done or taken including any rule, notification, inspection, order or notice made or issued or any appointment, confirmation or declaration made or any licence, permission, authorization or exemption granted or any document or instrument executed or any direction given under the Act hereby repealed shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act;

(b) any appeal preferred to the Appellate Board under sub-section (2) of Section 52 of the repealed Act but not disposed of before  the commencement of this Act shall stand transferred to and shall be disposed of by the Appellate Tribunal constituted under this Act;

(c) every appeal from any decision or order of the Appellate Board under sub-section (3) or sub-section (4) of Section 52 of the repealed Act shall, if not filed before the commencement of this Act, be filed before the High Court within a period of sixty days of such commencement:

Provided that the High Court may entertain such appeal after the expiry of the said period of sixty days if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period.

(6) Save as otherwise provided in sub-section (3), the mention of particular matters in sub-sections (2), (4) and (5) shall not be held to prejudice or affect the general application of Section 6 of the General Clauses Act, 1897 (10 of 1897) with regard to the effect of repeal.

Any repeal of an enactment is governed principally by the following two Sections of the General Clauses Act, 1857:

Section 6. Effect of repeal

Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not —

(a) revive anything not in force or existing at the time at which the repeal takes effect; or
(b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or
(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or
(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or
(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid;

and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed.

Section 24. Continuation of orders, etc., issued under enactments repealed and re-enacted. 

"Where any Central Act or Regulation, is after the commencement of this Act, repealed or re-enacted with or without modification, then, unless it is otherwise expressly provided, any appointment, notification, order scheme, rule, form or bye-law made or issued under the repealed Act or Regulation, shall, so far as it not inconsistent with the provisions re-enacted, continue in force, and be deemed to have been made or issued under the provisions so re-enacted, unless and until it is superseded by any appointment, notification, order, scheme, rule, form or bye-laws made or issued under the provisions so re-enacted ........;

In view of the provisions under the above Section 24, with effect from 1.6.2000: 

(a) There was no Enforcement Directorate that had existed when FERA was in force, since it has been already superseded by the ' Directorate of Enforcement' established under FEMA.

(b) With effect from 1.6.2000, the Adjudication Proceedings and Appeal Rules, 1974 made under FERA was no more available for issuing any notice since it was already superseded by making of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 under FEMA. 

(c) If it is assumed for the sake of argument that FERA was in force even in the year 2002, then also the said memorandum / show cause notices were without jurisdiction as the same were not issued by any officer authorized under FERA, because under FERA there did not exist any 'Special Director' ; this post has been created only under FEMA.

(d) As FEMA already came into force with effect from 1.6.2000, thus, subject to compliance of Section 6 read with section 24 of the General Clauses Act, only the Adjudicating Authorities appointed under FEMA had jurisdiction to issue any such memorandum / show cause notice from the Directorate of Enforcement under the Foreign Exchange (Adjudication Proceedings and Appeal) Rules, 2000.

(II) The Central Govt. Notification being No. S.O. 964(E), dated 25.8.2003, appointing certain Commissioners and Additional Director Generals of the Central Government as officers of Enforcement under FERA is invalid because after the repeal of FERA the Central Government is debarred from exercising any power that was conferred under any provision of the repealed Act. The said notification contradicts the provisions given under Section 6 read with Section 24 of the General Clauses Act, 1897. The text of the said notification is reproduced below:

MINISTRY OF FINANCE
(Department of Revenue)
NOTIFICATION 
New Delhi, the 25th August, 2003

S.O. 964(E). - Whereas the provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) were brought into force vide G.S.R. 371(E) published in the Gazette of India on 1st May, 2000 giving effect to the provisions of the said Act from 1st June, 2000;

And, whereas, the Central Government by an Order published in the Gazette in exercise of the powers conferred under Section 50 of Foreign Exchange Regulation Act, 1973 (repealed Act) read with sub-section (1) of Section 4 and clause (e) of Section 3 of the repealed Act appointed certain officers of the Central Government to adjudicate cases for contravention made on or before 31st May, 2002 of the provisions of the repealed Act;

Now, therefore, in exercise of the powers conferred under Section 50 read with sub-section (1) of Section 4 of the Foreign Exchange Regulation Act, 1973 (repealed Act) and sub-sections (3) and (4) of Section 49 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Central Government hereby appoints the following persons given in the Table below as officers of Enforcement, namely: -"

In the table the names and respective designations of twenty-nine Central Government Officers were given.

