The following article is authored by Adv. Ishani Samajpati. This article exhaustively deals with the case of Sampath Kumar vs. Enforcement Officer Madras, on 1st August 1997. It discusses the facts of the case, the arguments put forth by both parties, the analysis of relevant laws, precedents and finally, the order passed by the single judge bench of the Madras High Court. This case is primarily concerned with the application of Section 56 of the Foreign Exchange Regulation Act, 1973.

Introduction 

At a critical time, when forex reserves of India were at an all time low, the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as “the FERA” or “the Act”) was enacted. The Act came into force on 19th September 1973. The purpose of this Act was to regulate certain kinds of payments, dealings in foreign exchange and securities, and transactions which indirectly affect the foreign exchange and import and export of currency and bullions. The Act also sought to conserve and properly utilise foreign exchange resources for the economic development of India. 

The Act also provided competent authorities (mostly the Enforcement Officer), the power to investigate. Hence, it contains provisions under Section 40, wherein a Gazetted Enforcement Officer has the power to summon any person whose attendance he thinks is necessary, either to give evidence or to produce any document during the course of an investigation or any proceeding under the FERA.

However, what if the person receiving the summons does not attend to give evidence or produce documents? Does it constitute an offence under this Act? Are there any provisions in the FERA under which it is punishable?

The case of Sampath Kumar vs. Enforcement Officer Madras on 1st August 1997 answers these questions. Although it was a single bench order, it has been cited multiple times in various related judgements, indicating its importance. Let’s read on to find out.

Details of the case

Name of the case:  Sampath Kumar vs. Enforcement Officer Madras

Petitioner: Sampath Kumar 

Respondent: Enforcement Officer Madras  

Court: Madras High Court

Nature of case: criminal original petitions

Counsel on behalf of the petitioner: Mr. N. Jothi

Counsel on behalf of the respondent: Mr. V. T. Gopalan

Date of order: 1st August, 1997 

Facts of the case

The facts of the case are as follows:

• The petitioner was issued summons for an investigation under the FERA, which directed them to comply with the directions mentioned in the summons. It was specifically mentioned in the summons, that non-compliance with the summons constitutes offences under Sections 50 and 56 of the FERA. The summons were issued on 12.02.1996, directing the petitioner to appear on 16.02.1996, which he failed to do so.
• On 19.02.1996, the Enforcement Officer searched their residences and seized certain documents. Even during the course of the search, the petitioner was absent. Hence, again, summons were issued on 19.02.1996, for the appearance of the petitioner at 3 pm on the same date. Again, the petitioners did not appear and one more summons for their appearance was served under Rule 3(c) of the Foreign Exchange Regulation Rules, 1974. The petitioner, in turn, filed writ applications and anticipatory bail applications before the Madras High Court.
• Multiple summons were issued to the petitioner, but he failed to respond and appear before the respondent. Thereafter, complaints were filed under Section 56 of the FERA, before competent courts, for not abiding by the summons. Finally, the petitioner appeared before the respondent, to give his statement.
• Various incriminating documents were confiscated under Section 33(2) (power to call for information) of the FERA, from the Income Tax Department. Apart from this, the seizure of foreign exchange also formed part of the material available against the petitioner, while summoning him.
• The petitioner failed to comply with the directions mentioned in the summons and hence, he defeated the sole purpose and scope of the FERA. He had contravened Section 40(3), read with Section 56(1)(ii) of the FERA.
• A prosecution case was started against the petitioner, since he failed to comply with the summons, and thereby failed to comply with the directions of the Enforcement Officer.
• The respondent, the Enforcement Officer of Madras, filed a complaint against the petitioner, under Section 56(1)(ii) of the FERA, for committing an offence under Section 40(3). 
• Two proceedings, in C.C. No. 60 of 1996 and C.C. No. 61 of 1996, were ongoing against the petitioner, Sampath Kumar, on the files of Additional Chief Metropolitan Magistrate (E.O.-I), Egmore and Additional Chief Metropolitan Magistrate (E.O.-II), Egmore, Madras. The petitioner approached the Madras High Court under Section 482 (inherent powers of High Court) of the Code of Criminal Procedure, 1973, to file two criminal original petitions. Hence, the present case.

