Supreme Court Upholds Enforcement Officer's Authority to File FERA Complaints During FEMA Sunset Period

Supreme Court Upholds Enforcement Officer's Authority to File FERA Complaints During FEMA Sunset Period

The Supreme Court has ruled that Enforcement Officers appointed and authorized under the repealed provisions of the Foreign Exchange Regulation Act, 1973 (FERA), can continue to file complaints for FERA offences during the two-year sunset period provided under Section 49(3) of the Foreign Exchange Management Act, 1999 (FEMA).

A Bench of Justices Abhay S. Oka and Sanjay Karol was hearing an appeal against a Bombay High Court order dismissing the appellants' application under Section 482 of the Code of Criminal Procedure, 1973 (CrPC) to quash a criminal complaint filed against them under Sections 56 and 57 of FERA.

The Bench noted that in response to the evolving economic landscape, more rigorous provisions of FEMA were introduced, supplanting FERA. Section 49(3) of FEMA includes a sunset provision, allowing for the filing of complaints regarding offences punishable under FERA and for taking cognisance of these offences, provided that such offences were committed before the repeal of the Act, with a time limit of two years.

The Court took note of Section 49(3) of FEMA, which preserves the possibility of prosecuting offences under Sections 56 and 57 of FERA, so long as they were committed before the repeal of FERA, provided that the competent court initiates proceedings within two years from the date when FEMA came into force.

Additionally, in accordance with Section 49(4) of FEMA, all offences committed under the repealed Act (FERA) shall continue to be regulated by the provisions of FERA, as if the repeal had not occurred.

The Court, therefore, concluded that, in accordance with Section 49(4) of FEMA, a legal fiction maintains the application of the provisions of the repealed Act (FERA) for the prosecution of offences punishable under Sections 56 and 57 of FERA. However, this continuation only applies to the prosecution of offences saved by Section 49(3) of FEMA. Consequently, the complaint filed within the two-year sunset period by the Enforcement Officer, who is duly authorised to file the complaint under Section 61(2)(ii)(b) of FERA, remains valid, as ruled by the Court.

“Therefore, during the sunset period, the authorisation of the Enforcement Officers to file the complaints continues to be valid for the limited purposes of sub¬section (3) of Section 49 of FEMA,” the Court observed.

Rejecting the argument made by the accused that the officer designated under FERA would lack the authority to file complaints for offences punishable under the repealed Act, even within the two-year sunset period, the Bench stated that such an interpretation would effectively bar the Court from taking cognisance of complaints filed after the repeal of FERA by an officer authorised under sub-clause (b) of clause (ii) of subsection (2) of Section 61 of FERA. Consequently, no complaint could be filed during the two-year sunset period stipulated in subsection (3) of Section 49 of FEMA. It was emphasized that a statute cannot be construed in a manner that renders any of its provisions meaningless or unnecessary.

The Court further underlined that any interpretation that would thwart the clear intent of the legislature should be discarded, and the Court should instead adopt an interpretation that renders the provisions of a statute functional and effective.

FEMA came into effect on June 1, 2000, and pursuant to Section 49(1) of FEMA, FERA was repealed. Subsequently, on February 11, 2002, the Enforcement Officer designated under FERA filed a complaint in the Chief Metropolitan Magistrate's Court against the appellants, alleging multiple offences punishable under FERA and Section 120-B of the Indian Penal Code. The Court acknowledged the complaint and issued an order to initiate the legal process.

The applications submitted seeking the discharge of the accused appellants were declined by the lower court. The revision application challenging the rejection of these applications was also dismissed. Subsequently, an application filed under Section 482 of the Criminal Procedure Code (CrPC) was rejected by the High Court.

In the appeal submitted to the Supreme Court, the appellant contended that the Enforcement Officer, even if authorised under FERA before its repeal, lost his authorisation to file the complaint as of June 1, 2000, when he ceased to hold the position of an Enforcement Officer under the Act. Therefore, the appellant argued that the Court should not have accepted the complaint filed by an officer who lacked the necessary authorisation.

During its examination of the present case, the Supreme Court observed that the Magistrate had indeed taken cognisance of the matter within the two-year sunset period stipulated under Section 49(3) of FEMA. Furthermore, it was noted that the complaint had been submitted by an officer who, at the relevant time, held the position of an Enforcement Officer as per Section 3(e) of FERA. Accordingly, the Court ruled that the Enforcement Officer was duly authorised to file a complaint before the Magistrate, seeking cognisance of offences punishable under Sections 56 and 57 of FERA, as specified in Section 61(2)(ii)(b).

The Court clarified that the complaint filed by the Enforcement Officer, who was duly authorised under Section 61(2)(ii)(b) of FERA, within the sunset period, remains valid. This is because, through the legal fiction incorporated in Section 49(4) of FEMA, the prosecution continues to be regulated by the provisions of FERA as if the repeal had not taken place. Consequently, during the sunset period, the authorisation of the Enforcement Officer to submit the complaint remains valid for prosecuting offences under the repealed act.

In line with its findings, the Apex Court decided to reject the appeal, stating that the appeal had not succeeded and, therefore, was dismissed. In light of the fact that the complaint has been stayed since January 7, 2011, the Court directed the Trial Court to expedite the disposal of the complaint bearing CC.No.14/CW/2002, which is the central issue in this appeal, by giving it the necessary out-of-turn priority.