Union of India (UOI) vs Ashok J. Ramsinghani

J.P. Devedhar, J.—This Civil Application is filed by the applicant Assistant Director, Enforcement Directorate, Mumbai seeking condonation of 291 days delay in filing the appeal against the order dated 18/8/2009 passed by the Appellate Tribunal for Foreign Exchange in Appeal No. 110/08. The Appellate Tribunal by its order dated 18/8/2009 has set aside the penalty of Rs. 7 crores imposed by the Special Director, vide order in original dated 28/3/2008, passed u/s 50 of the Foreign Exchange Regulation Act, 1973 (''FERA'' for short) read with Section 13(1) of the Foreign Exchange Management Act, 1999 (''FEMA'' for short).

The condonation of delay is sought on the ground that there was sufficient cause for not filing the appeal in time and since the appeal is filed u/s 54 of the FERA read with Section 49(5)(c) of FEMA, the High Court is empowered to condone the delay for any period of time subject to showing sufficient cause.

In the present case, for the offence allegedly committed under FERA, proceedings were initiated against the Respondent after the commencement of FEMA as per Section 49 of FEMA and penalty was imposed u/s 50 of FERA read with Section 13(1) of FEMA. The question is, whether the first appeal and thereafter the second appeal filed against such penalty order could be said to have been filed before the authorities constituted under FERA or FEMA ?

Against the penalty order passed u/s 50 of FERA, an appeal was maintainable before the Foreign Exchange Regulation Appellate Board (''Appellate Board'' for short) u/s 52 of FERA. Further appeal against the decision or order of the Appellate Board was maintainable before the High Court u/s 54 of FERA. As per the proviso to Section 54 of FERA, any appeal filed after the expiry of sixty days from the date of communication of the decision or order of the appellate board could be condoned by the High Court provided sufficient cause was shown.

FERA was replaced by FEMA with effect from 1/6/2000. Section 49(3) of FEMA empowered the adjudicating officer under FEMA to take notice of any contravention of FERA up to a period of two years from the commencement of FEMA that is upto 31/5/2002. As per Section 49(1) of FEMA, the Appellate Board constituted u/s 52(1) of FERA stood dissolved immediately on commencement of FEMA. As a result, appeal against the adjudication order passed by the Special Director had to be filed before the appellate Tribunal constituted under FEMA.

Section 49(5) of FEMA is relevant for the purpose of this appeal and the said provision reads thus:

49 Repeal and saving:

(1) to (4) ....

(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.

At this stage, we may also refer to Section 35 of FEMA ( to the extent relevant) which reads thus:

Appeal to High Court, Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal on any question of law arising out of such order:

Provided that the High Court may, if it is satisfied that the Appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days.

In the present case, show cause notice was issued to the Respondent on 31/5/2002, that is, within the period of two years from the commencement of FEMA as provided u/s 49(3) of FEMA. By the said notice, the Respondent was called upon to show cause as to why adjudication proceedings should not be held against him for the alleged contravention of FERA. On the Respondent showing cause, the matter was adjudicated and by an order in original dated 28/3/2008 the Special Director of Enforcement Directorate imposed penalty of Rs. 7,00,00,000/- on the Respondent u/s 50 of FERA read with Section 13(1) of FEMA.

In view of the dissolution of the Appellate Board with effect from 1/6/2000, appeal against the adjudication order dated 28/3/2008 had to be filed by the Respondent before the Appellate Tribunal constituted under FEMA. Accordingly, the appeal was filed by the Respondent before the Appellate Tribunal. The Appellate Tribunal by its order dated 18/8/2009 set aside the penalty of Rs. 7 crores imposed by order in original dated 28/3/2008.

Challenging the order of the Appellate Tribunal dated 18/8/2009, the applicant has filed an appeal in this Court on 14/10/2010. Since the appeal is delayed by 291 days, the present Civil Application is taken out seeking condonation of delay of 291 days in filing the appeal.

u/s 35 of FEMA, appeal against the decision or order of the Appellate Tribunal may be filed in the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal on any question of law arising out of such order. Proviso to Section 35 of FEMA makes it clear that the High Court if satisfied that the Appellant was prevented by sufficient cause from filing the appeal within 60 days, may allow it to be filed within a further period not exceeding sixty days. Thus, u/s 35 of FEMA, appeal against the decision or order of the Appellate Tribunal would lie before the High Court provided the appeal is filed within a period of 60 days, extendable by a further period not exceeding 60 days if the High Court is satisfied that sufficient cause prevented the filing of the appeal within the prescribed period. To put it simply, any appeal filed before the High Court u/s 35 of FEMA beyond 120 days would be time barred.