Issues raised

The main issues involved in this case are as follows:

• Whether the proceedings pending against the petitioner in the files of Additional Chief Metropolitan Magistrate (E.O.-I), Egmore and Additional Chief Metropolitan Magistrate (E.O.-II), Egmore, Madras are maintainable or not?
• Whether the remaining criminal cases against the petitioner are maintainable or not?
• Whether the criminal original petitions filed by the petitioner under Section 482 of the Code of Criminal Procedure can be allowed or not?
• Whether the violation of Section 40(3) is punishable under Section 56(1)(ii) of the FERA or not?

Laws involved in Sampath Kumar vs. Enforcement Officer Madras

Section 40 of the Foreign Exchange Regulation Act, 1973

Section 40 of the FERA deals with the power to summon persons to give evidence and produce required documents.

Section 40(1) of the Act states that any Gazetted Officer of the Enforcement has the power to summon any person whose attendance he thinks is necessary for giving evidence or for producing any required documents for any investigation or ongoing proceedings under this Act.

Section 40(2) states that a summons will be given for producing a specific document or for producing documents of certain categories, which are in possession or under the control of the person who has been summoned.

According to Section 40(3) of the Act, the person who has been summoned must attend either in person or be represented by any authorised person, as directed by the Enforcement Officer. Additionally, the person summoned shall be bound to state the truth with respect to the subject on which they are examined or give statements or produce required documents. Further, this Section allows an exemption under Section 132 of the Code of Civil Procedure, 1908. It states that women who do not appear in public due to their customs and manners, cannot be compelled to publicly appear in court. Hence, their personal appearance in court is exempted.

Section 40(4) states that under the scopes of Sections 193 (punishment for false evidence) and 228 (intentional insult or interruption to public servant sitting in judicial proceedings) of the Indian Penal Code, 1860, such investigation or proceedings under this Act, shall be deemed to be a judicial proceeding.

Section 56 of the Foreign Exchange Regulation Act, 1973

Section 56 of the FERA, is the only Section in this Act that deals with offences and their prosecution. 

This Section provides punishment for contravention, without prejudicing the award of a penalty by adjudicating officers under this Act. Section 56 also provides a number of exceptions wherein its punishments will not be applicable, such as Section 13 (restrictions on import and export of certain currency and bullion), Section 18(1)(a) (payment for exported goods), Section 18A (prohibition to take or send any goods except with the general or special permission of the Reserve Bank), Section 19(1)(a) (taking or sending any security without the permission of the Reserve Bank), Section 44(2) (punishment for discharging duty in good faith), Sections 57 (the penalty for contravention of an order made by adjudicating officer, Appellate Board and High Court) and Section 58 (vexatious search etc. by Enforcement Officer). Apart from these Sections, if a person contravenes any provisions of this Act, after conviction by a court, he shall be punishable under Section 56.

Section 56(1)(i) provides punishment for an offence which is pecuniary in nature and exceeds rupees one lakh. In such a case, the person shall be punished with imprisonment for a minimum term of six months, which may extend to seven years, and a fine. The court may provide a sentence of less than six months if it thinks fit.

In other cases, Section 56(1)(ii) provides punishment of imprisonment extending up to three years or with a fine or with both fine and imprisonment.

As per Section 56(2), for the second and every subsequent offence under this Act, the person shall be punished with imprisonment for a minimum term of six months, which may extend to seven months, and a fine. The court may provide a sentence of less than six months if it thinks fit.

Under Section 56(3), in addition to the sentence imposed, the court that convicts a person under this Act may pass an order to not carry out a specified business, for a term of not more than three years, if it is found the business may enable the commission of such an offence.

Section 56(4) lays down the reasons which a court cannot use as grounds for providing a sentence of less than six months-

• The accused has been convicted of an offence under this Act, for the first time.
• The accused, in any proceedings under this Act (apart from a prosecution), has been ordered to pay a penalty, or if goods concerned with such proceedings have been ordered to be confiscated, or if for the same offence, any other penal action has been initiated against him.
• The accused was not the primary offender and was merely a carrier of goods or a secondary party.
• The age of the accused.

