Mishra Carpet Palace Vs. Special Director, Enforcement Directorate - Court Judgment

1-2. This appeal is directed against adjudication order No. SDE/SKP/II/ 11/2006, dated 29-3-2006 passed by Special Director, Enforcement Directorate, Enforcement Directorate imposing a penalty of Rs. 30 lakhs on the appellant firm and Rs. 15 lakhs on its partner Shyamji Mishra and Rs. 5 lakhs each on its other two partners Smt. Bremdei Mishra and Kusum Kumari Mishra for the reason of acknowledging debt creating right in favour of the foreign party namely EURO, West Germany to receive payment in contravention of section 9(1)(c) of FER Act, 1973.

3. This appeal is filed in the name of partnership firm M/s. Mishra Carpet Palace and its 3 partners but court fees paid only for a single appeal. When this defect is pointed out to the Counsel appearing for the appellants, he made an oral prayer that these appeals may be treated as having been filed by partnership firm alone and any other names, i.e., of partners can be disregarded. Therefore, this appeal is taken up as an appeal filed by partnership firm only. Ld. Counsel has subsequently filed a formal application for withdrawal of the appeals filed by the partners and also filed a written submission which are taken on record.

4. This appeal has been filed on 21-11-2006 against the adjudication order dated 29-3-2006 which is admittedly received on 29-6-2006. There is inordinate delay of about 145 days in filing this appeal. Shri R.N. Singh, Ld. Advocate appearing for the appellant firm contended that this appeal has been filed after repeal of FER Act, 1973. As such the question of delay being the procedural aspect is to be governed by the repealing Act, i.e., FEMA, 1999 which came into effect from 1-6-2000. Referring to the provisions of section 19(2) of FEMA, 1999, Shri R.N. Singh, Ld. Advocate for the appellant states that unlike FER Act, 1973, there is no outer limit in FEMA provisions rather this Tribunal is enjoying discretionary power to entertain an appeal after the expiry of 45 days on sufficient cause being shown for not filing the same within the said period.

5. The argument of Ld. Counsel for the appellant is attractive in first blush but on close scrutiny it is difficult to accept. It is well-settled that FER Act, 1973 is a self-contained code in which substitution and procedural provisions are interwined. The procedure of holding adjudication proceedings is clearly provided in this Act including the procedure of filing appeal before the erstwhile FERA Board which is substituted by this Tribunal on being repealed by the said Act by FEMA, 1999. Similarly, FEMA, 1999 contains substitutive and procedural provisions providing therein that adjudication proceedings can be held after a complaint is filed under section 16 before the adjudicating authority which was totally absent in FER Act, 1973. Under the provisions of FER Act, 1973 adjudicating officer can take notice of contravention by issuing a show-cause notice whereafter the noticee is required to file a reply and proceedings can be held if the adjudicating officer is not satisfied with the reply, if any, to the show-cause notice. The argument of the Ld. Counsel that after repeal and replacement of FER Act, 1973 new procedure prescribed under FEMA, 1999 will apply is fallacious because section 49(4) of FEMA, 1999 clearly save the provisions of repealed FER Act, 1973. It is appropriate to refer to provisions of sub-sections (3) and (4) of section 49 of FEMA, 1999 which read as under :—

“(3) Notwithstanding anything contained in any other law for the time being in force, no court shall take cognizance of an offence under the repealed Act and no adjudicating officer shall take notice of any contravention under section 51 of the repealed Act after the expiry of a period of two years from the date of the commencement of this Act.

(4) Subject to the provisions of sub-section (3) all offences committed under the repealed Act shall continue to be governed by the provisions of the repealed Act as if that Act had not been repealed.”

