FERA: Company can be prosecuted for offences, says SC
New Delhi, Mar 5 (UNI) The Supreme Court has held that " a company can be prosecuted for offences under the Foreign Exchange Regulations Act, 1973 (FERA), despite the fact that no imprisonment can be imposed on a company or an incorporated body as a company does not enjoy immunity from prosecution in respect of offences for which a mandatory punishment of imprisonment is prescribed." A three-judge bench comprising Chief Justice Y.K. Sabharwal, Mr.
Justice C.K. Thakker and Mr. Justice P.K. Balasubramanyan vide its judgement dated Feb. 24,2006 dismissed the appeals of the Standard Chartered Bank and some of its officials challenging a Bombay high court judgment rejecting their writ petitions against the constitutional validity of sections 50,51,56 and 68 of FERA.
The apex court relied on the findings of a constitution bench in the same case while making the observation.
The high court had, however, held that section 68 (1) of FERA was not applicable to an adjudication proceeding and that it was confined to a prosecution for penal offences under the Act.
The Bank has challenged the impugned sections of FERA on the grounds that these were violative of articles 14 and 21 of the Constitution.
"It is not a case where any successful challenge could be mounted on the provisions providing both for adjudication and imposition of penalty and for penal action in the context of the objectives sought to be achieved by the Act and the serious repercussions of transgression of the provisions of the Act on the economy of the country," the court ruled.
The court also observed that it was open to the appellants to show to the authorities or the trial court that they had the requisite permission.
The Directorate of Enforcement had pleaded that the attempt of the appellants to block the prosecution should not be countenanced as the Magistrate would issue process only if he was satisfied that a case was made out.
The court also found force in the argument of the department that FERA was aimed at ensuring that no economic loss is caused by the alleged contravention by the imposition of penalties after adjudication under section 51 and also to ensure that tendency to violate is curbed by imposing an appropriate punishment after due prosecution in terms of section 56 of the Act.
The court dismissed the appeals filed by the bank and its officers and allowed the appeals of the department while vacating the findings of the high court that section 68 of FERA is confined in its operation only to prosecution under section 56 of the Act.
The Apex Court also held that proceedings for adjudication and criminal prosecution under the Act are independent of each other.
The high court had also dismissed the petitions of the appellant officers of the Standard Chartered Bank under section 482 Cr. P.C.
seeking to quash the criminal proceedings under FERA launched for alleged violations of provisions of the Act.
The Apex Court refused to interfere with the high court order.
UNI AKS/XC RP GC1017