The Supreme Court has held that criminal proceedings under the repealed Foreign Exchange Regulation Act, 1973 (FERA) cannot begin unless the proposed accused is first served with the mandatory opportunity notice prescribed under the law.
A bench of Justice JB Pardiwala and Justice Manoj Misra quashed the complaints and summoning orders issued against Standard Chartered Bank and its officer in connection with an alleged FERA violation involving the deposit of around ₹30 lakh for the benefit of a person residing outside India.
The Court ruled that the notice requirement under the proviso to Section 61(2) of FERA is not a procedural formality but a mandatory safeguard.
The bench observed that no complaint under Sections 56 or 57 of FERA can be validly instituted, and no Magistrate can take cognizance of the alleged offence, unless the required opportunity notice has been served.
The Court stressed that the opportunity must be real and meaningful, particularly given the serious penal consequences that could follow under FERA. The prosecution, it said, must demonstrate at the very threshold that the notice was issued and served in the prescribed manner.
A Magistrate must also satisfy himself before taking cognizance that the accused was actually given the required opportunity. Failure to do so, the Court held, could render the cognizance order unsustainable.
The Supreme Court also criticised the Bombay High Court for refusing to entertain the petition seeking quashing of the proceedings under Section 482 of the Code of Criminal Procedure solely on the ground that the accused had an alternative remedy of filing a revision petition under Section 397 CrPC.
Relying on the principle laid down in Dhariwal Tobacco Products Ltd. v. State of Maharashtra, the Court reiterated that the existence of an alternative remedy does not take away the High Court’s inherent jurisdiction under Section 482 CrPC.
The bench said the High Court had committed a serious error by declining to examine the challenge merely because the accused had not first invoked the revisional jurisdiction.
The Supreme Court further took note of the extraordinary delay in the case, finding the prosecution largely responsible for the proceedings remaining stalled for decades.
The complaints were filed in 2002, but the complainant allegedly failed to collect summons for nearly two years. Even after that, the summons remained unserved for several years. Although the High Court had directed in 2012 that the trial be completed within a month, the prosecution did not take the necessary steps, including collecting fresh notices for service on the accused.
The Court noted that more than 23 years had passed since the complaints were filed and over three decades since the underlying transaction, yet the case had not moved beyond the stage of serving summons.
Allowing the appeal, the Supreme Court set aside the proceedings against the appellants.