Further, Section 56(5) states that the fact that the offence is not detrimental to the general public or any individual is also not a valid ground for a court to provide a sentence of less than six months.

Arguments by the petitioner

The following were the arguments advanced by the petitioner before the Hon’ble Court.

Respondent was not justified in approaching the court of law

The counsel for the petitioner raised the contention, that since the petitioner was pursuing their legal remedies in the competent court of law, the respondent was not justified to lodge a complaint under Section 56(1)(ii) of the FERA, for an offence under Section 40(3) of the same. The counsel further submitted that the petitioner had approached the Supreme Court and filed special leave petitions challenging the issue of the summons under Section 40 of the FERA. Those were still pending before the learned Supreme Court and hence, the respondent was not justified in filing the above complaint. The counsel relied on Garikapati vs. Subbiah Choudhry (1957),  wherein the following principles emerged:

• The legal pursuit of any remedy, suit, appeal and second appeal, are steps in a series of proceedings. They all are connected by an intrinsic unity and should be regarded as a single legal proceeding.
• The right to appeal is a substantive right and not a mere procedural matter.
• The beginning of a suit implies that the right to appeal that existed at that time, remains with the parties until the end of the suit.
• The right to appeal is a vested right.
• The vested right of appeal can only be taken away by a subsequent enactment.

The petitioner further submitted that he had invoked constitutional remedies by filing a writ petition, after receiving the first summons. The said writ petition was disposed of and the petitioner filed writ appeals before the Madras High Court. Subsequently, the writ appeals were also dismissed. Then the petitioner approached the Supreme Court. He filed a special leave petition under Article 133 of the Constitution (Appellate Jurisdiction of the Supreme Court from High Courts in regard to Civil matters), which was pending before the said Court. Under such circumstances, the respondent was not justified to lodge a complaint for not complying with the provisions of Section 40(3) of FERA. The initiation of the above-mentioned legal proceedings implies that the rights of the petitioner are protected until the proceedings attain finality. 

The petitioners also submitted that the right to appeal is a vested right, which can be exercised on any adverse order, while the right to enter a superior court is a substantive right available to a person. 

Non-compliance under Section 40(3) does not constitute an offence under Section 56(1)(ii) of the FERA

The next contention submitted by the petitioner’s counsel was that non-compliance of Section 40(3), does not constitute an offence under Section 56 of the FERA. Hence, neither the respondents are justified in filing complaints, nor the courts are justified in entertaining them and issuing summons to the petitioner. 

The first submission by the petitioner was that a plain reading of the provision of Section 40(3) states that the person who has been summoned, shall attend and will be bound to state the truth regarding the subject they are examined on and produce the required documents. Nowhere has it been stated that it would lead to prosecution under Section 56(1)(ii) of the FERA. Section 40(3) merely states that the person summoned shall attend to give a statement and produce the documents. It does not mention what the consequences would be if a person does not do so. Section 56(1)(ii) lays down a punishment of imprisonment for three years or a fine or both. On further reading of the Section, it is seen that the offence is measured on the basis of the amount of money involved in the contravention. This Section decides the quantum of punishment, on the basis of the pecuniary involvement and does not mention any punishment for contravening and not complying with Section 40(3) of the FERA. Taking this into consideration, non-compliance under Section 40(3), would not constitute an offence under Section 56

Non-compliance of summons issued by a Gazetted Officer is not an offence

The counsel for the petitioner submitted that in case of a summons issued by a Gazetted Officer of Enforcement, not attending, either in person or by authorised agent, is not an offence under Section 56. This Section of the FERA deals with offences which are pecuniary in nature. On the other hand, there is no mention of monetary value under Section 40(3) of the FERA. Hence, the courts are not justified in taking cognisance and subsequently issuing summons to the petitioner. 

