Non-compliance of summons under FERA an offence -- SC

Non-compliance of summons under FERA an offence -- SC
PRESS TRUST OF INDIA

NEW DELHI, MAY 10: In a significant judgement having bearing on many important FERA violation cases, the Supreme Court has ruled that a person could be punished if he fails to honour summons issued to him under the Foreign Exchange Regulation Act (FERA).

"We are of the considered opinion that violation or contravention of the directions given under the summons under section 40 would come within the purview of Section 56 and therefore would be punishable thereunder," a Bench headed by Justice G B Pattanaik ruled.

With this ruling, the Bench set aside a Delhi High Court order in the multi-crore Urea Import Scam ruling that non-honouring of summons by Enforcement Directorate did not constitute an offence. The Court also set aside a similar ruling by the Kerala High Court.

This ruling would restart cases against controversial godman Chandraswami and others who were discharged by the trial court after the High Court ruling.

Section 40 of FERA empowers summoning of any person whose attendance the officer concerned considers necessary either to give evidence or to produce a document during the course of any investigation or proceeding under the Act.

Section 56 provides for punishment of a person who contravenes any provision of FERA.

The Supreme Court ruled that non-honouring of summons would amount to contravention of the provisions of FERA.

The Delhi High Court took the view that Section 56 would bring within its sweep only such violation or contravention which under different provisions of the Act has been deemed to be a contravention under the Act.

The Bench, while allowing the appeal of the Enforcement Directorate, said "We are unable to accept this interpretation put by the single Judge as in our view such interpretation given would make the power to summons under section 40 meaningless and the provisions of sub-section (3) of Section 40 meaningless."

It also said if the interpretation of the High Court was accepted "the provisions of Section 40(3) making it bounden duty for the persons summoned to attend (the proceedings before Enforcement Directorate) meaningless."

The apex court noted that the argument by the Directorate that the provisions of FERA was a complete code in itself did not find favour with the High Court.

The Court, while setting aside the judgements of the High Courts, directed that the complaint proceedings with regard to non-honouring of summons issued by the Enforcement Directorate "may be proceeded with in accordance with law."