In a significant ruling, the Delhi High Court has clarified that violations under the Foreign Exchange Management Act (FEMA), 1999, do not provide immunity from prosecution under the Indian Penal Code (IPC), 1860. Justice Anup Jairam Bhambhani emphasized that both statutes address distinct infractions and can be applied simultaneously when warranted.
The case involved petitioners Manideep Mago and Sanjay Sethi, who challenged their arrests by the Enforcement Directorate (ED) and their subsequent remand to judicial custody. The petitioners contended that the ED's search and seizure operations at their residences and company offices, conducted under Section 37 of FEMA and Section 132 of the Income Tax Act, were unlawful. They argued that these actions should not have led to the registration of a First Information Report (FIR) or an Enforcement Case Information Report (ECIR), rendering their arrests illegal.
However, the court found that the complaint received by the police from the ED disclosed the commission of cognizable offences. Consequently, the law mandated the police to register an FIR, and the court held that the police could not be faulted for doing so.
Justice Bhambhani further elaborated that offences such as criminal conspiracy, cheating, and forgery under the IPC are independent and complete in themselves. These offences do not become non-punishable merely because they are associated with violations of foreign exchange regulations under FEMA. The court underscored that the penal offences were complete before any infraction of FEMA provisions occurred.
Additionally, the court addressed the petitioners' argument regarding the ED's obligation to provide "reasons to believe" at the time of arrest, as mandated by a subsequent Supreme Court judgment in the Arvind Kejriwal case. Justice Bhambhani noted that this requirement should be applied prospectively and could not be retroactively imposed on arrests made before the judgment was delivered. Nonetheless, the court observed that the grounds of arrest provided to the petitioners contained specific allegations that sufficiently conveyed the essential case against them.
This ruling delineates the distinct scopes of FEMA and the IPC, affirming that violations under one statute do not negate the applicability of the other. It reinforces the principle that individuals can be prosecuted under both laws when their actions constitute offences under each. The decision serves as a precedent for future cases involving overlapping violations of financial regulations and criminal law.
0 Comments
Thank you for your response. It will help us to improve in the future.