The counsel for the petitioner relied on the judgement passed in the case of Itty vs. Assistant Director (1990), by a single judge bench in the Kerala High Court. The court in this case examined the meaning of the word “contravention”. According to Black’s Law Dictionary, when a person is summoned to appear before a competent authority, it means that the person has been directed to appear before him. Summons should be obeyed, but disobedience of summons is not a contravention. Rather, it is a matter which falls under Section 174 of the Indian Penal Code, which deals with non-attendance in obedience to an order from a public servant. The single judge bench held that it was a legal fallacy to state that non-compliance of summons under Section 40(1) is a contravention of any of the provisions of this Act. Section 56 of the Act mentions punishment with regard to the extent of monetary values. So to attract Section 56, it may not be possible to compute the offence in terms of monetary value. Hence, in such a case, Section 56 is not applicable to an offence under Section 40, because if it is held otherwise, the consequences may be serious and innocent persons will be harassed by vindictive officers.   

Definition of offence 

The counsel for the petitioner submitted that as per Section 3(38) of the General Clauses Act, 1897, “offence” refers to “any act or omission made punishable by any law for the time being in force.” He further submitted a decision by the Allahabad High Court, namely, Raj Narain Singh vs. Atmaram Govind And Anr. (1953), which reiterated the definition of “offence” as given in the General Clauses Act, 1897.

Interpretation of ambiguous words

The counsel for the petitioner submitted that any ambiguity that arises while interpreting the provisions, should be resolved in favour of the person liable to the penalty. To support his contention, he relied on the decision of the Supreme Court in Ishar Das vs. State Of Punjab (1972), where it was held that while construing a penal statute if any ambiguity or doubt arises, it should be resolved in favour of the person liable to the penalty, based on Interpretation of Statutes by Maxwell.

Furthermore, in the case of Nasiruddin vs. State Transport Appellate Tribunal (1975), the Supreme Court observed that words should be interpreted in their ordinary sense if they are plain and unambiguous. A court cannot refuse to give effect to a statute, merely because its interpretation is unjust. Furthermore, in an Act, if a word can be interpreted in two ways, the courts should adopt the interpretation which is just, reasonable and sensible.

In the case of A.R. Antulay vs. R.S. Nayak & Anr (1988), the Supreme Court observed that while interpreting a Section, the court should read it as it is. It neither has the authority to rewrite a Section as it wants nor can it interpret the Section in any manner which renders it absurd.

FERA is not a self contained Act

The counsel for the petitioner submitted before the Court that the FERA is not a self-contained Act, since it contains no provisions to issue notice, application for granting bail, and mode of recording evidence. He relied on the Andhra Pradesh High Court’s decision in N.S.R. Krishna Prasad vs. Directorate Of Enforcement (1991), where the court decided that while recording statements of a person, the Enforcement Authorities should follow the procedure under Section 164 (recording of confessions and statements) of the Code of Criminal Procedure, to show that the Act is not a self-contained Act. 

He also relied on Deepak Mahajan vs. Director of Enforcement And Another (1990) by the Delhi High Court, where it was observed that the Customs Act, 1962 does not lay down a specific procedure for customs or enforcement officers to procure an order from the Magistrate to detain someone they have arrested. While these officers hold the power to investigate crimes that are by a Magistrate, they have limited authority, like that of a police officer in charge of a police station, particularly the power to deny or grant bail. Their powers of arrest and detention are merely to enable inquiry under the Customs Act or the FERA. Along with this, the case of Directorate Of Enforcement vs. Deepak Mahajan (1994) by the Supreme Court of India, was also referred to, to show that the FERA is not a self-contained Act.

Binding effect of precedents

The counsel for the petitioner pointed out that the case was decided by the Court, not at the time of disposal, but at the stage of admission, without issuing notice to the other side. Hence, it is not binding on this Court. To substantiate his contention, he mentioned the decision of the Madras High Court in Abdul Malick vs. The Collector Of Dharmapuri And Ors (1968), where the single judge bench examined the binding force of precedents. In this case, during trial, the Board of Revenue relied on the observations of two judgements which this Court held to have no binding force as precedents because they were not rendered after hearing both sides. The single judge bench further elaborated that a judgement rendered without notice or without hearing a contesting party or in his/her absence, will not be considered as a precedent. In cases where petitions are dismissed at the admission stage, the respondent is absent and quite naturally gets no opportunity to present his/her case. So the observations made, will not be binding on the respondent and the said judgement cannot be considered as a precedent, since it was passed only after hearing one side. The judgement passed would be a judgement per incuriam.

