Binu Jacob Vs Office of The Special Directorate of Enforcement (Karnataka High Court)
Karnataka HC Quashes FEMA Notice – Action Based on Omitted Section 6(3)(b) Held Without Jurisdiction
Background
Petitioner Binu Jacob challenged the show-cause notice dated 25.02.2020 & the complaint dated 25.10.2019 issued by the Directorate of Enforcement (ED) under the Foreign Exchange Management Act, 1999 (FEMA). The notices alleged violation of Section 6(3)(b) of FEMA relating to transfer or issue of securities by persons resident outside India.
Petitioner’s Argument
- The impugned proceedings were based on a provision (Section 6(3)(b)) that had already been omitted by the Finance Act, 2015, notified on 15.10.2019.
- Since the complaint was filed on 25.10.2019 & show-cause notice on 25.02.2020, both after the omission, the action was without jurisdiction.
- There was no saving clause in the Finance Act preserving pending or future actions under the omitted provision.
- The petitioner relied on Kolhapur Canesugar Works Ltd. v. Union of India (2000) 2 SCC 536, where the Supreme Court held that Section 6 of the General Clauses Act (which saves prior actions on repeal) does not apply to omissions.
Respondent’s Argument
- The ED argued that liabilities under FEMA are civil in nature, & therefore the omission would not erase liability for earlier transactions.
- They cited Suborno Bose v. Enforcement Directorate (CA No. 6267/2020) to claim continuing applicability despite omission.
Court’s Findings
Paid content
Become a Basic or Premium Member, or log in if you are already a Basic or Premium member.
