In a significant ruling, the Delhi High Court addressed the interplay between the Foreign Exchange Management Act, 1999 (FEMA), and the Indian Penal Code, 1860 (IPC), emphasizing that violations under FEMA do not grant immunity from prosecution under the IPC. Justice Anup Jairam Bhambhani, presiding over the matter, elucidated that both statutes cater to different legal infractions and can operate concurrently without one superseding the other.
The case involved petitioners Manideep Mago and Sanjay Sethi, who challenged their arrests and subsequent judicial custody. They contended that the Enforcement Directorate's (ED) search and seizure operations, conducted under Section 37 of FEMA and Section 132 of the Income Tax Act, were unlawful and should not have led to the registration of a First Information Report (FIR) or an Enforcement Case Information Report (ECIR). The petitioners argued that these actions were illegal and warranted annulment.
However, the High Court dismissed these contentions, stating that the complaint received by the police from the ED did reveal the commission of cognizable offences. Consequently, the police were obligated by law to register an FIR, and their actions in doing so could not be faulted. Justice Bhambhani clarified that offences such as criminal conspiracy, cheating, and forgery, as alleged under the IPC, are distinct and complete in themselves, independent of any infractions under FEMA. These offences do not become nullified merely because they are associated with violations of foreign exchange regulations.
Furthermore, the Court addressed the procedural aspect concerning the ED's obligation to provide "reasons to believe" when arresting individuals under the Prevention of Money Laundering Act (PMLA). Referring to the Supreme Court's ruling in the Arvind Kejriwal case, Justice Bhambhani noted that the requirement to furnish such reasons as a separate document should be applied prospectively. Since the petitioners were arrested in June and July of the previous year, prior to the Supreme Court's judgment in July 2014, the ED could not have anticipated the necessity to serve these reasons separately. Nonetheless, the grounds of arrest presented to the petitioners contained specific allegations, adequately conveying the essential case against them.
This judgment underscores the principle that legal provisions under different statutes can coexist and be enforced simultaneously when addressing distinct offences. The High Court's decision reinforces the notion that violations under FEMA do not shield individuals from prosecution under the IPC for separate and complete offences. It also highlights the judiciary's commitment to ensuring that procedural requirements are applied fairly, taking into account the temporal context of legal developments.
In conclusion, the Delhi High Court's ruling affirms the independent applicability of FEMA and the IPC, clarifying that infractions under one statute do not negate the enforceability of the other. This decision serves as a precedent for future cases involving overlapping legal provisions, ensuring that individuals cannot evade accountability by exploiting perceived statutory immunities.
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