Arguments by the respondent

The respondent filed a counter and denied all the allegations mentioned in the affidavits of the petitioner, except those which the respondent admitted specifically. The arguments made by the respondents were as follows.

When a party can be prevented from availing a legal remedy

The counsel for the respondent submitted before the Court that mere pendency of a matter does not prohibit a party from availing a legal remedy. A party can only be stopped from proceeding with an available legal remedy, if there is an order of stay or any order from the competent court, directing them to stop. He relied on a decision by the Supreme Court, namely, N. Rathinasabapathy vs. K. S. Palaniappa Kandar (1995). In this case, the respondents were given an injunction for three weeks. The appellants stopped the construction work as soon as the injunction order was communicated to them. After the three weeks ended, the appellants received no order of extension of the injunction and hence, they proceeded with the construction. The Supreme Court held that the appellants showed respect to the order by halting the construction as soon as they received the injunction order and proceeding with the construction as soon as the period expired.

FERA is a self-contained Act 

Counsel for the respondent submitted that the FERA is a self-contained Act. It does not need to refer to any other Act for any purpose, such as interpretation or procedural details. Hence, the non-compliance of Section 40(3) by the petitioner, is punishable under Section 56 of the FERA. 

The counsel further submitted that Section 40 of the FERA is an important Section of the Act and if a person does not comply with the provisions of this Section, investigation proceedings stop at an initial stage and the provisions of the Act become void. Keeping the scope and view of the Section in mind, any contravention under Section 40 becomes punishable under Section 56(1)(ii) of the FERA. The counsel relied on the decision in Central Bureau of Investigation vs. State Of Rajasthan and Ors (1996).

Non-compliance of Section 40(3) constitutes an offence under Section 56(1)(ii) of the FERA

Counsel for the respondent submitted that non-compliance with Section 40(3) is an offence under Section 56(1)(ii) and therefore, the respondent was justified in filing the complaints and the Court was justified in entertaining the complaints filed. He pointed out that in the decision of Itty vs. Assistant Director (1990), by the Kerala High Court, which was relied on by the counsel of the petitioner, the court did not consider the provisions of Section 56(1)(ii). 

According to his submissions, although the decision in an unreported case M. P. Jain vs. The Assistant Director in Crl. O.P. No. 312 of 1992 of the Madras High Court, was rendered at the admission stage, the facts fully cover the present case. Section 56(1)(ii) should refer to matters under the provisions of Section 40, as well as other provisions of this Act. If a person contravenes any provisions of this Act, he shall be liable for punishment.

The counsel submitted that rather than the decision of the Kerala High Court referred to by the counsel for the petitioner, the Court should follow the decision of this Court. The counsel also submitted that the decision of the Kerala High Court is not binding upon this Court, but the decision of this Court is binding upon itself.

Order of the court

Final order

Based on the reasonings discussed below, the Hon’ble Court ordered the following:

• The criminal original petitions would be allowed. 
• The pending proceedings in C.C. Nos. 60 of 1996 and 61 of 1996 on the file of the Additional Chief Metropolitan Magistrate (E.O.-I) Egmore and Additional Chief Metropolitan Magistrate (E.O.-II), Egmore, Madras-8, would be quashed.

Rationale behind the order

Whether the proceeding is maintainable

The Court also examined whether the petitioner could use the legal remedies availed by him (writs, writ appeals, special leave petitions etc filed by them), as a ground to support his stand. Furthermore, he had also invoked the inherent jurisdiction under Section 482 of the Code of Criminal Procedure. The Court reasoned that the legal remedies availed by the petitioner, are self-serving factors and they are subject to proof. They should be determined on the basis of evidence at the time of trial. The petitioner cannot use that as the ground to support their stand for non-compliance of summons.

The Court has also accepted the submission of the respondent in this regard. According to the respondent, the courts can exercise their inherent powers only in the rarest of rare cases. The Court may not exercise its inherent powers in this case, since the complaints have been filed before the Economic Offences Court and these involve taking evidence and trial before the said court. 

The Hon’ble Court held that there was no order of stay in the special leave petitions filed in the Supreme Court and those are merely pending. Hence, there is no ground for the first contention of the counsel of the petitioner. The Hon’ble Court rejected the first contention of the petitioner’s counsel.

