UNION OF INDIA vs. M/S PREMIER LIMITED (FORMERLY PREMIER AUTOMOBILES LTD.)

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 3529 OF 2008 Union of India & Ors.             ….Appellant(s) VERSUS M/s Premier Limited (Formerly    …Respondent(s) Premier Automobiles Ltd.) & Ors. J U D G M E N T Abhay Manohar Sapre, J. 1.  This   appeal   is   filed   by   the   Union   of   India against   the   final   judgment   and   order   dated 13.07.2006 passed by the High Court of Judicature at Bombay in Writ Petition Nos. 1567 of 2005, 2780, 2781   &   2782   of   2004   wherein   the   High   Court Signature Not Verified Digitally signed by ANITA MALHOTRA Date: 2019.01.29 17:54:20 IST Reason: allowed the writ petitions and quashed the orders passed by the Special Director (Appeals). 1 2. The   controversy   involved   in   this   appeal   is short.   However, in order to appreciate the same, few undisputed facts need mention hereinbelow. 3. On 01.05.1991, a memorandum to show cause notice   was   issued   by   the   Special   Director   to respondent Nos. 2, 3 and 4, namely, M/s Godrej Industries   Ltd.   [formerly   known   as   Godrej   Soaps Ltd. (R­2)] and its two Directors (R­3 and R­4) for allegedly committing contravention of Sections 9 (1) (a),   9(1)(c)   and   Section   16(1)   of   the   Foreign Exchange Regulation Act, 1973 (hereinafter referred to as  “FERA”) in respect of imports and exports of certain commodities made with two foreign parties, viz.,   M/s   Fingrain,   S.A.,   Geneva   and   M/s Continental   Grain   Export   Corporation,   New   York during the year 1977­78. 4. During the pendency of the proceedings, FERA was repealed with effect from 01.06.2000. It was, however,   replaced   by   Foreign   Exchange 2 Management Act, 1999 (hereinafter referred to as “FEMA”).   5. On   05.12.2003,   an   adjudication   order   was passed   by   the   Deputy   Director   of   Enforcement under FEMA read with FERA in relation to the show cause   notice   dated   01.05.1991.   By   this   order, penalty   of   Rs.15,50,000/­     was   imposed   on   M/s Godrej   Industries   Ltd.   and   its   two   Directors   for contravening the provisions of Sections 9 (1)(a) and 9(1)(c) read with Section 16 (1) of FERA. 6. On 15.01.2004, the respondent Nos. 2 to 4 felt aggrieved   by   the   adjudication   order   dated 05.12.2003   and   filed   appeal   before   the   Special Director (Appeals) under Section 17 of FEMA. 7. On   08.09.2004   and   08.11.2004,   the   Special Director (Appeals) dismissed the appeals as being not maintainable. He held that the Special Director (Appeals)  has  no  jurisdiction  to hear  the  appeals against the adjudication order passed under Section 51 of FERA. 3 8. Respondent Nos. 2 to 4 felt aggrieved by orders dated   08.09.2004   and   08.11.2004   and   filed   writ petitions   before   the   High   Court   of   Bombay   at Mumbai.   By impugned common order, the High Court allowed the writ petitions and quashed the orders of the Special Director (Appeals). The High Court   held   that   the   appeals   filed   by   respondent Nos.2   to   4   before   the   Special   Director   (Appeals) against   the   adjudication   order   dated   05.12.2003 were maintainable inasmuch as the Special Director (Appeals) possessed the jurisdiction to decide the appeals on merits.  9. It is against this order of the High Court,  the Revenue   has   felt   aggrieved   and   filed   the   present appeal by way of  special leave before this Court.   10. Heard learned counsel for the parties. 11. Learned   counsel   for   the   appellant   (Union   of India) while assailing the legality of the impugned order contended that on proper reading of relevant provisions   of   FERA   and   FEMA   and   especially 4 Section 81 of FERA and Sections 17, 19 and 49 of FEMA in   juxtaposition , it is clear that the appeal against the order dated 05.12.2003 passed by the Deputy   Director   of   Enforcement   (Adjudicating Officer) under Section 51 of FERA read with FEMA would   lie   only   to   the   Appellate   Tribunal   under Section   19   of   FEMA   but   not   before   the   Special Director (Appeals) under Section 17 of FERA.  12. It   is   this   submission,   the   learned   counsel elaborated in his argument by referring to various provisions of FERA and FEMA. 13. In   reply,   learned   counsel   for   the respondents(assessees)   supported the view taken by the High Court and contended that the appeal was rightly held maintainable under Section 17 of FEMA before the Special Director (Appeals) against the   order   dated   05.12.2003   passed   by   Deputy Director of Enforcement as an Adjudicating Officer for its disposal.  