A summons issued by the Enforcement Directorate, Government of India, under Section 37 of the Foreign Exchange Management Act, 1999 could not be interdicted by the High Court on the ground that there was no application of mind and the documents sought for would amount to a roving enquiry by the Directorate, the Madras High Court has held.

Dismissing a writ petition from Mr K.A. Manshoor challenging the issuance of summons dated December 12, 2008, Mr Justice K. Chandru held that the attack made against the summons could not be countenanced by this court.

The petition in essence seeks for a writ of prohibition against the Department for having issued the summons by exercise of powers vested on them under Section 37 read with Section 131 of the Income-tax Act.

Referring to the petitioner’s contention that the Directorate, which had power to issue summons, could do so only if it was satisfied that the purpose had relevance to the issue in which the summons was issued, the Judge said there was a complete departure from the earlier enactment, viz. Foreign Exchange Regulation Act, 1973 (FERA), which was repealed by Section 49 of Foreign Exchange Management Act (FEMA).

The concept of an offence being committed had been dispensed with. The present procedure under the Act was for imposition of a penalty for contravention of provisions of the Act. The entire face of the Act had completely been overhauled. Hence, at this stage, it was unthinkable to question the summons issued by the Directorate.

Also, the Act had deliberately chosen not to apply the concept of summons used either under the Code of Civil Procedure or under the Code of Criminal Procedure, but had chosen to apply analogous provisions in the Income-tax Act.

Therefore, while interpreting the scope and width of Section 37 of FEMA, one could not apply the concept of summons as available to a Civil Court under the Code of Civil Procedure, only because the power of a civil court was conferred on the authorities, the Judge ruled.

On behalf of the Enforcement Directorate, it was submitted that the provisions of FEMA could not be compared with other enactments.

Here the question of application of Article 20(3) or Article 21 of the Constitution did not arise. The Directorate cited the judgement of this Court in TTV Dinakaran vs Enforcement Officer reported in 1995 (80) ELT 745 (Mad) where the attempt to challenge the summons served under Section 40 was repelled by this Court.

The Judge held that attempt by petitioner to stall summons issued by the Directorate had to be necessarily rejected. Accordingly, the writ petition would stand dismissed.

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Category : Corporate Law (3757)
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Tags : fema (537) Fema Notifications (733) RBI Notifications (1932)

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