MINISTER OF THE STATE IN THE MINISTRY OF FINANCE (SHRI PRANAB MUKHERJEE)
(a) to (e) : A statement is laid on the Table of the House.
Statement referred to in parts (a) to (e) of the Lok Sabha Starred Question No. 224
for answer on 04.12.2009 regarding `Violation of Foreign Exchange Laws`
(a) to (c): The number of cases of adjudication proceedings initiated by the Directorate
of Enforcement under Foreign Exchange Management Act,1999 (FEMA) has gone up in the recent
past, as can be seen from the following:
No. of cases in which adjudication proceedings were initiated under FEMA:
2007-08 2008-09 2009-10(up till 31.10.09)
269 380 297
There has also been an increase in the number of adjudication proceedings
(underFEMA) which have been completed.
No. of cases in which adjudication proceedings were completed under FEMA
2007-08 2008-09 2009-10 (up till 31.10.09)
214 233 223
Since FEMA is a civil law, no prosecution is launched under FEMA.
(d): The number of cases of adjudication proceedings that were/are pending
under FEMA is as follows:
No. of cases in which adjudication proceedings were/are pending under FEMA
2007-08 2008-09 2009-10 (up till 31.10.09)
1130 1277 1351
After Foreign Exchange Regulation Act, 1973 (FERA) has been repealed in 2000,
no new FERA cases are initiated after the cut off date of 31.05.2002. Only
the cases prior to that are pursued and disposed of. The details are as follows:
FERA Cases
No. of cases in which adjudication proceedings under FERA were completed
2007-08 2008-09 2009-10 (up till 31.10.09)
182 160 1127
No. of cases in which adjudication proceedings under FERA are pending
2007-08 2008-09 2009-10 (uptill 31.10.09)
3760 3740 2661
The number of cases pending prosecution under FERA as on 31.10.2009 is as follows:
Prosecution cases under FERA
Prosecution u/s 56 Prosecution u/s 57 Total
of FERA, 1973 - of FERA, 1973 -
for substantive for non- payment
offences of penalties
1783 2300 4083
As regards reasons for pendency, it may be mentioned that whenever any case of suspected
contravention of the provisions of Foreign Exchange Management Act, 1999 (FEMA) comes to
the notice of the Directorate, the information/intelligence received is subjected to initial
process of verification. In those cases, where there is material for further action, formal
investigations are taken up. During the course of these investigations, the officers of the
Directorate collect relevant evidence, through various processes including conduct of searches
and seizure of relevant material, examination of the concerned persons and recording of their
statements under FEMA. The evidence so collected is thereafter analyzed and based on the
sufficiency thereof, Show Cause Notice is issued to the concerned party. This is followed
by the quasi judicial process of adjudication proceedings, in such cases where the Noticee
fails to show sufficient cause as to his bona-fides. Being a Civil Law, FEMA does not have
any provisions for launching prosecution or for obtaining conviction in respect of the
offenders.
Under FERA, besides adjudication, the offenders were also liable for prosecution for the
substantive offence, u/s 56, and in those cases where penalties imposed consequent to
adjudication proceedings remained unpaid, the concerned individuals were liable for
prosecution for non realization of penalties u/s 57 of the Act.
In the adjudication proceedings, which are quasi judicial in nature, as also in criminal
prosecution, the concerned Authority/Court has to ensure compliance of the principles of
natural justice, before arriving at any conclusion with regard to commission of the offence.
FERA and FEMA both have been Special Laws. Cases under these laws involve complex and intricate
legal issues and processes. In most of these cases, there are quite a number of Noticees/
Accused, who usually adopt dilatory tactics, resultant to which the proceedings get prolonged.
(e) In spite of all the procedural and administrative hurdles, all out efforts are being made
for expeditious disposal of pending FERA and FEMA cases. The Directorate of Enforcement could
complete adjudication proceedings in as many as 670 FEMA cases & 1469 FERA cases from 2006-07
onwards. In the same period trial was concluded in 325 cases. Sustained efforts are being
made to minimize the pendency of cases under adjudication.