Learned counsel also referred to the 5 provisions   of   FERA   and   FEMA   to   support   his arguments. 14. Having   heard   the   learned   counsel   for   the parties  and  on perusal  of  the  record  of  the  case including the written submissions, we find force in the   submissions   of   learned   counsel   for   the appellants­UOI.  15. The question, which arises for consideration in this   appeal,   is   ­   which   is   the   proper   appellate authority for deciding the appeals filed after repeal of FERA on 01.06.2000 against the order passed under   Section   51   of   FERA     in   the   proceedings initiated prior to 01.06.2000, viz., is it the “Special Director (Appeals)” under Section 17 of FEMA or is it   the   “Appellate   Tribunal”   under   Section   19   of FEMA. 16. In   other   words,   the   question   is,   if   the Adjudicating Officer has passed an order after the repeal of FERA in the proceedings initiated prior to 01.06.2000, whether an appeal against such order 6 will lie before the “Special Director (Appeals)” under Section   17   of   FEMA   or   before   the   “Appellate Tribunal” under Section 19 of FEMA. 17. In order to answer the question involved in this appeal, it is necessary to take note of some relevant provisions   of   FERA   (since   repealed)   and   FEMA under   which   the   issue   was   dealt   with.     Though Rules are also framed under FEMA prescribing the manner in which the appeals are to be prosecuted but   for   deciding   the   question,   it   may   not   be necessary to examine the Rules.   18. The relevant Sections are Sections 50, 51, 52, 54 and 81 of FERA and Sections 17, 18, 19 and 49 of FEMA which read as under: “ FERA Section 50 Penalty­If   any   person   contravenes   any   of   the provisions of this Act other than section 13, clause (a) of   sub­section   (1)   of   section   18,   section   18   A   and clause (a) of sub­section ( 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 7 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). Section 51 Power  to adjudicate  ­  For the  purpose of  adjudging under section 50 whether any person has committed a contravention   of   any   of   the   provisions   of   this   Act (other than those referred to in that section) or of any rule,   direction   or   order   made   thereunder,   the adjudicating   officer   shall   hold   an   inquiry   in   the prescribed   manner   after   giving   that   person   a reasonable opportunity for making a representation in the matter and if, on such inquiry, he is satisfied that the person has committed the contravention, he may impose such penalty as he thinks fit in accordance with the provisions of that section. Section 52 Appeal   to   Appellate   Board  ­   (1)   The   Central Government,   may   by   notification   in   the   Official Gazette, constitute an Appellate Board to be called the Foreign   Exchange   Regulation   Appellate   Board consisting of a Chairman [being a person who has for at least ten years held a civil judicial post or who has been a member of the Central Legal Service (not below Grade 1) for at least three years or who has been in practice as an advocate for at least ten years] and such number of other members, not exceeding four to be appointed   by   the   Central   Government   for   hearing appeals against the orders of the adjudicating officer made under section 51.  (2) Any person aggrieved by such order may, on payment of such fee as may be prescribed and after depositing the sum imposed by way of penalty under section 50 and within forty­five days from the date on which the order is served on the person committing the contravention, prefer an appeal to the Appellate Board:  Provided   that   the   Appellate   Board   may entertain any appeal after the expiry of the said period of forty­five days, but not after ninety days from the date aforesaid if it is satisfied that the appellate was prevented by sufficient cause from filing the appeal in time:  8 Provided further that where the Appellate Board is of opinion that the deposit to be made will cause undue hardship to the appellant, it may, in its own discretion,   dispense   with   such   a   deposit   either unconditionally   or   subject   to   such   conditions   as   it may deem fit.  (3) On receipt of an appeal under sub­section (2) the Appellate   Board   may,   after   making   such   further inquiry as it deems fit, confirm, modify or set aside the   order   appealed   against   and   the   decision   of   the Appellate   Board   shall,   subject   to   the   provisions   of section 54, be final and if the sum deposited by way of penalty   under   sub­section   (2)   exceeds   the   amount directed to be paid by the Appellate Board, the excess amount shall be refunded.  (4)   The   Appellate   Board   may,   for   the   purpose   of examining the legality, propriety or correctness of any order made by the adjudicating officer under section 50 read with section 51 in relation to any proceeding, on its own motion or otherwise, call for the records of such proceeding and make such order in the case as it thinks fit.   (5) No order of the adjudicating officer made under section 50 read with section 51 shall be varied by the Appellate Board so as to prejudicially affect any person without giving such person a reasonable opportunity for making a representation in the matter; and subject thereto   the   Appellate   Board   shall   follow   such procedure, in respect of the proceedings before it, as may be prescribed.  (6) The powers and functions of the Appellate Board may   be   exercised   and   discharged   by   Benches consisting   of   two   members   and   constituted   by   the Chairman of the Appellate Board:  Provided   that   if   the   members   of   the   Bench differ on any point or points, they shall state the point or points on which they differ and refer the same to a third member (to be specified by the Chairman) for hearing  on  such  point  or  points  and  such  point  or points shall be decided according to the opinion of that member:  Provided further that it shall be competent for the Chairman or any other member of the Appellate Board authorised by the Chairman in this behalf to exercise the powers and discharge the functions of the 9 Appellate Board in respect of any appeal against an order imposing a penalty of an amount not exceeding two lakhs and fifty thousand rupees. Section 54 Appeal to High Court ­ An appeal shall lie to the High Court only on questions of law from any decision or order of the Appellate Board under sub­section (3) or sub­section (4) of section 52:  Provided   that   the   High   Court   shall   not entertain any appeal under this section if it is filed after   the   expiry   of   sixty   days   of   the   date   of communication   of   the   decision   or   order   of   the Appellate Board, unless the High Court is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time.  Explanation. —In this section and in section 55, "High Court" means­  (i) the High Court within the jurisdiction of which the aggrieved   party   ordinarily   resides   or   carries   on business or personally works for gain; and (ii)   where   the   Central   Government   is   the   aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one   respondent,   any   of   the   respondents,   ordinarily resides or carries on business or personally works for gain.  Section 81 Repeal   and   Saving  ­   (1)   The   Foreign   Exchange Regulation Act, 1947 (7 of 1947) is hereby repealed.  (2) 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, authorisation or exemption granted or any document or instrument executed or any direction given or any proceedings taken or any confiscation adjudged or any penalty or fine imposed) under the Act hereby repealed shall,   in   so   far   as   it   is   not   inconsistent   with   the 10 provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act; (b) the provisions of section 60 of this Act shall apply in   relation   to   the   contravention   of   any   of   the provisions of the Act hereby repealed or of any rule, direction or order made thereunder;  (c)   any   appeal   preferred   to   the   Foreign   Exchange Regulation   Appellate   Board   under   sub­section   (2)of section   23E   of   the   Act   hereby   repealed   but   not disposed of before the commencement of this Act and any appeal that may be preferred to the said Board against any order made or to be made under section 23 of the Act hereby repealed may be disposed of by any member of the Appellate Board constituted under this   Act   in   accordance   with   the   provisions   of   sub­ section (6) of section 52 of this Act; (d)   every   appeal   from   any   decision   or   order   of   the Foreign   Exchange   Regulation   Appellate   Board   under sub­section (3) or sub­section (4) of section 23E of the Act   hereby   repealed   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 any 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.  (3) The mention of particular matters in sub­section (2) 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. FEMA Section 17

   ) (1  The   Central   Government   shall,   by   notification, appoint   one   or   more   Special   Directors   (Appeals)   to hear  appeals  against  the  orders  of  the  Adjudicating Authorities under this section and shall also specify in the said notification the matter and places in relation 11 to which the Special Director (Appeals) may exercise jurisdiction. (2) Any   person   aggrieved   by   an   order   made   by   the Adjudicating Authority, being an Assistant Director of Enforcement   or   a   Deputy   Director   of   Enforcement, may prefer an appeal to the Special Director (Appeals). (3) Every   appeal   under   sub­section   (1)   shall   be   filed within forty­five days from the date on which the copy of the order made by the Adjudicating Authority is received by the aggrieved person and it shall be in such   form,   verified   in   such   manner   and   be accompanied by such fee as may be prescribed:  Provided   that   the   Special   Director   (Appeals) may entertain an appeal after the expiry of the said period of forty­five days, if he is satisfied that there was sufficient cause for not filing it within that period. (4) On receipt of an appeal under sub­section (1), the Special Director (Appeals) may after giving the parties to the appeal an opportunity of being heard, pass such order thereon as he thinks fit, confirming, modifying or setting aside the order appealed against. (5) The Special Director (Appeals) shall send a copy of every order made by him to the parties to appeal and to the concerned Adjudicating Authority. (6) The Special Director (Appeals) shall have the same powers   of  a   civil  court   which  are   conferred  on   the Appellate Tribunal under sub­section (2) of section 28 and— (a) all proceedings before him shall be deemed to be judicial  proceedings within  the meaning  of sections 193 and 228 of the Indian Penal Code (45 of 1860); (b) shall be deemed to be a civil court for the purposes of   sections   345   and   346   of   the   Code   of   Criminal Procedure, 1973 (2 of 1974). Section 18

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Section 19

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Section 35

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19. Section   49   (5)(b)   of   FEMA  deals   with   repeal and saving in relation to the action taken and to be taken under FERA, 1973. Reading of this Section shows that the legislature has equated the Appellate Board constituted under FERA with the Appellate Tribunal constituted under FEMA for disposal of the appeals filed under Section 52(2) of FERA against an order passed under Section 51 of FERA which were   pending   before   the   Appellate   Board   as   on 01.06.2000.   Such   appeals   stood   transferred   from the Appellate Board to the Appellate Tribunal for their disposal in accordance with law.  16 20. The reason as to why a specific provision for transfer of such pending appeals was made for their disposal from the Appellate Board to the Appellate Tribunal was that the Appellate Board constituted under   FERA   stood   dissolved   by   Section   49(1)   of FEMA with effect from 01.06.2000.  21. It is this dissolution of the Appellate Board, which   necessitated   the   legislature   to   make   a corresponding provision in the new Act (FEMA) so that the consequences arising out of the dissolution of the Appellate Board constituted under FERA is taken   care   of   by   another   appellate   authority constituted   under   the   FEMA   and   all   pending appeals   are   automatically   transferred   to   the Appellate Board for their disposal under FEMA.  22. Having   examined   the   relevant   provisions   of FERA and FEMA, we are of the considered opinion that any appeal filed after 01.06.2000 against the order   of   the   Adjudicating   Officer   passed   under Section   51   of   FERA   in   the   proceedings   initiated 17 under FERA would lie before the Appellate Tribunal under Section 19 of FEMA. This we say for more than one reason set out in detail hereinbelow. 