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

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was repealed with effect from 01.06.2000.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

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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.

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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

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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

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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

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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

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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:  

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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

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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

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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

Appeal to Special Director (Appeals).—

(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

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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

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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.  

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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.

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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

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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.

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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

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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

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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

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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.  

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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.        

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