The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is an international agreement administered by the World Trade Organization (WTO) that sets down minimum standards for many forms of intellectual property (IP) regulation. It was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in 1994.
Specifically, TRIPS contains requirements that nations' laws must meet for: copyright rights, including the rights of performers, producers of sound recordings and broadcasting organizations; geographical indications, including appellations of origin; industrial designs; integrated circuit layout-designs; patents; monopolies for the developers of new plant varieties; trademarks; trade dress; and undisclosed or confidential information. TRIPS also specifies enforcement procedures, remedies, and dispute resolution procedures.
The TRIPS agreement introduced intellectual property law into the international trading system for the first time, and remains the most comprehensive international agreement on intellectual property to date. In 2001, developing countries concerned that developed countries were insisting on an overly-narrow reading of TRIPS, initiated a round of talks that resulted in the Doha Declaration: a WTO statement that clarifies the scope of TRIPS; stating for example that TRIPS can and should be interpreted in light of the goal "to promote access to medicines for all."
TRIPS has been criticised by the alter-globalization movement, regarding for example its consequences with regards to the AIDS pandemic in Africa.Contents
1 Background and history
2 The requirements of TRIPS
3 Controversy
3.1 Access to essential medicines
3.2 Software and business method patents
4 Implementation in developing countries
5 Post-TRIPs expansionism
6 Panel reports
7 See also
8 References
9 External links
Background and history
TRIPS was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) treaty in 1994. Its inclusion was the culmination of a program of intense lobbying by the United States, supported by the European Union, Japan and other developed nations. Campaigns of unilateral economic encouragement under the Generalized System of Preferences and coercion under Section 301 of the Trade Act played an important role in defeating competing policy positions that were favoured by developing countries, most notably Korea and Brazil, but also including Thailand, India and Caribbean Basin states. In turn, the United States strategy of linking trade policy to intellectual property standards can be traced back to the entrepreneurship of senior management at Pfizer in the early 1980s, who mobilized corporations in the United States and made maximizing intellectual property privileges the number one priority of trade policy in the United States (Braithwaite and Drahos, 2000, Chapter 7).
After the Uruguay round, the GATT became the basis for the establishment of the World Trade Organization. Because ratification of TRIPS is a compulsory requirement of World Trade Organization membership, any country seeking to obtain easy access to the numerous international markets opened by the World Trade Organization must enact the strict intellectual property laws mandated by TRIPS. For this reason, TRIPS is the most important multilateral instrument for the globalization of intellectual property laws. States like Russia and China that were very unlikely to join the Berne Convention have found the prospect of WTO membership a powerful enticement.
Furthermore, unlike other treaties on intellectual property, TRIPS has a powerful enforcement mechanism. States can be disciplined through the WTO's dispute settlement mechanism.
The requirements of TRIPS
TRIPS requires member states to provide strong protection for intellectual property rights. For example, under TRIPS:
Copyright terms must extend to 50 years after the death of the author, although films and photographs are only required to have fixed 50 and to be at least 25 year terms, respectively.(Art.7(2),(4))
Copyright must be granted automatically, and not based upon any "formality", such as registrations or systems of renewal.
Computer programs must be regarded as "literary works" under copyright law and receive the same terms of protection.
National exceptions to copyright (such as "fair use" in the United States) must be tightly constrained.
Patents must be granted in all "fields of technology," although exceptions for certain public interests are allowed (Art. 27.2 and 27.3 [1]) and must be enforceable for at least 20 years (Art 33).
Exceptions to patent law must be limited almost as strictly as those to copyright law.
In each state, intellectual property laws may not offer any benefits to local citizens which are not available to citizens of other TRIPs signatories by the principles of national treatment (with certain limited exceptions, Art. 3 and 5 [2]). TRIPS also has a most favoured nation clause.
Many of the TRIPS provisions on copyright were imported from the Berne Convention for the Protection of Literary and Artistic Works and many of its trademark and patent provisions were imported from the Paris Convention for the Protection of Industrial Property.
Controversy
Since TRIPS came into force it has received a growing level of criticism from developing countries, academics, and Non-governmental organizations. Some of this criticism is against the WTO as a whole, but many advocates [attribution needed] of trade liberalization also regard TRIPS as bad policy. TRIPS' wealth redistribution effects (moving money from people in developing countries to copyright and patent owners in developed countries) and its imposition of artificial scarcity on the citizens of countries that would otherwise have had weaker intellectual property laws, are a common basis for such criticisms.
Access to essential medicines
The most visible conflict has been over AIDS drugs in Africa. Despite the role which patents have played in maintaining higher drug costs for public health programs across Africa, this controversy has not led to a revision of TRIPs. Instead, an interpretive statement, the Doha Declaration, was issued in November 2001, which indicated that TRIPs should not prevent states from dealing with public health crises. After Doha, PhRMA, the United States and to a lesser extent other developed nations began working to minimize the effect of the declaration.
A 2003 agreement loosened the domestic market requirement, and allows developing countries to export to other countries where there is a national health problem as long as drugs exported are not part of a commercial or industrial policy [3]. Drugs exported under such a regime may be packaged or colored differently to prevent them from prejudicing markets in the developed world.
In 2003, the Bush administration also changed its position, concluding that generic treatments might in fact be a component of an effective strategy to combat HIV. Bush created the PEPFAR program, which received $15 billion from 2003-2007, and was reauthorized in 2007 for $30 billion over the next five years. Despite wavering on the issue of compulsory licensing, PEPFAR began to distribute generic drugs in 2004-5.
Software and business method patents
Main article: Software patents under TRIPs Agreement
Another controversy has been over the TRIPS Article 27 requirements for patentability "in all fields of technology", and whether or not this necessitates the granting of software and business method patents.
Implementation in developing countries
The obligations under TRIPS apply equally to all member states, however developing countries were allowed extra time to implement the applicable changes to their national laws, in two tiers of transition according to their level of development. The transition period for developing countries expired in 2005. The transition period for least developed countries was extended to 2016, and could be extended beyond that.
Developing countries are massive net-exporters of copyright-, patent- and trademark-related royalties. It has therefore been argued that the TRIPS standard of requiring all countries to create strict intellectual property systems will be detrimental to poorer countries' development.[4] Many argue [attribution needed] that it is, prima facie, in the strategic interest of most if not all underdeveloped nations to use any flexibility available in TRIPS to write the weakest IP laws possible. [attribution needed]
This has not happened in most cases. A 2005 report by the WHO found that many developing countries have not incorporated TRIPS flexibilities (compulsory licensing, parallel importation, limits on data protection, use of broad research and other exceptions to patentability, etc) into their legislation to the extent authorized under Doha. [5]
This is likely caused by the lack of legal and technical expertise needed to draft legislation that implements flexibilities, which has often led to developing countries directly copying developed country IP legislation [6], or relying on technical assistance from the World Intellectual Property Organization (WIPO), which, some say [attribution needed], encourages them to implement stronger intellectual property monopolies.
Post-TRIPs expansionism
The requirements of TRIPS are, from a policy perspective, extremely stringent. Despite this, lobbyists for the industries that benefit from various intellectual property laws have continued since 1994 to campaign to strengthen existing forms of intellectual property and to create new kinds:
The creation of anti-circumvention laws to protect Digital Rights Management systems. This was achieved through the 1996 World Intellectual Property Organization Copyright Treaty (WIPO Treaty) and the WIPO Performances and Phonograms Treaty.
The desire to further restrict the possibility of compulsory licenses for patents has led to provisions in recent bilateral US trade agreements.
It is one thing for states to have intellectual property laws on their statutes, and another for governments to enforce them aggressively. This distinction has led to provisions in bilateral agreements, as well as proposals for WIPO and European Union rules on intellectual property enforcement. The 2001 EU Copyright Directive was to implement the 1996 WIPO Copyright treaty.