Analysis of the provisions of Section 40 and Section 56 of the FERA

To analyse the rival contentions put forth by the parties, the Court first examined the provisions of Sections 40 and 56 of the FERA.

The Court analysed that Section 40 of the FERA deals with the power of any Gazetted Officer of Enforcement to summon persons to give evidence and to produce necessary documents. However, the Section does not mention what the consequence would be if a person does not comply with the summons. On the other hand, Section 56 of the Act deals with offences and their prosecutions. Section 56(1)(i) states that without prejudicing a penalty awarded by an adjudicating officer, a person contravening any provisions of this Act, shall be punishable with a term of imprisonment for a minimum of six months to a maximum of seven years, if the offence involves an amount exceeding rupees one lakh. From the provisions of Section 56(1)(i), it becomes clear that this Section mentions offences with reference to a particular monetary value. The Court reasoned that to attract Section 56(1)(ii) of the FERA, it may not be possible to compute the offences committed by the petitioner with respect to monetary value or amount.

The Court then analysed the provisions from the perspective of the respondent’s stance. Section 56(1)(ii) states that in any other case, the accused, on conviction by the Court, shall be punishable with imprisonment up to three years or with a fine or with both imprisonment and fine. The single judge bench reasoned that the phrase “in any other case” should be read in consonance with the provision of Section 56(1)(i) of the FERA. Section 56(1)(i) deals with the prosecution of an offence involving more than rupees one lakh. Hence, the phrase “in any other case” in Section 56(1)(ii) refers to offences wherein the value involved is less than one lakh. Therefore, both the provisions compute offences with respect to monetary value.

Based on the above reasoning, the learned Judge held that the entire Section 56 of the FERA is identified and substantiated, with respect to monetary value or the amount involved in the offence. Hence, the Court rejected the submission of the counsel for the respondent, who submitted that “in any other case” refers to cases which come under the purview of this Act irrespective of the amount of money involved. The Court also rejected the submission of the counsel for the respondent, wherein he stated that offences committed under Section 40(3) of the Act will come under the purview of Section 56(1)(ii) of the FERA.

Whether an offence under Section 40(3) constitutes an offence under Section 56(1)(ii) of the FERA 

It was observed that the non-compliance of summons by the petitioner, is a contravention under the meaning of the Act and the only Section that mentions its punishment is Section 56.

Section 56 of the FERA specifically deals with punishment. Other Sections of the FERA deal with the offences and powers of the enforcement officers. Therefore, for contravention of any provisions of the Act, Section 56 of the FERA should be attracted. 

Non-compliance with the summons sent means the non-compliance of any direction/ order/ rule/ condition under Section 40 of the FERA, but as far as Section 56 is concerned, the non-compliance should not be measured with respect to a pecuniary extent.

While the FERA provides the effect of contravention under the Act in many provisions, the Act does not provide punishments in every Section. Hence, only Section 56 provides punishments under the FERA.

The Court held that the contention of the petitioner, that Section 56 can only be invoked if there is a monetary contravention, is not correct. It was further held by the Court that the petitioner cannot interpret the Section to suit his convenience.

The Court fully agreed with the decision of the Kerala High Court in Itty vs. Assistant Director (1990), where it was held that an offence committed under Section 40 of the Act does not attract Section 56, since Section 56 computes prosecution of offences with respect to monetary value. Accepting the submission by the counsel of the petitioner, the Court held that the unreported judgement of  M. P. Jain vs. The Assistant Director in Crl. O.P. No. 312 of 1992 of the Madras High Court, cited by the counsel for the respondent, has no binding force upon this court since as held by the decision of Abdul Malick vs. The Collector Of Dharmapuri And Ors (1968), this judgement was rendered at the admission stage without issuing notice to the opposite party.

Finally, the Court held that contravening the provisions of Section 40 of the FERA was not an offence which attracts Section 56 of the said Act.