Under the provision of Section 50 of FERA as given below, only the Adjudicating Officers, but not the officers of Enforcement, could be appointed: 

Penalty

50. If any person contravenes any of the provisions of this Act [other than Section 13, clause (a) of sub-section (1) of Section 18, Section 18A and clause (a) of sub-section (1) of Section 19] or of any rule, direction or order made thereunder, he shall be liable to such penalty not exceeding five times the amount or value involved in any such contravention or five thousand rupees, whichever is more, as may be adjudged by the Director of Enforcement or any other officer of Enforcement not below the rank of an Assistant Director of Enforcement specially empowered in this behalf by order of the Central Government (in either case hereinafter referred to as the adjudicating officer).

The third paragraph of the said notification mentions about appointment of ' certain officers of the Central Government to adjudicate cases for contravention made on or before 31st May, 2002 of the provisions of the repealed Act' , whereas no contravention of any provision of the repealed Act FERA could be committed by anyone in the year 2002 as the said Act itself has already been repealed in the year 2000. 

(III) The Central Govt. Notification being No. S.O. 986(E) dated the 28.8.2003 purportedly appointing Adjudicating Officers under FERA is similarly invalid because after repeal of FERA the Central Government has lost its competence to exercise any power that was conferred under any provision of the repealed Act.

MINISTRY OF FINANCE
(Department of Revenue)
NOTIFICATION
New Delhi, the 28th August, 2003 

S.O. 986(E) - Whereas the provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) were brought into force vide G.S.R.371(E) published in the Gazette of India 1st May, 2000 giving effect to the provisions of the said Act from 1st June, 2000;

And, whereas, the Central Government by an Order published in the Gazette in exercise of the powers conferred under Section 50 of Foreign Exchange Regulation Act, 1973 (repealed Act) appointed certain officers of the Central Government to take action for contravention under Section 51 of the repealed Act and also initiated certain actions under the provisions of the repealed Act;

And, whereas, the Central Government by an order published in the Official Gazette vide S.O.964(E) dated 25th August, 2003 appointed certain officers as Officers of Enforcement to give continued effect for the action taken under paragraph 2 above;

Now, therefore, in exercise of the powers conferred under Section 50 of the Foreign Exchange Regulation Act, 1973 (repealed Act) read with Section 5 of the repealed Act and sub-sections (3) and (4) of Section 49 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Central Government authorises the persons mentioned in the Table below to function as adjudicating officers to adjudicate the cases of contravention of any of the provisions of the repealed Act (other than Section 13, clause (a) of Section 18, sub-clause (a) of sub-section (1) of Section 19) or any rule or direction or order made thereunder, such cases as may be assigned by the Directorate of Enforcement, namely:'

The table that followed contained the same twenty-nine names mentioned in the  Central Govt. Notification being No. S.O. 964(E), dated 25.8.2003 giving their respective designations.

Furthermore, under Section 50 of FERA only an ' officer of Enforcement not below the rank of an Assistant Director of Enforcement' was eligible to be specially empowered by the Central Government to adjudge cases of contravention as an Adjudicating Officer. But as evident from the designations of the officers given in the said notification who have been purportedly authorized to function as Adjudicating Officers, they are Commissioners and Additional Director Generals in the Central Government but not officers of Enforcement Directorate. This makes them ineligible to be authorized to function as Adjudicating Officers under FERA.

Even if it is presumed for the moment that the said officers were the same who were purportedly appointed as officers of Enforcement three days earlier, i.e., on 25.8.2003, under the Notification No. S.O. 964(E), then the question arises: how come their designation in the said Notification dated 28.8.2003 is not shown as officers of Enforcement? Once they were appointed as officers of Enforcement, they could not remain in their original posts as Commissioners and Additional Director Generals after the said appointment as officers of Enforcement. Moreover, only as officers of Enforcement, they could not be authorized to function as Adjudicating Officers, for that they had to be at least Assistant Directors of Enforcement, which they were not as evident from the said notification. Thus their appointment as Adjudicating Officers under FERA is ultra vires the Act itself, which is evident on the face of the record, and this makes any adjudication proceedings held and any order made by them, entirely without jurisdiction and void ab initio. 