The wording of Trips 27 of non-discrimination is used to justify an extension of the patent system.
The campaign for the creation of a WIPO Broadcasting Treaty that would give broadcasters (and possibly webcasters) exclusive rights over the copies of works they have distributed.
Panel reports
According to WTO 10th Anniversary, Highlights of the first decade, Annual Report 2005 page 142 [7], in the first ten years, 25 complaints have been lodged leading to the panel reports and appellate body reports on TRIPS listed below.
The WTO website has a gateway to all TRIPS disputes (including those that did not lead to panel reports) here [8].
2005 Panel Report [9]:
European Communities - Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs .
2000 Panel Report [10], Part 2 [11] and 2000 Appellate Body Report [12]:
Canada - Term of Patent Protection.
2000 Panel Report, Part 1 [13] and Part 2 [14]:
United States - Section 110(5) of the US Copyright Act.
2000 Panel Report [15]:
Canada - Patent Protection of Pharmaceutical Products.
2001 Panel Report [16] and 2002 Appellate Body Report [17]:
United States - Section 211 Omnibus Appropriations Act of 1998.
1998 Panel Report [18]:
India - Patent Protection for Pharmaceutical and Agricultural Chemical Products.
1998 Panel Report [19]:
Indonesia - Certain Measures Affecting the Automobile Industry.
Friday, November 30, 2007
TRIMS - The Agreement on Trade Related Investment Measures
INTRODUCTION
The Agreement on Trade Related Investment Measures (TRIMs) is one of Agreements covered under Annex IA to the Marrakech Agreement, signed at the end of the Uruguay Round (UR) negotiations. The Agreement addresses investment measures that are trade related and that also violate Article III (National treatment) or Article XI (general elimination of quantitative restrictions) of the General Agreement on Tariffs and Trade. An illustrative list of the measures that are violative of the provisions of the Agreement is annexed to the text of the Agreement. These pertain broadly to local content requirements, trade balancing requirements and export restrictions, attached to investment decision making.
Provisions on elimination of notified TRIMs by WTO Members, and transition periods
The Agreement requires all WTO Members to notify the TRIMs that are inconsistent with the provisions of the Agreement, and to eliminate them after the expiry of the transition period provided in the Agreement. Transition periods of two years in the case of developed countries, five years in the case of developing countries and seven years in the case of LDCs, from the date of entry into force of the Agreement (i.e. 1st January 1995) are provided in the Agreement.
Temporary deviation on BOP grounds
The Agreement allows developing countries to deviate temporarily from its provisions on balance of payments (BOP) grounds (as per the provisions of Article XVIII.B of GATT, 1994).
India’s notified TRIMs
As per the provisions of Art. 5.1 of the TRIMs Agreement India had notified three trade related investment measures as inconsistent with the provisions of the Agreement:
Local content (mixing) requirements in the production of News Print,
Local content requirement in the production of Rifampicin and Penicillin – G, and
Dividend balancing requirement in the case of investment in 22 categories consumer goods.
Such notified TRIMs were due to be eliminated by 31st December, 1999. None of these measures is in force at present. Therefore, India does not have any outstanding obligations under the TRIMs agreement as far as notified TRIMs are concerned.
Present Status
The transition period allowed to developing countries ended on 31st December, 1999. However, Art. 5.3 provides for extension of such transition periods in the case of individual members, based on specific requests. In such cases individual Members have to approach the Council for Trade in Goods with justification based on their specific trade, financial and development needs. Accordingly 9 developing countries (Malaysia, Pakistan, Philippines, Mexico, Chile, Colombia, Argentina, Romania and Thailand) have applied for extension of transition period in respect of certain TRIMs which had been notified by them. Examination of their requests is underway in the Council for Trade in Goods of WTO.
India had proposed during the Seattle Ministerial Conference that:
Extension of transition period for developing countries should be on a multilateral basis and not on an individual basis;
Another opportunity should be provided to developing countries to notify un-notified TRIMs and maintain them for an extended transition period;
The Seattle Ministerial Conference was inconclusive and no decision could be taken on the proposals.
However, during the General Council meeting of 8th May, 2000, the following decisions, inter-alia, were taken :
"…… ..members agree to direct the Council for Trade in Goods to give positive consideration to individual requests presented in accordance with Article 5.3 by developing countries for extension of transition periods for implementation of the TRIMs Agreement".
"Members have noted the concerns of those Members who have not notified TRIMs or have not yet requested an extension. Consultations on the means to address these cases should also be pursued as a matter of priority, under the aegis of the General Council, by the Chairman of the Council for Trade in Goods".
Mandated Review of the Agreement
Art. 9 of the Agreement envisages its review within five years of its coming into operation, i.e. by 1-1-2000.
The Council for Trade in Goods is to review the operation of the Agreement and, as appropriate, propose to the Ministerial Conference amendments to its text. The process of review has started but no specific proposals have been made by any Member as yet.
Investment Policy and Competition Policy
In the course of this review, the Council for Trade in Goods shall consider whether the Agreement should be complemented with the provisions on investment policy and competition policy. The Singapore Ministerial Conference which established the two parallel Working Groups to study the relationship between Trade and Investment on the one hand and Trade and Competition Policy on the other had stipulated that future negotiations, if any, regarding multilateral disciplines in these areas will take place only after explicit consensus decision by the Members. The Working Group process is still on.
Likely issues during the review
The review of the Agreement is likely to address the following issues:
A. Issues related to the operation of the Agreement during the last five years, and
B. Issues related to the coverage of the Agreement
A. Issues related to the operation of the Agreement
Art. 4 provides that a developing country Member shall be free to deviate temporarily from the obligations arising out of this agreement to the extent and in such a manner as Art. XVIII of GATT 1994, the Understanding on the Balance of Payments Provisions of GATT 1994, and the Declaration on Trade Measures Taken for Balance of Payments Purpose adopted on 28th November, 1979. Issues related to operationalization of this provision would be raised by developing countries;
The question of transition period of five years for developing countries has ended before the review of the operation of the Agreement. The issue of transition periods and the need for general exemption, rather than based on individual request, is a matter of concern for developing countries;
Art. 5.3 which provides for request for extension of transition period on individual basis, stipulates that such Members should demonstrate particular difficulties in implementing the provisions of the Agreement. This leaves the decision to the discretion of WTO Members. There is likely to be demand for objective criteria;
The role of the Committee on Trade–Related Investment Measures has so far been confined to monitoring the notification requirements. A changed role could be considered.
B. Issues related to the coverage of the Agreement
The present agreement prohibits trade related investment measures that are violative of Art. III and Art. XI of the General Agreement on Tariffs and Trade. Local content requirements, trade balancing requirements, and export restrictions are prohibited. The efforts of developing countries would be to reduce the prohibitions in view of the experience of these countries based on the operation of the agreement. Developing countries (the Like Minded Group) have submitted certain proposals in this regard in the context of review of implementation of the Uruguay Round Agreements.
The TRIMs Agreement has been found by the developing countries to be standing in the way of sustained industrialization of developing countries, without exposing them to balance of payment shocks, by reducing substantially the policy space available to these countries.
Developed countries, on the other hand, have been arguing for a further expansion in the list of prohibited TRIMs.
The Agreement on Trade Related Investment Measures (TRIMs) is one of Agreements covered under Annex IA to the Marrakech Agreement, signed at the end of the Uruguay Round (UR) negotiations. The Agreement addresses investment measures that are trade related and that also violate Article III (National treatment) or Article XI (general elimination of quantitative restrictions) of the General Agreement on Tariffs and Trade. An illustrative list of the measures that are violative of the provisions of the Agreement is annexed to the text of the Agreement. These pertain broadly to local content requirements, trade balancing requirements and export restrictions, attached to investment decision making.