Critical analysis of Sampath Kumar vs. Enforcement Officer Madras 

Sampath Kumar vs. Enforcement Officer of Madras on 1st August, 1997, dealt with the issue of whether a violation of Section 40(3) is an offence under Section 56(1)(ii) of the Foreign Exchange Regulations Act, 1973 by considering the nature and characteristics of Section 56. The key observation, which aided in deciding this matter, was that Section 56 of the FERA identifies offences with respect to the monetary value or amount. If an offence cannot be computed into monetary value, the offence will not come under the purview of Section 56. The phrase “in any other case” mentioned in Section 56(1)(ii) should be read in consonance with Section 56(1)(i) of the Act. Hence, the only offences triable under this Section should be financial offences and not any other offences. Hence, contravention of any other Sections will not attract Section 56 if no monetary amount or value is involved.

This case highlighted the importance of complying with summons issued under the FERA. However, the High Court of Madras clarified that non-compliance with Section 40(3), does not constitute an offence under Section 56(1)(ii). The Court’s observations and the order passed in this case, also re-establishes the authority of the Enforcement Officer, while ensuring that the process of investigation is not compromised or obstructed, and hence, encouraging economic development and the regulation of foreign exchange in the country.

Impact of the case

Although a single judge bench order, the case has been cited in numerous decisions, even in the Supreme Court. In the case of Enforcement Directorate And Anr vs. M. Samba Siva Rao & Ors (2000), a division bench of the Supreme Court cited this decision in their judgement to consider the issue of whether any violation or contravention of summons under Section 40 should be punishable under Section 56 of the FERA. In the case of The Enforcement Officer vs. Mohammed Akram (2017), Justice Nageswara Rao of the Supreme Court, cited this case for the same reason.

Conclusion

The case of Sampath Kumar vs. Enforcement Officer Madras on 1st August, 1997 is an important case with respect to a specific question of law under the Foreign Exchange Regulation Act, 1973. It deals with the core question of whether the contravention of summons under Section 40(3) would constitute an offence under Section 56(1)(ii) of the FERA. The decision made in this case has brought great clarity with respect to the basic aspects of this Act, which enables smoother regulation of foreign exchange in India. 

Frequently Asked Questions (FAQs)

What is a special leave petition (SLP)?

A special leave petition refers to a special sect of appeals, which may skip the general hierarchy of courts prescribed. The Supreme Court of India grants a special leave to an aggrieved party, to appeal against any judgement or order of any courts or tribunals in India, except any courts or tribunals related to the military and court martial. Article 136 of the Constitution of India provides the Supreme Court with the discretionary power to grant a special leave petition.

With respect to a judgement of a High Court, a special leave petition against the same should be filed within 90 days from the date of passing of the judgement. In case the High Court has refused to grant a certificate of fitness to appeal to the Supreme Court, a special leave petition should be filed within 60 days.

To gain a detailed understanding of special leave petitions, click here.

What are vested rights?

Vested rights are unconditional and independent rights. Vested rights cannot be taken away from a person without his/her permission.

For example, the right to appeal is a vested right. It can only be taken away by retrospectively amending a statute, which confers the right to appeal. This was held in the case of Ganesh Singh And Anr. vs. Bishram Singh And Ors. (2003).

What is Section 482 of the Code of Criminal Procedure, 1973?

Section 482 of the Code of Criminal Procedure, 1973 deals with the inherent powers of the High Court. Under this Section, the High Court can give effect to any order, to prevent procedural abuse by the courts, as well as to secure ends of justice.

What is a self-contained Act?

Self-contained Acts are those Acts which are complete in themselves. They do not require the help of the provisions of other Acts for any procedural purpose or for their interpretation.

How is “foreign exchange” defined under the Foreign Exchange Regulation Act, 1973?

Section 2(h) of the Foreign Exchange Regulation Act, 1973 states that foreign exchange means foreign currency. Section 2(h)(i) includes all deposits, credits and balances payable in foreign currency. Furthermore, under this Act, foreign currency also includes drafts, traveller’s cheques, letters of credit and bills of exchange, which have been drawn in Indian currency, but are payable in any foreign currency. Section 2(h)(ii) of the Act also includes any instrument payable between the drawee and the holder, either in Indian currency or any foreign currency or partly with both.

References

• https://indianrailways.gov.in/railwayboard/uploads/directorate/security/rpf/Files/law/BareActs/FERA.doc