It may even be argued that the said appointments were made under Section 5 of FERA, which had provided:

Entrustment of functions of Director

5. The Central Government may, by order and subject to such conditions and limitations as it thinks fit to impose, authorize any officer of customs or any Central Excise Officer or any police officer or any other officer of the Central Government or a State Government to exercise such of the powers and discharge such of the duties of the Director of Enforcement or any other officer of Enforcement under this Act as may be specified in the order.

It is clear from Section 5 that the appointment of Adjudicating Officer was not covered under Section 5. To be authorized as an Adjudicating Officer, the person had to be an officer of Enforcement not below the rank of an Assistant Director of Enforcement. Thus even a Director of any other Central Government Directorate was not eligible to be authorized by the Central Government to function as an Adjudicating Officer under FERA, unless he was appointed first at least as an Assistant Director of Enforcement, meaning Assistant Director of Enforcement Directorate as statutorily required under Section 50 of FERA.

(IV) By operation of Sections 6 and 24 of the General Clauses Act, 1897 given above, there can be no appointment of any Adjudicating Officer under FERA in the year 2003 when FERA was repealed and FEMA came into force and Adjudicating Authorities were already appointed under FEMA on 1.6.2000, as mandated under the said provisions of Sections 6 and 24 of the General Clauses Act. 

(V) Even the officers of Enforcement purportedly appointed under the Notification being No. S.O. 964(E), dated 25.8.2003, were ineligible to be appointed as Adjudicating Officers just after three days under the Notification being No. S.O. 986(E) dated the 28.8.2003, even if FERA was in force at the relevant point of time, because they were all below the rank of Assistant Director of Enforcement, which was a statutory requirement under Section 50 of FERA.

(VI) The said so-called Adjudicating Officers, purportedly appointed under FERA, had issued hearing notices in the year 2004, commencing adjudication proceedings under Adjudication Proceedings and Appeal Rules, 1974, from Directorate of Enforcement established under FEMA, whereas the said Rules were superseded by Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000, made under FEMA and were no more in force within the meaning of Section 24 of the General Clauses Act. Furthermore, the aforesaid officers did not belong to the said Directorate of Enforcement under any circumstances as they were not appointed as Adjudicating Authorities under Section 16 of FEMA. This also means that no order made by any of them can be appealed against either before the Special Director (Appeals) under Section 17 of FEMA or before the Foreign Exchange Appellate Tribunal constituted under Section 18 of FEMA.

(VII) Thus any order made by any of the said so-called Adjudicating Officers imposing penalty for alleged contravention of any provision of FERA is without jurisdiction on the face of the record and thereby it is a nullity and is liable to be quashed. 

(VIII) The Central Government, levying such undue and illegal penalties, has made wrongful gain causing humiliation, mental injury and huge monetary loss to the alleged contraveners, for which they are entitled to adequate compensation. 

(IX) Any prosecution under Section 56 of FERA, held as a result of the written complaint made by any of the said so-called Adjudicating Officers, purportedly appointed in 2003, is patently illegal as they had no jurisdiction to make any such complaint in the first place. Such prosecution is also legally prohibited by Section 6 of the General Clauses Act because no such offence continued in the post-repealed period, as under FEMA there is no provision corresponding to any such offence that had existed under FERA and thereby contrary intention in the repealing Act FEMA is clearly manifest in this respect.

(X) Hence any person undergoing punishment of imprisonment by the order of the Court made under Section 56 of FERA after its repeal when FEMA is already in force, is entitled to be acquitted forthwith with permission to file appropriate suit for damages. 

CONCLUSION

In the light of the above discussion, as a concluding remark, it is once again emphasized that in the adjudication of the aforesaid 12652 (twelve thousand six hundred and fifty two) cases of alleged contravention of the provisions of FERA, there has been complete abuse of the process of law of the land. It has ruined the lives of thousands of individuals along with the eventual closure of hundreds of companies, although there was not even an iota of cause of action against any of them because their alleged cases of contravention were purportedly adjudicated by persons who had absolutely no legal authority to do so. Since it is a serious concern for the whole country as such, through this humble article the legal fraternities are invited to look into the matter and review the same as per the provisions of law. It is earnestly hoped that the reader will appreciate that it is a clear case of public interest at large.