Interpreting similar provisions contained in the Central Excise Act, 1944, the Apex Court in the case of M/s. Singh Enterprises v. CCE reported in 221 ELT 163 (SC) held that where the statute bars appeal beyond sixty days, the Court cannot condone the delay and entertain the appeal filed beyond sixty days. In the present case, since the appeal is filed beyond 120 days, the High Court cannot condone the delay and consequently, the appeal would be time barred.

To overcome this difficulty, it is contended by the learned Additional Solicitor General (''ASG'' for short) appearing on behalf of the applicant that the appeal is filed u/s 54 of the FERA read with Section 49(5)(c) of FEMA.

The learned ASG submits that u/s 6 of the General Clauses Act, 1897, when a Central Act is repealed and replaced by another Act, then the legal proceedings for enforcing a right accrued or acquired or liability incurred under the repealed Act remains unaffected and remain preserved as if the old Act continues to be operative unless the new Act manifests a contrary intention. He submitted that in order to see as to whether the rights and liabilities under the repealed law have been put to an end to by the new enactment, the proper approach is not to enquire if the new enactment has by its new provisions expressly kept alive the rights and liabilities under the repealed law but whether it has taken away those rights and liabilities. Mere absence of a savings clause is not, by itself, material. In support of the above argument, the learned ASG relied upon the decisions of the Apex Court in the case of M/s. P.V. Mohammad Barmay Sons Vs. Director of Enforcement, , The Gujarat Electricity Board Vs. Shantilal R. Desai, , Jayantilal Amrathlal Vs. The Union of India (UOI), , T.S. Baliah Vs. T.S. Rengachari, and State of Punjab v. Mohan Singh [ AIR 1955 S.C. 84].

Relying on the decisions of the Apex Court in the case of Garikapatti Veeraya Vs. N. Subbiah Choudhury, and Hossein Dada V/s. State of M.P. [ AIR 1955 S.C. 221], the learned ASG submitted that a right to appeal is not a matter of procedure but is a substantive right and it is acquired and acquired and vests in a party when the proceedings are first initiated. A pre-existing right of appeal which has vested as above, continues even after the statute in which it is contained has been repealed. An intention to interfere with or to impair or imperil such a vested right cannot be presumed unless such intention be clearly manifested by express words or necessary implication. The fact that the pre-existing right of appeal continues to exist must in turn necessarily imply that the old law which created that right of appeal must also exist to support the continuation of that right. That old law must govern the exercise and enforcement of that right of appeal. Any provision of the new law that impairs, interferes or imperils that vested right of appeal is itself overridden by the old law and is inapplicable. Accordingly, it is submitted that the appeal filed by the applicant must be treated to have been filed u/s 54 of FERA or alternatively u/s 49(5)(c) of FEMA, so that this Court can entertain the appeal after condoning the delay as provided in those provisions.

We find it difficult to accept the above contentions. The legislature while repealing FERA and replacing it with FEMA has expressly dissolved the first appellate authority, namely the Appellate Board. Thus, on commencement of FEMA, the first appellate forum prescribed under FERA namely, the Appellate Board is expressly abolished. As a result, after commencement of FEMA, appeals against adjudication orders passed under FERA had to be filed before the appellate authorities under FEMA, namely Special Director (Appeals) / Appellate Tribunal, as the case may be. The legislature further provides u/s 49(5)(b) of FEMA that appeals pending before the Appellate Board on the date of commencement of FEMA shall be transferred to the Appellate Tribunal constituted under FEMA. Thus, on commencement of FEMA, appeal against the adjudication order passed under FERA would be maintainable before the appellate authorities constituted under FEMA within the period of limitation prescribed under FEMA. In other words, appeals against adjudication orders passed under FERA or FEMA after the commencement of FEMA, have to be filed before the appellate authorities constituted under FEMA within the period of limitation prescribed for filing appeals before the appellate authorities constituted under FEMA.

