Indian currency can be seized under FERA; High Court appeals only on questions of law: Delhi High Court

The Delhi High Court recently held that Indian currency can be seized under the Foreign Exchange Regulation Act, 1973 (FERA) [Arjun Patil v UOI & Ors].

A Division Bench of Justices Subramonium Prasad and Vimal Kumar Yadav said that Section 63 of FERA is clear that the Court or Adjudicating Authority is empowered to confiscate “any currency, security or other money or property in respect of which the contravention has taken place.” 

It stressed that the language of Section 63 is wide enough to include Indian currency and the provision is unambiguous, clear, and precise in its object. 

“Nowhere does the Section disqualify or prohibit either the Court or Adjudicating Authority from confiscating Indian Currency. In fact, a perusal of clause (b) of the Explanation to Section 63 makes it abundantly clear that property with respect to which contravention has taken place includes Indian currency, where the said property is converted into that currency,” the Court said.

Notably, FERA has now been replaced with the Foreign Exchange Management Act, 1999 (FEMA), which came into effect in June 2000.

In a judgment passed on October 14, the Bench observed that the right to appeal before the High Court under FERA is limited to questions of law and not facts, and the latter lies in the exclusive domain of the Adjudicatory Authority and Appellate Tribunal. 

"This Court cannot go behind or interfere with the findings on fact arrived at by them. The FERA Appellate Tribunal is the final Court of facts. This circumscribed right to appeal has been retained under FEMA, the successor legislation to FERA. Section 35 of FEMA, under which the present appeal has been filed, restricts the jurisdiction of a High Court to only questions of law," the Court stated.

The High Court rendered these findings while dealing with an appeal filed by one Arjun Patil against the orders of the Enforcement Directorate (ED) and the Appellate Tribunal for Foreign Exchange that confiscated ₹12.31 lakh in Indian currency and imposed a penalty of ₹40,000 on Patil for offences under FERA. 

The ED had searched Patil’s premises in February 1997, seizing ₹12.31 lakh, US$6,371, four gold biscuits, and documents. Patil allegedly confessed that he was buying gold from Nepal using foreign exchange, violating Sections 81, 82, 63, and 64(2) of FERA. He later retracted his statement, claiming it was obtained under coercion and torture.

In 2003, the Adjudicating Authority found Patil guilty of illegal dealings in gold and foreign exchange and imposed a penalty and ordered confiscation. The order was upheld by the Appellate Tribunal three years later, which led to the appeal before the High Court. 

After considering the case, the High Court ruled that even if a statement is retracted, it can be relied upon as long as it is voluntary and corroborated. 

Further, the Court said that the moment Patil started doing an act with the necessary intention, he commenced his “attempt” to commit the offence. 

“The Appellant’s conduct, as well as the surrounding facts and circumstances of this case establish that the Appellant had taken steps for the commission of the offence and had crossed the threshold for “attempt”. Therefore, his claim that seizure does not amount to attempt is a facile argument that is in negation of the factual matrix of this case. The recovery, coupled with absence of any lawful explanation and the conduct of the Appellant is a clear attempt for an act that would have amounted to contravention of the provisions of FEMA,” the Court said.

Ultimately, the Court upheld the order passed passed by the Adjudicating Authority and the Appellate Tribunal and rejected Patil’s appeal. 

Advocates Jaspreet Singh Kapur, Wasim Ansari and Shweta appeared for Arjun Patil. 

Advocates Bharathi Raju and Divyangi represented the Union of India. 

The ED was represented through advocates Vivek Gurnani and Kanishk Maurya. 

[Read Judgment]