Appellate Tribunal For Foreign Exchange Can't Pronounce Person 'Guilty' Of Offences Under FERA Act: Delhi High Court

The Delhi High Court has ruled that the Appellate Tribunal for Foreign Exchange cannot pronounce a person “guilty” of the offences under the Foreign Exchange Regulation Act, 1973.

Justice Jasmeet Singh said that pronouncing a person “guilty” has serious consequences and to adjudicate and give a finding of “guilty” lies within the exclusive domain of the competent courts of jurisdiction.

Observing that proceedings under the the FERA Act are not criminal proceedings but are adjudicatory in nature, the Court said: “Appellant Tribunal for Foreign Exchange is an adjudicatory body, which performs quasi-judicial functions and act as administrators and adjudicators.”

It added: “They are not „courts‟. While it is very much within their powers, to impose penalties for non-compliance of provisions of FERA, however, it does not lie within their domain to pronounce a person “guilty” of offences under the FERA Act.”

The Court was dealing with three appeals filed by two individuals and an entity challenging an order passed by the Appellate Tribunal for Foreign Exchange. One of the petitioners was M/s Sujana Steel Ltd and the other two petitioners were its Chairman and Managing Director.

The Special Director of Enforcement Directorate (ED) had imposed a penalty of Rs. 4 crores on SSL in 2008 and Rs.1 crore each the chairman and the Managing Director. SLL and the two individuals then preferred an appeal before the Appellate Tribunal for Foreign Exchange.

In 2016, the Appellate Tribunal allowed the appeals and reduced the penalty from Rs.4 crores to Rs.1 crore for SSL and Rs.30 lakhs each for the Chairman and Managing Director.

Since the Appellate Tribunal used the word “guilty” in its order, the appellants contended that the same could not have been done as the same is in violation of provisions of FERA Act.

The Court agreed with appellants' reliance on the judgment of the Supreme Court in Director of Enforcement v. M.C.T.M. Corporation Pvt. Ltd. and Others wherein it was held that the adjudicators of the Appellate Tribunal do not try “an accused” for commission of “any crime” but determine the liability of the contravenor for the breach of any "obligations" imposed under the FEMA Act.

“In this view of the matter, the penalty imposed by the Appellant Tribunal for Foreign Exchange on the appellants is upheld, however, the word “guilty” used in the entire order 02.06.2016 against the appellants is to be considered as “redacted”,” the Court said.

Title: Y S CHOWDARY v. ED and other connected matters

Citation: 2025 LiveLaw (Del) 258

Click here to read order