Provisions on elimination of notified TRIMs by WTO Members, and transition periods
The Agreement requires all WTO Members to notify the TRIMs that are inconsistent with the provisions of the Agreement, and to eliminate them after the expiry of the transition period provided in the Agreement. Transition periods of two years in the case of developed countries, five years in the case of developing countries and seven years in the case of LDCs, from the date of entry into force of the Agreement (i.e. 1st January 1995) are provided in the Agreement.
Temporary deviation on BOP grounds
The Agreement allows developing countries to deviate temporarily from its provisions on balance of payments (BOP) grounds (as per the provisions of Article XVIII.B of GATT, 1994).
India’s notified TRIMs
As per the provisions of Art. 5.1 of the TRIMs Agreement India had notified three trade related investment measures as inconsistent with the provisions of the Agreement:
Local content (mixing) requirements in the production of News Print,
Local content requirement in the production of Rifampicin and Penicillin – G, and
Dividend balancing requirement in the case of investment in 22 categories consumer goods.
Such notified TRIMs were due to be eliminated by 31st December, 1999. None of these measures is in force at present. Therefore, India does not have any outstanding obligations under the TRIMs agreement as far as notified TRIMs are concerned.
Present Status
The transition period allowed to developing countries ended on 31st December, 1999. However, Art. 5.3 provides for extension of such transition periods in the case of individual members, based on specific requests. In such cases individual Members have to approach the Council for Trade in Goods with justification based on their specific trade, financial and development needs. Accordingly 9 developing countries (Malaysia, Pakistan, Philippines, Mexico, Chile, Colombia, Argentina, Romania and Thailand) have applied for extension of transition period in respect of certain TRIMs which had been notified by them. Examination of their requests is underway in the Council for Trade in Goods of WTO.
India had proposed during the Seattle Ministerial Conference that:
Extension of transition period for developing countries should be on a multilateral basis and not on an individual basis;
Another opportunity should be provided to developing countries to notify un-notified TRIMs and maintain them for an extended transition period;
The Seattle Ministerial Conference was inconclusive and no decision could be taken on the proposals.
However, during the General Council meeting of 8th May, 2000, the following decisions, inter-alia, were taken :
"…… ..members agree to direct the Council for Trade in Goods to give positive consideration to individual requests presented in accordance with Article 5.3 by developing countries for extension of transition periods for implementation of the TRIMs Agreement".
"Members have noted the concerns of those Members who have not notified TRIMs or have not yet requested an extension. Consultations on the means to address these cases should also be pursued as a matter of priority, under the aegis of the General Council, by the Chairman of the Council for Trade in Goods".
Mandated Review of the Agreement
Art. 9 of the Agreement envisages its review within five years of its coming into operation, i.e. by 1-1-2000.
The Council for Trade in Goods is to review the operation of the Agreement and, as appropriate, propose to the Ministerial Conference amendments to its text. The process of review has started but no specific proposals have been made by any Member as yet.
Investment Policy and Competition Policy
In the course of this review, the Council for Trade in Goods shall consider whether the Agreement should be complemented with the provisions on investment policy and competition policy. The Singapore Ministerial Conference which established the two parallel Working Groups to study the relationship between Trade and Investment on the one hand and Trade and Competition Policy on the other had stipulated that future negotiations, if any, regarding multilateral disciplines in these areas will take place only after explicit consensus decision by the Members. The Working Group process is still on.
Likely issues during the review
The review of the Agreement is likely to address the following issues:
A. Issues related to the operation of the Agreement during the last five years, and
B. Issues related to the coverage of the Agreement
A. Issues related to the operation of the Agreement
Art. 4 provides that a developing country Member shall be free to deviate temporarily from the obligations arising out of this agreement to the extent and in such a manner as Art. XVIII of GATT 1994, the Understanding on the Balance of Payments Provisions of GATT 1994, and the Declaration on Trade Measures Taken for Balance of Payments Purpose adopted on 28th November, 1979. Issues related to operationalization of this provision would be raised by developing countries;
The question of transition period of five years for developing countries has ended before the review of the operation of the Agreement. The issue of transition periods and the need for general exemption, rather than based on individual request, is a matter of concern for developing countries;
Art. 5.3 which provides for request for extension of transition period on individual basis, stipulates that such Members should demonstrate particular difficulties in implementing the provisions of the Agreement. This leaves the decision to the discretion of WTO Members. There is likely to be demand for objective criteria;
The role of the Committee on Trade–Related Investment Measures has so far been confined to monitoring the notification requirements. A changed role could be considered.
B. Issues related to the coverage of the Agreement
The present agreement prohibits trade related investment measures that are violative of Art. III and Art. XI of the General Agreement on Tariffs and Trade. Local content requirements, trade balancing requirements, and export restrictions are prohibited. The efforts of developing countries would be to reduce the prohibitions in view of the experience of these countries based on the operation of the agreement. Developing countries (the Like Minded Group) have submitted certain proposals in this regard in the context of review of implementation of the Uruguay Round Agreements.
The TRIMs Agreement has been found by the developing countries to be standing in the way of sustained industrialization of developing countries, without exposing them to balance of payment shocks, by reducing substantially the policy space available to these countries.
Developed countries, on the other hand, have been arguing for a further expansion in the list of prohibited TRIMs.
Foreign Exchange Management Act - 1999
An Act to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
BE it enacted by Parliament in the Fiftieth Year of the Republic of India as follows:—
CHAPTER I
PRELIMINARY
Short title, extent, application and commencement.
1. (1) This Act may be called the Foreign Exchange Management Act, 1999.
(2) It extends to the whole of India.
(3) It shall also apply to all branches, offices and agencies outside India owned or controlled by a person resident in India and also to any contravention thereunder committed outside India by any person to whom this Act applies.
(4) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint:
Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.
