WHETHER AN ACCUSED CAN BE ARRESTED UNDER FEMA? YES- SAYS SUPREME COURT OF INDIA
IN DROPI DEVI vs UNION OF INDIA CASE.
In Dropti
Devi and Another vs Union of India and others case, this interesting
question was raised in the Supreme Court of India.
Learned counsel for
the appellants fervently opposed that since FEMA did not regard its infringement
as a criminal offence, the whole notion, essence, intent and purpose behind the
enactment of preventive detention had ceased to exist and the continuation of
such provision was violative of Article 21
read with Articles 14 and 19 of the Constitution. He, thus, submitted that the
provision for preventive detention under COFEPOSA of the accused was wholly
unsustainable and untenable.
The public prosecutor
Mr. Vikram Chaudhari cited that there are cases of preventive detention
existing in USA, England, Australia and Germany. He referred to the excerpts
from “The Limits of Preventive Detention” by Rinat Kitai – Sangero 2009.
Hence, the important
question to be answered is that — whether an accused who infringes the
provisions of FEMA can be arrested under the preventive detention Act, namely,
the COFEPOSA Act?
It was argued that the
objective of FEMA is also promotion of orderly development and maintenance of
foreign exchange market in India. Dealing in foreign exchange is regulated by
the Act. For violation of foreign exchange regulations, penalty can be levied and such activity is certainly an illegal
activity, which is prejudicial to conservation or augmentation of foreign
exchange.
From the objects and
reasons of the COFEPOSA Act,
it is apparent that the purpose of the Act is to prevent violation of foreign
exchange regulations or smuggling activities which are having increasingly
deleterious effect on the national economy and thereby serious effect on the
security of the State.
Section 3
of the COFEPOSA Act, which is not amended or repealed, empowers the authority
to exercise its power of detention with a view to preventing any person inter
alia from acting in any manner prejudicial to the conservation or augmentation
of foreign exchange. If the activity of any person is prejudicial to the
conservation or augmentation of foreign exchange, the authority is empowered to make a detention order against such
person and the Act does not contemplate that such activity should be an
offence.
The
main difference between COFEPOSA and FEMA can be illustrated as under:
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COFEPOSA
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FEMA
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The COFEPOSA Act deals with
preventive detention for violation of foreign exchange regulations
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FEMA
is for regulation and management of foreign exchange through authorised
person and provides for penalty for contravention of the said provisions.
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As
held in Poonam Lata v. M.L. Wadhawan,
(1987) 3 SCC 347)preventive detention law is for effectively keeping out of
circulation the detenu during a prescribed period by means of preventive
detention.
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The
object as stated above is for promoting orderly development and maintenance
of foreign exchange market in India.
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As
held in Khudiram Das v. State of W.B.,
(1975) 2 SCC 8, the power of detention is clearly a preventive measure. It
does not partake in any manner of the nature of punishment. It is taken by
way of precaution to prevent mischief to the community
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Although contravention of its provisions is not regarded as a criminal offence, yet it is an illegal activity jeopardizing the very economic fabric of the country. For violation of foreign exchange regulations, penalty can be levied and its non-compliance results in civil imprisonment of the defaulter