23. First, if the Adjudicating Officer had passed an order   under   Section   51   of   FERA   prior   to 01.06.2000, then the appeal against such order was required to be filed before the Appellate Board under Section 52 (2) of FERA. In   other   words,   if   the Adjudicating   Officer   had   passed   the   order   under Section 51 of FERA prior to 01.06.2000 when FERA was   in   force,   the   appeal  against   such   order   was maintainable only under Section 52 (2) before the Appellate Board under FERA.  24. Second, if such appeal had remained pending before the Appellate Board on 01.06.2000, the same would   have   been   transferred   to   the   Appellate Tribunal   constituted   under   FEMA   in   terms   of Section 49 (5)(b) of FEMA for its disposal.  18 25. Indeed, there can be no dispute to the legal position   mentioned   in   the   First   and   Second reasoning  supra . 26. Third,   a   fortiori ,   any   appeal,   if   filed   after 01.06.2000 and against the similar order, i.e., an order passed under Section 51 of FERA should also be held to lie before the Appellate Tribunal under Section 19 of FEMA alike the appeals filed prior to 01.06.2000   and   which   were   transferred   to   the Appellate Tribunal by virtue of Section 49(5)(b) of FEMA.       27. Fourth, the reason behind this simultaneous statutory   transfer   of   pending   appeals   to   the Appellate Tribunal under FEMA appears to be that the   legislature   did   not   intend   to   provide   two separate   Appellate   Authorities   under   FEMA   for challenging   the   adjudication   order   passed   under Section 51 of the FERA, i.e., one appeal before the Special   Director   (Appeals)   and   the   other   appeal before the Appellate Tribunal under FEMA. 19 28. In other words, the legislature did not intend to make a distinction between the two appeals for their disposal by two different appellate authorities under FEMA only because one appeal was filed prior to   01.06.2000,   therefore,   it   will   lie   before   the Appellate Tribunal whereas the other appeal which was   filed   after   01.06.2000   though   against   the similar order, it will lie before the Special Director (Appeals).  In our view, there does not appear to be any justifiable reason to make such distinction for filing   of   appeals   filed   against   the   similar   order passed under FERA before two different appellate authorities under FEMA. 29. In our opinion, this intention of the legislature is strengthened when we read Section 49 (5)(b) of FEMA and Section 81(c) of FERA.   30. So   far   as   Section   49(5)(b)   of   FEMA   is concerned,     as   mentioned   above,   it   specifically provides that the appeals filed under Section 52 (2) of FERA against the order passed under Section 51 20 of FERA will be decided by the Appellate Tribunal under FEMA.  31. So   far   as   Section   81(c)   of   FERA,   1973   is concerned, it deals with Repeal and Saving of FERA, 1947.  Clause (c) of Section 81 specifically provides that all the appeals filed under Section 23 of FERA, 1947, whether pending on the date of Repeal or/and those filed after the repeal of FERA, 1947, shall be disposed   of   by   the   Appellate   Board   constituted under FERA, 1973. 32. It is true that Section 49 (5)(b) of FEMA is not worded alike Section 81 (c) of FERA,   yet, in our view, it shows the intention of the legislature that all such   appeals   have   to   be   heard   by   the   Appellate Board   under   the   FERA.   The   legislative   intent contained   in   Section   81   (c)   can   be   taken   into account for interpreting the relevant provisions of FERA and FEMA for deciding the question which is the subject matter of this appeal. 21 33.   We cannot, therefore, accept the submission of learned counsel for the respondents(assessees) that since   Section   49(5)(b)   of   FEMA   is   not   identically worded on the pattern of Section 81(c) of FERA, that itself would justify that the legislature intended to provide two appellate authorities in FEMA for filing two types of appeals arising out of a similar order.  