Definitions
2. In this Act, unless the context otherwise requires,—
(a) "Adjudicating Authority" means an officer authorised under sub-section (1) of section 16;
(b) "Appellate Tribunal" means the Appellate Tribunal for Foreign Exchange established under section 18;
(c) "authorised person" means an authorised dealer, money changer, off-shore banking unit or any other person for the time being authorised under sub-section (1) of section 10 to deal in foreign exchange or foreign securities;
(d) "Bench" means a Bench of the Appellate Tribunal;
(e) "capital account transaction" means a transaction which alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India, and includes transactions referred to in sub-section (3) of section 6;
(f) "Chairperson" means the Chairperson of the Appellate Tribunal;
(g) "chartered accountant" shall have the meaning assigned to it in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949);
(h) "currency" includes all currency notes, postal notes, postal orders, money orders, cheques, drafts, travellers cheques, letters of credit, bills of exchange and promissory notes, credit cards or such other similar instruments, as may be notified by the Reserve Bank;
(i) "currency notes" means and includes cash in the form of coins and bank notes;
(j) "current account transaction" means a transaction other than a capital account transaction and without prejudice to the generality of the foregoing such transaction includes:-
(i) payments due in connection with foreign trade, other current business,services, and short-term banking and credit facilities in the ordinary course of business,
(ii) payments due as interest on loans and as net income from investments,
(iii) remittances for living expenses of parents, spouse and children residing abroad, and
(iv) expenses in connection with foreign travel, education and medical care of parents, spouse and children;
(k) "Director of Enforcement" means the Director of Enforcement appointed under sub-section (1) of section 36;
(l) "export", with its grammatical variations and cognate expressions, means—
(i) the taking out of India to a place outside India any goods,
(ii) provision of services from India to any person outside India;
(m) "foreign currency" means any currency other than Indian currency;
(n) "foreign exchange" means foreign currency and includes,—
(i) deposits, credits and balances payable in any foreign currency,
(ii) drafts, travellers cheques, letters of credit or bills of exchange, expressed or drawn in Indian currency but payable in any foreign currency,
(iii) drafts, travellers cheques, letters of credit or bills of exchange drawn by banks, institutions or persons outside India, but payable in Indian currency;
(o) "foreign security" means any security, in the form of shares, stocks, bonds, debentures or any other instrument denominated or expressed in foreign currency and includes securities expressed in foreign currency, but where redemption or any form of return such as interest or dividends is payable in Indian currency;
(p) "import", with its grammatical variations and cognate expressions, means bringing into India any goods or services;
(q) "Indian currency" means currency which is expressed or drawn in Indian rupees but does not include special bank notes and special one rupee notes issued under section 28A of the Reserve Bank of India Act, 1934 (2 of 1934);
(r) "legal practitioner" shall have the meaning assigned to it in clause (i) of sub-section (1) of section 2 of the Advocates Act, 1961 (25 of 1961);
(s) "Member" means a Member of the Appellate Tribunal and includes the Chairperson thereof;
(t) "notify" means to notify in the Official Gazette and the expression "notification" shall be construed accordingly;
(u) "person" includes—
(i) an individual,
(ii) a Hindu undivided family,
(iii) a company,
(iv) a firm,
(v) an association of persons or a body of individuals, whether incorporated or not,
(vi) every artificial juridical person, not falling within any of the preceding sub-clauses, and
(vii) any agency, office or branch owned or controlled by such person;
(v) "person resident in India" means—
(i) a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include—
(A) a person who has gone out of India or who stays outside India, in either case—
(a) for or on taking up employment outside India, or
(b) for carrying on outside India a business or vocation outside India, or
(c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;
(B) a person who has come to or stays in India, in either case, otherwise than—
(a) for or on taking up employment in India, or
(b) for carrying on in India a business or vocation in India, or
(c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;
(ii) any person or body corporate registered or incorporated in India,
(iii) an office, branch or agency in India owned or controlled by a person resident outside India,
(iv) an office, branch or agency outside India owned or controlled by a person resident in India;
(w) "person resident outside India" means a person who is not resident in India;
(x) "prescribed" means prescribed by rules made under this Act;
(y) "repatriate to India" means bringing into India the realised foreign exchange and—
(i) the selling of such foreign exchange to an authorised person in India in exchange for rupees, or
(ii) the holding of realised amount in an account with an authorised person in India to the extent notified by the Reserve Bank, and includes use of the realised amount for discharge of a debt or liability denominated in foreign exchange and the expression "repatriation" shall be construed accordingly;
(z) "Reserve Bank" means the Reserve Bank of India constituted under sub-section (1) of section 3 of the Reserve Bank of India Act, 1934 (2 of 1934);
(za) "security" means shares, stocks, bonds and debentures, Government securities as defined in the Public Debt Act, 1944 (18 of 1944), savings certificates to which the Government Savings Certificates Act, 1959 (46 of 1959) applies, deposit receipts in respect of deposits of securities and units of the Unit Trust of India established under sub-section (1) of section 3 of the Unit Trust of India Act, 1963 (52 of 1963) or of any mutual fund and includes certificates of title to securities, but does not include bills of exchange or promissory notes other than Government promissory notes or any other instruments which may be notified by the Reserve Bank as security for the purposes of this Act;
(zb) "service" means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, medical assistance, legal assistance, chit fund, real estate, transport, processing, supply of electrical or other energy, boarding or lodging or both, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service;
(zc) "Special Director (Appeals)" means an officer appointed under section 18;
(zd) "specify" means to specify by regulations made under this Act and the expression "specified" shall be construed accordingly;
(ze) "transfer" includes sale, purchase, exchange, mortgage, pledge, gift, loan or any other form of transfer of right, title, possession or lien.
CHAPTER II
Regulation And Management Of Foreign Exchange Dealing in foreign exchange, etc.
3. Save as otherwise provided in this Act, rules or regulations made thereunder, or with the general or special permission of the Reserve Bank, no person shall—
(a) deal in or transfer any foreign exchange or foreign security to any person not being an authorised person;
(b) make any payment to or for the credit of any person resident outside India in any manner;
(c) receive otherwise through an authorised person, any payment by order or on behalf of any person resident outside India in any manner;
Explanation.—For the purpose of this clause, where any person in, or resident in, India receives any payment by order or on behalf of any person resident outside India through any other person (including an authorised person) without a corresponding inward remittance from any place outside India, then, such person shall be deemed to have received such payment otherwise than through an authorised person;
(d) enter into any financial transaction in India as consideration for or in association with acquisition or creation or transfer of a right to acquire, any asset outside India by any person.
Explanation.—For the purpose of this clause, "financial transaction" means making any payment to, or for the credit of any person, or receiving any payment for, by order or on behalf of any person, or drawing, issuing or negotiating any bill of exchange or promissory note, or transferring any security or acknowledging any debt.
Holding of foreign exchange, etc.
4. Save as otherwise provided in this Act, no person resident in India shall acquire, hold, own, possess or transfer any foreign exchange, foreign security or any immovable property situated outside India.
Current account transactions.
5. Any person may sell or draw foreign exchange to or from an authorised person if such sale or drawal is a current account transaction:
Provided that the Central Government may, in public interest and in consultation with the Reserve Bank, impose such reasonable restrictions for current account transactions as may be prescribed.
Capital account transactions.
6. (1) Subject to the provisions of sub-section (2), any person may sell or draw foreign exchange to or from an authorised person for a capital account transaction.
(2) The Reserve Bank may, in consultation with the Central Government, specify—
(a) any class or classes of capital account transactions which are permissible;
(b) the limit up to which foreign exchange shall be admissible for such transactions :
Provided that the Reserve Bank shall not impose any restriction on the drawal of foreign exchange for payments due on account of amortization of loans or for depreciation of direct investments in the ordinary course of business.
(3) Without prejudice to the generality of the provisions of sub-section (2), the Reserve Bank may, by regulations, prohibit, restrict or regulate the following—
(a) transfer or issue of any foreign security by a person resident in India;
(b) transfer or issue of any security by a person resident outside India;
(c) transfer or issue of any security or foreign security by any branch, office or agency in India of a person resident outside India;
(d) any borrowing or lending in foreign exchange in whatever form or by whatever name called;
(e) any borrowing or lending in rupees in whatever form or by whatever name called between a person resident in India and a person resident outside India;
(f) deposits between persons resident in India and persons resident outside India;
(g) export, import or holding of currency or currency notes;
(h) transfer of immovable property outside India, other than a lease not exceeding five years, by a person resident in India;
(i) acquisition or transfer of immovable property in India, other than a lease not exceeding five years, by a person resident outside India;
(j) giving of a guarantee or surety in respect of any debt, obligation or other liability incurred—
(i) by a person resident in India and owed to a person resident outside India; or
(ii) by a person resident outside India.
(4) A person resident in India may hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India.
(5) A person resident outside India may hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if such currency, security or property was acquired, held or owned by such person when he was resident in India or inherited from a person who was resident in India.
(6) Without prejudice to the provisions of this section, the Reserve Bank may, by regulation, prohibit, restrict, or regulate establishment in India of a branch, office or other place of business by a person resident outside India, for carrying on any activity relating to such branch, office or other place of business.
Export of goods and services.