6. Perusal of the above provision shows that section 49(4) of FEMA, 1999 clearly stipulates that all offences committed under the repealed Act shall continue to be governed by the provisions of the repealed Act as if that Act has not been repealed. It is admitted position that in the instant case adjudication order has been passed under FER Act, 1973 and the appeal has been preferred under the repealed Act read with provisions of section 49(3) and (4) of FEMA, 1999. Therefore, the provisions of FER Act, 1973 will apply to the instant appeal as law proper. In absence of any contrary provisions in the repealing Act, i.e., FEMA, 1999 as remedy under repealed Act alone is available as specified under section 6(e) of General Clauses Act. Moreover, the appeals before this Tribunal as a substituted forum of erstwhile FER Board in continuation of adjudication proceedings under FER Act, 1973 will have to be governed by the provisions of FER Act, 1973. Therefore, this appeal has to be decided under the law proper which is none else but FER Act, 1973. Therefore, the argument that this appeal is filed under section 19(2) of FEMA, 1999 is fallacious and does not contain any merit.

7. It is well-settled in law that whenever a law is altered during the pendency of any action, the remedy or the rights of the parties are required to be decided according to the law as it existed when the action began unless new statute shows intention to vary such rights. There is no contrary, explicit or implicit intention available found in section 49 of FEMA, 1999. Rather a saving clause is specifically incorporated in sub-section (6) of section 49 which states that repeal shall not effect or prejudice the application of section 6 of the General Clauses Act, 1897 except what is provided in sub-section (3) whereby a limit of 2 years is prescribed for taking notice or cognizance under FER Act after the commencement of FEMA ,1999. In this regard, it may be beneficial to refer to the decision of the Honble Supreme Court in Gammon India Ltd. v. Special Chief Secretary [2006] 3 SCC 354 wherein the Honble Court observed that :—

“...unless the contrary intention appears, anything done or having effect as if done under the enactment repealed, insofar as it could have been done under the provision re-enacted, has effect as if done under that provision.” (p. 372)

8. In the said decision, the Honble Supreme Court after considering the various texts and a catena of cases, observed that :—

“73. On critical analysis and scrutiny of all relevant cases and opinions of learned authors, the conclusion becomes inescapable that whenever there is a repeal of an enactment and simultaneous re-enactment, the re-enactment is to be considered as re-affirmation of the old law and provisions of the repealed Act which are thus re-enacted continue in force uninterruptedly unless, the re-enacted enactment manifests an intention incompatible with or contrary to the provisions of the repealed Act. Such incompatibility will have to be ascertained from a consideration of the relevant provisions of the re-enacted enactment and the mere absence of saving clause is, by itself, not material for consideration of all the relevant provisions of the new enactment. In other words, a clear legislative intention of the re-enacted enactment has to be inferred and gathered whether it intended to reserve all the rights and liabilities of a repealed statute intact or modify or to obliterate them altogether.”

9. Thus, it is well settled that effect of repeal of a statute and replacement thereof by another statute cannot obliterate rights acquired or accrued and liabilities incurred during its operation but permit continuation or institution of any legal proceeding or records to any remedy which may have been available before the repeal or enforcement of such rights and liabilities.

10. Now turning to the provisions of section 52(2) of the FER Act, 1973, it is seen that the said provisions prescribes outer limit of 90 days as limitation of filing an appeal. The provisions of section 52(2) of FER Act, 1973 are reproduced herein below which reads as under :—

“(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 forty-five 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 forty-five days, but not after ninety days, from the date aforesaid if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time:

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 feet.”

11. From perusal of the above provisions it is clear that a person aggrieved by an order of adjudicating officer can file an appeal within 45 days from the date of receipt of the order. However, the 1st proviso to section 52(2) of the Act empowers the appellant forum to condone the delay on sufficient cause if appeal is filed before the expiry of 90 days from the date aforesaid.

12. In the light of above discussion this appeal when filed after 90 days from the date of receipt of the impugned order has to be dismissed. This Tribunal is a creature of statute. Therefore, this Tribunal cannot act beyond the statutory provisions. As a result the delay of exceeding period of 90 days cannot be condoned in view of legislative mandate couched in clear language.

13. For the reason stated hereinabove, this appeal is dismissed. This appeal may be consigned to record.