The argument of the learned ASG that the right of second appeal u/s 54 of FERA remains intact even after the commencement of FEMA is not acceptable because, Section 54 of FERA provides for appeal to the High Court against the order passed by the Appellate Board and not against the order passed by the Appellate Tribunal. In the present case, the appeal filed in this Court is against the order passed by the Appellate Tribunal and not against the order passed by the Appellate Board. There is no provision under FEMA to treat the order passed by the Appellate Tribunal to be the order passed by the Appellate Board. Therefore, the argument that the appeal filed against the order of the Appellate Tribunal should be treated as an appeal filed u/s 54 of FERA cannot be accepted, because, appeal u/s 54 of FERA was maintainable against a decision or order passed by the Appellate Board u/s 52 of FERA and in the present case, there is no order passed by Appellate Board and consequently there is no question of filing an appeal u/s 54 of FERA.

It was contended on behalf of the applicant that in the memo of Appeal filed before the Appellate Tribunal, against the decision of the Special Director, the Respondent had stated that the appeal has been filed u/s 52 of FERA. As noted earlier, Section 52 of FERA relates to filing an appeal before the Appellate Board. Admittedly, the Appellate Board stood dissolved on commencement of FEMA and, hence, there was no question of filing any appeal before the Appellate Board after the commencement of FEMA. Therefore, though the Respondent had stated that the appeal has been filed u/s 52 of FERA, it must be held that the appeal filed by the Respondent before the Appellate Tribunal was liable to be treated to have been filed u/s 19 of FEMA and not u/s 52 of FERA. Further appeal against the decision of the Appellate Tribunal would be before the High Court u/s 35 of FEMA. If the appeal against the decision of the Appellate Tribunal is filed in the High Court beyond the period of limitation prescribed u/s 35 of FEMA, then the High Court cannot condone the delay and consequently the appeal would be time barred.

The alternate argument advanced on behalf of the applicant is that the appeal against the order of the Appellate Tribunal arising from an order passed under FERA could be considered to have been filed u/s 49(5)(c) of FEMA. We find it difficult to accept the above argument, because, Section 49(5)(c) of FEMA refers to filing of an appeal before the High Court against an order or decision of the Appellate Board u/s 52 of FERA. In the present case, the appeal filed in this Court is not against the decision or order passed by the Appellate Board. Therefore, it cannot be said that the appeal has been filed before this Court u/s 49(5)(c) of FEMA and consequently there is no question of condoning the delay in filing the appeal as per the proviso to Section 49(5)(c) of FEMA.

Strong reliance was placed by the learned ASG on the decision of this Court in the case of Lalit D. Sheth v. Union of India reported in 2010 (153) E.L.T. 753 (Bom) in support of his contention that the appeal against the decision of the Appellate Tribunal can be treated to have been filed u/s 49(5)(c) of FEMA and consequently, this Court would have power to condone the delay in filing the appeal as per the proviso to Section 49(5)(c). As rightly contended by Mr. Sridharan, learned Counsel for the Respondent, though in para 11 of the aforesaid judgment, this Court has recorded that the appeal is obviously filed u/s 49(5)(c) of FEMA, in para 12 of its judgment this Court noted the contention of the revenue that the appeal would be referable to Section 35 of FEMA and concluded that even if the limitation prescribed u/s 35 of FEMA applies, then the delay is liable to be condoned by applying Section 14 of the Limitation Act, 1963. Thus, it cannot be said that this Court in the case of Lalit D. Sheth (supra) has conclusively held that appeal against the decision of the Appellate Tribunal could be filed before the High Court u/s 49(5)(c) of FEMA. Thus, in our opinion, the decision of this Court in the case of Lalit D. Sheth (supra) does not support the case of the applicant.

For all the aforesaid reasons, we hold that the appeal filed by the applicant against the decision / order of the Appellate Tribunal dated 18/8/2009 being an appeal filed u/s 35 of FEMA would be subject to the limitation prescribed there under. u/s 35 of FEMA, this Court can condone the delay, not beyond 60 days. In the present case, the appeal is beyond time by 291 days. Therefore, this Court cannot condone the delay of 291 days in filing the appeal.

In the result, the Civil Application is dismissed with no order as to costs.