7. (1) Every exporter of goods shall—
(a) furnish to the Reserve Bank or to such other authority a declaration in such form and in such manner as may be specified, containing true and correct material particulars, including the amount representing the full export value or, if the full export value of the goods is not ascertainable at the time of export, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in a market outside India;
(b) furnish to the Reserve Bank such other information as may be required by the Reserve Bank for the purpose of ensuring the realisation of the export proceeds by such exporter.
(2) The Reserve Bank may, for the purpose of ensuring that the full export value of the goods or such reduced value of the goods as the Reserve Bank determines, having regard to the prevailing market conditions, is received without any delay, direct any exporter to comply with such requirements as it deems fit.
(3) Every exporter of services shall furnish to the Reserve Bank or to such other authorities a declaration in such form and in such manner as may be specified, containing the true and correct material particulars in relation to payment for such services.
Realisation and repatriation of foreign exchange.
8. Save as otherwise provided in this Act, where any amount of foreign exchange is due or has accrued to any person resident in India, such person shall take all reasonable steps to realise and repatriate to India such foreign exchange within such period and in such manner as may be specified by the Reserve Bank.
Exemption from realisation and repatriation in certain cases.
9. The provisions of sections 4 and 8 shall not apply to the following, namely:—
(a) possession of foreign currency or foreign coins by any person up to such limit as the Reserve Bank may specify;
(b) foreign currency account held or operated by such person or class of persons and the limit up to which the Reserve Bank may specify;
(c) foreign exchange acquired or received before the 8th day of July, 1947 or any income arising or accruing thereon which is held outside India by any person in pursuance of a general or special permission granted by the Reserve Bank;
(d) foreign exchange held by a person resident in India up to such limit as the Reserve Bank may specify, if such foreign exchange was acquired by way of gift or inheritance from a person referred to in clause (c), including any income arising therefrom;
(e) foreign exchange acquired from employment, business, trade, vocation, services, honorarium, gifts, inheritance or any other legitimate means up to such limit as the Reserve Bank may specify; and
(f) such other receipts in foreign exchange as the Reserve Bank may specify.
CHAPTER III
Authorised Person
10. (1) The Reserve Bank may, on an application made to it in this behalf, authorise any person to be known as authorised person to deal in foreign exchange or in foreign securities, as an authorised dealer, money changer or off-shore banking unit or in any other manner as it deems fit.
(2) An authorisation under this section shall be in writing and shall be subject to the conditions laid down therein.
(3) An authorisation granted under sub-section (1) may be revoked by the Reserve Bank at any time if the Reserve Bank is satisfied that—
(a) it is in public interest so to do; or
(b) the authorised person has failed to comply with the condition subject to which the authorisation was granted or has contravened any of the provisions of the Act or any rule, regulation, notification, direction or order made thereunder:
Provided that no such authorisation shall be revoked on any ground referred to in clause (b) unless the authorised person has been given a reasonable opportunity of making a representation in the matter.
(4) An authorised person shall, in all his dealings in foreign exchange or foreign security, comply with such general or special directions or orders as the Reserve Bank may, from time to time, think fit to give, and, except with the previous permission of the Reserve Bank, an authorised person shall not engage in any transaction involving any foreign exchange or foreign security which is not in conformity with the terms of his authorisation under this section.
(5) An authorised person shall, before undertaking any transaction in foreign exchange on behalf of any person, require that person to make such declaration and to give such information as will reasonably satisfy him that the transaction will not involve, and is not designed for the purpose of any contravention or evasion of the provisions of this Act or of any rule, regulation, notification, direction or order made thereunder, and where the said person refuses to comply with any such requirement or makes only unsatisfactory compliance therewith, the authorised person shall refuse in writing to undertake the transaction and shall, if he has reason to believe that any such contravention or evasion as aforesaid is contemplated by the person, report the matter to the Reserve Bank.
(6) Any person, other than an authorised person, who has acquired or purchased foreign exchange for any purpose mentioned in the declaration made by him to authorised person under sub-section (5) does not use it for such purpose or does not surrender it to authorised person within the specified period or uses the foreign exchange so acquired or purchased for any other purpose for which purchase or acquisition of foreign exchange is not permissible under the provisions of the Act or the rules or regulations or direction or order made thereunder shall be deemed to have committed contravention of the provisions of the Act for the purpose of this section.
Reserve Bank’s powers to issue directions to authorised person.
11. (1) The Reserve Bank may, for the purpose of securing compliance with the provisions of this Act and of any rules, regulations, notifications or directions made thereunder, give to the authorised persons any direction in regard to making of payment or the doing or desist from doing any act relating to foreign exchange or foreign security.
(2) The Reserve Bank may, for the purpose of ensuring the compliance with the provisions of this Act or of any rule, regulation, notification, direction or order made thereunder, direct any authorised person to furnish such information, in such manner, as it deems fit.
(3) Where any authorised person contravenes any direction given by the Reserve Bank under this Act or fails to file any return as directed by the Reserve Bank, the Reserve Bank may, after giving reasonable opportunity of being heard, impose on the authorised person a penalty which may extend to ten thousand rupees and in the case of continuing contravention with an additional penalty which may extend to two thousand rupees for every day during which such contravention continues.
Power of Reserve Bank to inspect authorised person.
12. (1) The Reserve Bank may, at any time, cause an inspection to be made, by any officer of the Reserve Bank specially authorised in writing by the Reserve Bank in this behalf, of the business of any authorised person as may appear to it to be necessary or expedient for the purpose of—
(a) verifying the correctness of any statement, information or particulars furnished to the Reserve Bank;
(b) obtaining any information or particulars which such authorised person has failed to furnish on being called upon to do so;
(c) securing compliance with the provisions of this Act or of any rules, regulations, directions or orders made thereunder.
(2) It shall be the duty of every authorised person, and where such person is a company or a firm, every director, partner or other officer of such company or firm, as the case may be, to produce to any officer making an inspection under sub-section (1), such books, accounts and other documents in his custody or power and to furnish any statement or information relating to the affairs of such person, company or firm as the said officer may require within such time and in such manner as the said officer may direct.
CHAPTER IV
Contravention And Penalties
Penalties
13. (1) If any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorisation is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such contravention is a continuing one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues.
(2) Any Adjudicating Authority adjudging any contravention under sub-section (1), may, if he thinks fit in addition to any penalty which he may impose for such contravention direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government and further direct that the foreign exchange holdings, if any of the persons committing the contraventions or any part thereof, shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf.
Explanation.—For the purposes of this sub-section, "property" in respect of which contravention has taken place, shall include—
(a) deposits in a bank, where the said property is converted into such deposits;
(b) Indian currency, where the said property is converted into that currency; and
(c) any other property which has resulted out of the conversion of that property.
Enforcement of the orders of Adjudicating Authority.
14. (1) Subject to the provisions of sub-section (2) of section 19, if any person fails to make full payment of the penalty imposed on him under section 13 within a period of ninety days from the date on which the notice for payment of such penalty is served on him, he shall be liable to civil imprisonment under this section.
(2) No order for the arrest and detention in civil prison of a defaulter shall be made unless the Adjudicating Authority has issued and served a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and to show cause why he should not be committed to the civil prison, and unless the Adjudicating Authority, for reasons in writing, is satisfied—
(a) that the defaulter, with the object or effect of obstructing the recovery of penalty, has after the issue of notice by the Adjudicating Authority, dishonestly transferred concealed, or removed any part of his property, or
(b) that the defaulter has, or has had since the issuing of notice by the Adjudicating Authority, the means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same.
(3) Notwithstanding anything contained in sub-section (1), a warrant for the arrest of the defaulter may be issued by the Adjudicating Authority if the Adjudicating Authority is satisfied, by affidavit or otherwise, that with the object or effect of delaying the execution of the certificate the defaulter is likely to abscond or leave the local limits of the jurisdiction of the Adjudicating Authority.