34. In other words, it is not possible to accept the submission   of   learned   counsel   for   the respondents(assessees)   that   by   interpretative process this Court can uphold creation of another appellate authority for the disposal of the appeals filed against the order passed under Section 51 of FERA   after   01.06.2000   which   do   not   fall   under Section 49 (5)(2) of FEMA. 35.   Indeed,     as   mentioned   above,   when   similar occasion arose  at the  time  of  repealing  of  FERA, 1947 by a new Act­ FERA, 1973 on 01.01.1974, the legislature provided in Section 81(c) of FERA, 1973 that   all   appeals   filed   under   Section   23   (E)(2)   of 22 FERA, 1947 and pending before the Appellate Board including those appeals which are filed against the order passed after 01.01.1974 shall be disposed of by the Appellate Board under FERA, 1973. 36. Keeping in view this legislative intent, we are of the view that there is no reason as to why the same legislative intent while interpreting the provisions of FERA, 1973 and FEMA, 1999 is applied for deciding the identical question now arising in the case.  37. The   aforementioned   submission   is   not acceptable   for   yet   another   reason.     Perusal   of Scheme   of   FEMA   would   show   that   the   Special Director (Appeals) is subordinate in hierarchy to the Appellate Tribunal prescribed under Section 49(5)(2) of  FEMA.   It is, therefore, not possible to hold that one   appeal   would   be   maintainable   before   the Appellate Tribunal and the other appeal arising out of similar order would be maintainable before the Special   Director   (Appeals),   who   is   subordinate   in 23 hierarchy to the Appellate Board.  Such distinction does not stand for any logic. 38. This question can be examined from another angle also.  If the submission of the learned counsel for the respondents is accepted that the appellate forum in this case for filing appeal is ­   “Special Director (Appeals)” and not the  “Appellate Tribunal” under   FEMA     then   it   will   result   in   anomalous situations which will again be incongruous. 39. The anomalous situation would be,  the orders passed  by   the  Appellate   Tribunal  in  the  appeals, which stood transferred to the Appellate Tribunal by virtue of Section 49 (5)(b),   are appealable to the High Court under Section 35 of FEMA whereas  the orders passed by the Special Director (Appeals) in the   appeals   filed   after   01.06.2000   are   not appealable to the High Court under Section 35 of FEMA.   So, against the same order, one appellant has a right of appeal to the High Court but the other appellant has no such right of appeal because he 24 suffered   dismissal   of   his   appeal   from   Special Director (Appeals) against whose order appeal does not lie under Section 35 to the High Court. In our view, such anomalous situation while interpreting the provisions of the Act should always be avoided. 40. Applying   the   principle   of   purposive interpretation, we are of the view that the appellate forum for deciding the appeals arising out of the order   passed   under   Section   51   of   FERA   whether filed prior to 01.06.2000 or filed after 01.06.2000 must be the same, i.e., Appellate Tribunal under FEMA. 41. In view of the foregoing discussion, we cannot concur with the view taken by the High Court and accordingly hold that the appeal filed by respondent Nos.   2   to   4   against   the   order   dated   05.12.2003 passed   by   Deputy   Director   of   enforcement   under Section   51   of   FERA   will   lie   and   was,   therefore, maintainable   only   before   the   Appellate   Tribunal under Section 19 of FEMA.  25 42. The   appeals   bearing   Nos.SD/A/MUM/04­ 05/38,39,40   and   SD/A/MUM/03­04/22   which respondent Nos. 2 to 4 had filed before the Special Director (Appeals) are accordingly transferred to the concerned   Appellate   Tribunal   constituted   under Section 18 of FEMA for their disposal on merits in accordance with law.  43. The   appeal   is   accordingly   allowed.   The impugned order is set aside.      …………………………………J.       [ABHAY MANOHAR SAPRE]                                                                    ....…..................................J.              [INDIRA BANERJEE] New Delhi; January 29, 2019.                26