Supreme Court Upholds Legal Continuity of FERA Offences Under FEMA: Sets Precedent for Post-Repeal Prosecution

07 May 2024 8:19 AM

By: Admin

In a significant legal development, the Supreme Court of India has ruled in a landmark judgment that the repeal of the Foreign Exchange Regulation Act, 1973 (FERA), by the Foreign Exchange Management Act, 1999 (FEMA), does not hinder the prosecution of offences previously covered under FERA. The decision, delivered by a bench comprising Justices Abhay S. Oka and Sanjay Karol, has far-reaching implications for cases involving financial irregularities and foreign exchange violations.

The judgment, which underscores the principle of legal continuity, reaffirms that penalties, liabilities, and prosecutions for acts committed under FERA remain valid even after its repeal. Citing Section 6 of the General Clauses Act, the Court made a compelling argument, stating, "What remains to be done, after the Act came into force, is the quantification, if necessary, after due investigation and legal proceedings and if proved to impose the penalty, forfeiture, or punishment."

The decision sets a precedent for cases where the FERA provisions are invoked post its repeal by FEMA. The Court emphasized that the legal proceedings for enforcing rights, liabilities, penalties, and forfeitures incurred during FERA's existence are preserved by operation of Section 6 of the General Clauses Act.

Mr. Siddhartha Dave, learned senior counsel representing the appellants, had argued that the repeal of FERA rendered the complaints filed by an Enforcement Officer under FEMA invalid. However, the Court rejected this contention, highlighting that such an interpretation would render the statutory provisions unworkable.

Ms. Aishwarya Bhati, learned Additional Solicitor General representing the respondents, supported the view that the prosecution for offences under FERA continued to be governed by the provisions of FERA, as preserved by FEMA.

This judgment underscores the importance of maintaining legal consistency and preserving the rights and liabilities of individuals and entities even after the repeal of an Act. It clarifies the legal landscape surrounding the transition from FERA to FEMA, providing clarity to the enforcement authorities and the legal community regarding the prosecution of financial offences committed during FERA's tenure.

Date of Decision: September 21, 2023

First Global Stockbroking Pvt. Ltd. & Ors. vs nil Rishiraj & Anr.