(4) Where appearance is not made pursuant to a notice issued and served under sub-section (1), the Adjudicating Authority may issue a warrant for the arrest of the defaulter.
(5) A warrant of arrest issued by the Adjudicating Authority under sub-section (3) or sub-section
(4) may also be executed by any other Adjudicating Authority within whose jurisdiction the defaulter may for the time being be found.
(6) Every person arrested in pursuance of a warrant of arrest under this section shall be brought before the Adjudicating Authority issuing the warrant as soon as practicable and in any event within twenty-four hours of his arrest (exclusive of the time required for the journey):
Provided that, if the defaulter pays the amount entered in the warrant of arrest as due and the costs of the arrest to the officer arresting him, such officer shall at once release him.
Explanation.—For the purposes of this sub-section, where the defaulter is a Hindu undivided family, the karta thereof shall be deemed to be the defaulter.
(7) When a defaulter appears before the Adjudicating Authority pursuant to a notice to show cause or is brought before the Adjudicating Authority under this section, the Adjudicating Authority shall give the defaulter an opportunity showing cause why he should not be committed to the civil prison.
(8) Pending the conclusion of the inquiry, the Adjudicating Authority may, in his discretion, order the defaulter to be detained in the custody of such officer as the Adjudicating Authority may think fit or release him on his furnishing the security to the satisfaction of the Adjudicating Authority for his appearance as and when required.
(9) Upon the conclusion of the inquiry, the Adjudicating Authority may make an order for the detention of the defaulter in the civil prison and shall in that event cause him to be arrested if he is not already under arrest:
Provided that in order to give a defaulter an opportunity of satisfying the arrears, the Adjudicating Authority may, before making the order of detention, leave the defaulter in the custody of the officer arresting him or of any other officer for a specified period not exceeding fifteen days, or release him on his furnishing security to the satisfaction of the Adjudicating Authority for his appearance at the expiration of the specified period if the arrears are not satisfied.
(10) When the Adjudicating Authority does not make an order of detention under sub-section (9), he shall, if the defaulter is under arrest, direct his release.
(11) Every person detained in the civil prison in execution of the certificate may be so detained,—
(a) where the certificate is for a demand of an amount exceeding rupees one crore, up to three years, and
(b) in any other case, up to six months:
Provided that he shall be released from such detention on the amount mentioned in the warrant for his detention being paid to the officer-in-charge of the civil prison.
(12) A defaulter released from detention under this section shall not, merely by reason of his release, be discharged from his liability for the arrears, but he shall not be liable to be arrested under the certificate in execution of which he was detained in the civil prison.
(13) A detention order may be executed at any place in India in the manner provided for the execution of warrant of arrest under the Code of Criminal Procedure, 1973 (2 of 1974).
Power to compound contravention.
15. (1) Any contravention under section 13 may, on an application made by theperson committing such contravention, be compounded within one hundred and eighty days from the date of receipt of application by the Director of Enforcement or such other officers of the Directorate of Enforcement and Officers of the Reserve Bank as may be authorised in this behalf by the Central Government in such manner as may be prescribed.
(2) Where a contravention has been compounded under sub-section (1), no proceeding or further proceeding, as the case may be, shall be initiated or continued, as the case may be, against the person committing such contravention under that section, in respect of the contravention so compounded.
CHAPTER V
CAdjudication And Appeal
Appointment of Adjudicating Authority.
16. (1) For the purpose of adjudication under section 13, the Central Govern-
ment may, by an order published in the Official Gazette, appoint as many officers of the Central Government as it may think fit, as the Adjudicating Authorities for holding an inquiry in the manner prescribed after giving the person alleged to have committed contravention under section 13, against whom a complaint has been made under sub-section
(2) (hereinafter in this section referred to as the said person) a reasonable opportunity of being heard for the purpose of imposing any penalty:
Provided that where the Adjudicating Authority is of opinion that the said person is likely to abscond or is likely to evade in any manner, the payment of penalty, if levied, it may direct the said person to furnish a bond or guarantee for such amount and subject to such conditions as it may deem fit.
(2) The Central Government shall, while appointing the Adjudicating Authorities under sub-section (1), also specify in the order published in the Official Gazette, their respective jurisdictions.
(3) No Adjudicating Authority shall hold an enquiry under sub-section (1) except upon a complaint in writing made by any officer authorised by a general or special order by the Central Government.
(4) The said person may appear either in person or take the assistance of a legal practitioner or a chartered accountant of his choice for presenting his case before the Adjudicating Authority.
(5) Every Adjudicating Authority shall have the same powers of a civil court which are conferred on the Appellate Tribunal under sub-section (2) of section 28 and—
(a) all proceedings before it shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code (45 of 1860);
(b) shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974).
(6) Every Adjudicating Authority shall deal with the complaint under sub-section (2) as expeditiously as possible and endeavour shall be made to dispose of the complaint finally within one year from the date of receipt of the complaint :
Provided that where the complaint cannot be disposed off within the said period, the Adjudicating Authority shall record periodically the reasons in writing for not disposing off the complaint within the said period.
Appeal to Special Director (Appeals).
17. (1) The Central Government shall, by notification, appoint one or more Special Directors (Appeals) to hear appeals against the orders of the Adjudicating Authorities under this section and shall also specify in the said notification the matter and places in relation to which the Special Director (Appeals) may exercise jurisdiction.
(2) Any person aggrieved by an order made by the Adjudicating Authority, being an Assistant Director of Enforcement or a Deputy Director of Enforcement, may prefer an appeal to the Special Director (Appeals).
(3) Every appeal under sub-section (1) shall be filed within forty-five days from the date on which the copy of the order made by the Adjudicating Authority is received by the aggrieved person and it shall be in such form, verified in such manner and be accompanied by such fee as may be prescribed :
Provided that the Special Director (Appeals) may entertain an appeal after the expiry of the said period of forty-five days, if he is satisfied that there was sufficient cause for not filing it within that period.
(4) On receipt of an appeal under sub-section (1), the Special Director (Appeals) may after giving the parties to the appeal an opportunity of being heard, pass such order thereon as he thinks fit confirming, modifying or setting aside the order appealed against.
(5) The Special Director (Appeals) shall send a copy of every order made by him to the parties to appeal and to the concerned Adjudicating Authority.
(6) The Special Director (Appeals) shall have the same powers of a civil court which are conferred on the Appellate Tribunal under sub-section (2) of section 28 and—
(a) all proceedings before him shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code (45 of 1860);
(b) shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974).
Establishment of Appellate Tribunal.
18. The Central Government shall, by notification, establish an Appellate Tribunal to be known as the Appellate Tribunal for Foreign Exchange to hear appeals against the orders of the Adjudicating Authorities and the Special Director (Appeals) under this Act.
Appeal to Appellate Tribunal.
19. (1) Save as provided in sub-section (2), the Central Government or any person aggrieved by an order made by an Adjudicating Authority, other than those referred to sub-section (1) of section 17, or the Special Director (Appeals), may prefer an appeal to the Appellate Tribunal:
Provided that any person appealing against the order of the Adjudicating Authority or the Special Director (Appeals) levying any penalty, shall while filing the appeal, deposit the amount of such penalty with such authority as may be notified by the Central Government :
Provided further that where in any particular case, the Appellate Tribunal is of the opinion that the deposit of such penalty would cause undue hardship to such person, the Appellate Tribunal may dispense with such deposit subject to such conditions as it may deem fit to impose so as to safeguard the realisation of penalty.
(2) Every appeal under sub-section (1) shall be filed within a period of forty-five days from the date on which a copy of the order made by the Adjudicating Authority or the Special Director (Appeals) is received by the aggrieved person or by the Central Government and it shall be in such form, verified in such manner and be accompanied by such fee as may be prescribed :
Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period.
(3) On receipt of an appeal under sub-section (1), the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against.
(4) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned Adjudicating Authority or the Special Director (Appeals), as the case may be.
(5) The appeal filed before the Appellate Tribunal under sub-section (1) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within one hundred and eighty days from the date of receipt of the appeal:
Provided that where any appeal could not be disposed of within the said period of one hundred and eighty days, the Appellate Tribunal shall record its reasons in writing for not disposing of the appeal within the said period.
(6) The Appellate Tribunal may, for the purpose of examining the legality, propriety or correctness of any order made by the Adjudicating Authority under section 16 in relation to any proceeding, on its own motion or otherwise, call for the records of such proceedings and make such order in the case as it thinks fit.
Composition of Appellate Tribunal.
20. (1) The Appellate Tribunal shall consist of a Chairperson and such number of Members as the Central Government may deem fit.
(2) Subject to the provisions of this Act,—
(a) the jurisdiction of the Appellate Tribunal may be exercised by Benches thereof;
(b) a Bench may be constituted by the Chairperson with one or more Members as the Chairperson may deem fit;
(c) the Benches of the Appellate Tribunal shall ordinarily sit at New Delhi and at such other places as the Central Government may, in consultation with the Chairperson, notify;
(d) the Central Government shall notify the areas in relation to which each Bench of the Appellate Tribunal may exercise jurisdiction.
(3) Notwithstanding anything contained in sub-section (2), the Chairperson may transfer a Member from one Bench to another Bench.
(4) If at any stage of the hearing of any case or matter it appears to the Chairperson or a Member that the case or matter is of such a nature that it ought to be heard by a Bench consisting of two Members, the case or matter may be transferred by the Chairperson or, as the case may be, referred to him for transfer, to such Bench as the Chairperson may deem fit.
Qualifications for appointment of Chairperson, Member and Special Director (Appeals).
21. (1) A person shall not be qualified for appointment as the Chairperson or a Member unless he—
(a) in the case of Chairperson, is or has been, or is qualified to be, a Judge of a High Court; and
(b) in the case of a Member, is or has been, or is qualified to be, a District Judge.
(2) A person shall not be qualified for appointment as a Special Director (Appeals) unless he—
(a) has been a member of the Indian Legal Service and has held a post in Grade I of that Service; or
(b) has been a member of the Indian Revenue Service and has held a post equivalent to a Joint Secretary to the Government of India.
Term of office.
22. The Chairperson and every other Member shall hold office as such for a term of five years from the date on which he enters upon his office :
Provided that no Chairperson or other Member shall hold office as such after he has attained,—
(a) in the case of the Chairperson, the age of sixty-five years;
(b) in the case of any other Member, the age of sixty-two years.
Terms and conditions of service.
23. The salary and allowances payable to and the other terms and conditions of service of the Chairperson, other Members and the Special Director (Appeals) shall be such as may be prescribed:
Provided that neither the salary and allowances nor the other terms and conditions of service of the Chairperson or a Member shall be varied to his disadvantage after appointment.
Vacancies.
24. If, for reason other than temporary absence, any vacancy occurs in the office of the Chairperson or a Member, the Central Government shall appoint another person in accordance with the provisions of this Act to fill the vacancy and the proceedings may be continued before the Appellate Tribunal from the stage at which the vacancy is filled.
Resignation and removal.
25. (1) The Chairperson or a Member may, by notice in writing under his hand addressed to the Central Government, resign his office:
Provided that the Chairperson or a Member shall, unless he is permitted by the Central Government to relinquish his office sooner, continue to hold office until the expiry of three months from the date of receipt of such notice or until a person duly appointed as his successor enters upon his office or until the expiry of term of office, whichever is the earliest.
(2) The Chairperson or a Member shall not be removed from his office except by an order by the Central Government on the ground of proved misbehaviour or incapacity after an inquiry made by such person as the President may appoint for this purpose in which the Chairperson or a Member concerned has been informed of the charges against him and given a reasonable opportunity of being heard in respect of such charges.
Member to act as Chairperson in certain circumstances.
26. (1) In the event of the occurrence of any vacancy in the office of the Chairperson by reason of his death, resignation or otherwise, the senior-most Member shall act as the Chairperson until the date on which a new Chairperson, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office.
(2) When the Chairperson is unable to discharge his functions owing to absence, illness or any other cause, the seniormost Member shall discharge the functions of the Chairperson until the date on which the Chairperson resumes his duties.
Staff of Appellate Tribunal and Special Director (Appeals).
27. (1) The Central Government shall provide the Appellate Tribunal and the Special Director (Appeals) with such officers and employees as it may deem fit.
(2) The officers and employees of the Appellate Tribunal and office of the Special Director (Appeals) shall discharge their functions under the general superintendence of the Chairperson and the Special Director (Appeals), as the case may be.
(3) The salaries and allowances and other conditions of service of the officers and employees of the Appellate Tribunal and office of the Special Director (Appeals) shall be such as may be prescribed.
Procedure and powers of Appellate Tribunal and Special Director (Appeals)
28. (1) The Appellate Tribunal and the Special Director (Appeals) shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908) but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, the Appellate Tribunal and the Special Director (Appeals) shall have powers to regulate its own procedure.
(2) The Appellate Tribunal and the Special Director (Appeals) shall have, for the purposes of discharging its functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908); while trying a suit, in respect of the following matters, namely:—
(a) summoning and enforcing the attendance of any person and examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872 (1 of 1872) requisitioning any public record or document or copy of such record or document from any office;
(e) issuing commissions for the examination of witnesses or documents;
(f) reviewing its decisions;
(g) dismissing a representation of default or deciding it ex parte;
(h) setting aside any order of dismissal of any representation for default or any order passed by it ex parte; and
(i) any other matter which may be prescribed by the Central Government.
(3) An order made by the Appellate Tribunal or the Special Director (Appeals) under this Act shall be executable by the Appellate Tribunal or the Special Director (Appeals) as a decree of civil court and, for this purpose, the Appellate Tribunal and the Special Director (Appeals) shall have all the powers of a civil court.
(4) Notwithstanding anything contained in sub-section (3), the Appellate Tribunal or the Special Director (Appeals) may transmit any order made by it to a civil court having local jurisdiction and such civil court shall execute the order as if it were a decree made by that court.
(5) All proceedings before the Appellate Tribunal and the Special Director (Appeals) shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code (45 of 1860) and the Appellate Tribunal shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974)
Distribution of business amongst Benches.
29. Where Benches are constituted, the Chairperson may, from time to time, by notification, make provisions as to the distribution of the business of the Appellate Tribunal amongst the Benches and also provide for the matters which may be dealt with by each Bench.
Power of Chairperson to transfer cases.
30. On the application of any of the parties and after notice to the parties, and after hearing such of them as he may desire to be heard, or on his own motion without such notice, the Chairperson may transfer any case pending before one Bench, for disposal, to any other Bench.
Decision to be by majority.
31. If the Members of a Bench consisting of two Members differ in opinion on any point, they shall state the point or points on which they differ, and make a reference to the Chairperson who shall either hear the point or points himself or refer the case for hearing on such point or points by one or more of the other Members of the Appellate Tribunal and such point or points shall be decided according to the opinion of the majority of the Members of the Appellate Tribunal who have heard the case, including those who first heard it.
Right of appellant to take assistance of legal practitioner or chartered accountant and of Government, to appoint presenting officers.
32. (1) A person preferring an appeal to the Appellate Tribunal or the Special Director (Appeals) under this Act may either appear in person or take the assistance of a legal practitioner or a chartered accountant of his choice to present his case before the Appellate Tribunal or the Special Director (Appeals), as the case may be.
(2) The Central Government may authorise one or more legal practitioners or chartered accountants or any of its officers to act as presenting officers and every person so authorised may present the case with respect to any appeal before the Appellate Tribunal or the Special Director (Appeals), as the case may be.
Members, etc. to be public servants.
33. The Chairperson, Members and other officers and employees of the Appellate Tribunal, the Special Director (Appeals) and the Adjudicating Authority shall be deemed to be public servants within the meaning of section 21 of the Indian Penal Code (45 of 1860).
Civil court not to have jurisdiction.
34. No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which an Adjudicating Authority or the Appellate Tribunal or the Special Director (Appeals) is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.
Appeal to High Court.
35. Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal on any question of law arising out of such order:
Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days.
Explanation.—In this section "High Court" means—
(a) the High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain; and
(b) where the Central Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one respondent, any of the respondents, ordinarily resides or carries on business or personally works for gain.
CHAPTER VI
Directorate Of Enforcement
Directorate of Enforcement.
36. (1) The Central Government shall establish a Directorate of Enforcement with a Director and such other officers or class of officers as it thinks fit, who shall be called officers of Enforcement, for the purposes of this Act.
(2) Without prejudice to provisions of sub-section (1), the Central Government may authorise the Director of Enforcement or an Additional Director of Enforcement or a Special Director of Enforcement or a Deputy Director of Enforcement to appoint officers of Enforcement below the rank of an Assistant Director of Enforcement.
(3) Subject to such conditions and limitations as the Central Government may impose, an officer of Enforcement may exercise the powers and discharge the duties conferred or imposed on him under this Act.
Power of search, seizure, etc.
37. (1) The Director of Enforcement and other officers of Enforcement, not below the rank of an Assistant Director, shall take up for investigation the contravention referred to in section 13.
(2) Without prejudice to the provisions of sub-section (1), the Central Government may also, by notification, authorise any officer or class of officers in the Central Government, State Government or the Reserve Bank, not below the rank of an Under Secretary to the Government of India to investigate any contravention referred to in section 13.
(3) The officers referred to in sub-section (1) shall exercise the like powers which are conferred on income-tax authorities under the Income-tax Act, 1961 (43 of 1961) and shall exercise such powers, subject to such limitations laid down under that Act.
Empowering other officers.
38. (1) The Central Government may, by order and subject to such conditions and limitations as it thinks fit to impose, authorise any officer of customs or any central excise officer or any police officer or any other officer of the Central Government or a State Government to exercise such of the powers and discharge such of the duties of the Director of Enforcement or any other officer of Enforcement under this Act as may be stated in the order.
(2) The officers referred to in sub-section (1) shall exercise the like powers which are conferred on the income-tax authorities under the Income-tax Act, 1961 (43 of 1961), subject to such conditions and limitations as the Central Government may impose.
CHAPTER VII
Miscellaneous
Presumption as to documents in certain cases.
39. Where any document—
(i) is produced or furnished by any person or has been seized from the custody or control of any person, in either case, under this Act or under any other law; or
(ii) has been received from any place outside India (duly authenticated by such authority or person and in such manner as may be prescribed) in the course of investigation of any contravention under this Act alleged to have been committed by any person, and such document is tendered in any proceeding under this Act in evidence against him, or against him and any other person who is proceeded against jointly with him, the court or the Adjudicating Authority, as the case may be, shall—
(a) presume, unless the contrary is proved, that the signature and every other part of such document which purports to be in the handwriting of any particular person or which the court may reasonably assume to have been signed by, or to be in the handwriting of, any particular person, is in that person’s handwriting, and in the case of a document executed or attested, that it was executed or attested by the person by whom it purports to have been so executed or attested;
(b) admit the document in evidence notwithstanding that it is not duly stamped, if such document is otherwise admissible in evidence;
(c) in a case falling under clause (i), also presume, unless the contrary is proved, the truth of the contents of such document.
Suspension of operation of this Act.
40. (1) If the Central Government is satisfied that circumstances have arisen rendering it necessary that any permission granted or restriction imposed by this Act should cease to be granted or imposed, or if it considers necessary or expedient so to do in public interest, the Central Government may, by notification, suspend or relax to such extent either indefinitely or for such period as may be notified, the operation of all or any of the provisions of this Act.
(2) Where the operation of any provision of this Act has under sub-section (1) been suspended or relaxed indefinitely, such suspension or relaxation may, at any time while this Act remains in force, be removed by the Central Government by notification.
(3) Every notification issued under this section shall be laid, as soon as may be after it is issued, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the notification or both Houses agree that the notification should not be issued, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that notification.
Power of Central Government to give directions.
41. For the purposes of this Act, the Central Government may, from time to time, give to the Reserve Bank such general or special directions as it thinks fit, and the Reserve Bank shall, in the discharge of its functions under this Act, comply with any such directions.
Contravention by companies.
42. (1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly :
Provided that nothing contained in this sub-section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised due diligence to prevent such contravention.
(2) Notwithstanding anything contained in sub-section (1), where a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly.
Explanation.—For the purposes of this section—
(i) "company" means any body corporate and includes a firm or other association of individuals; and
(ii) "director", in relation to a firm, means a partner in the firm.
Death or insolvency in certain cases.
43. Any right, obligation, liability, proceeding or appeal arising in relation to the provisions of section 13 shall not abate by reason of death or insolvency of the person liable under that section and upon such death or insolvency such rights and obligations shall devolve on the legal representative of such person or the official receiver or the official assignee, as the case may be :
Provided that a legal representative of the deceased shall be liable only to the extent of the inheritance or estate of the deceased.
Bar of legal proceedings.
44. No suit, prosecution or other legal proceeding shall lie against the Central Government or the Reserve Bank or any officer of that Government or of the Reserve Bank or any other person exercising any power or discharging any functions or performing any duties under this Act, for anything in good faith done or intended to be done under this Act or any rule, regulation, notification, direction or order made thereunder.
Removal of difficulties.
45. (1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, do anything not inconsistent with the provisions of this Act for the purpose of removing the difficulty:
Provided that no such order shall be made under this section after the expiry of two years from the commencement of this Act.
(2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament.
Power to make rules.
46. (1) The Central Government may, by notification, make rules to carry out the provisions of this Act.
(2) Without prejudice to the generality of the foregoing power, such rules may provide for,—
(a) the imposition of reasonable restrictions on current account transactions under section 5;
(b) the manner in which the contravention may be compounded under sub-section (1) of section 15;
(c) the manner of holding an inquiry by the Adjudicating Authority under sub-section (1) of section 16;
(d) the form of appeal and fee for filing such appeal under sections 17 and 19;
(e) the salary and allowances payable to and the other terms and conditions of service of the Chairperson and other Members of the Appellate Tribunal and the Special Director (Appeals) under section 23;
(f) the salaries and allowances and other conditions of service of the officers and employees of the Appellate Tribunal and the office of the Special Director (Appeals) under sub-section (3) of section 27;
(g) the additional matters in respect of which the Appellate Tribunal and the Special Director (Appeals) may exercise the powers of civil court under clause (i) of sub-section (2) of section 28;
(h) the authority or person and the manner in which any document may be authenticated under clause (ii) of section 39; and
(i) any other matter which is required to be, or may be, prescribed.
Power to make regulations.
47. (1) The Reserve Bank may, by notification, make regulations to carry out the provisions of this Act and the rules made thereunder.
(2) Without prejudice to the generality of the foregoing power, such regulations may provide for,—
(a) the permissible classes of capital account transactions, the limits of admissibility of foreign exchange for such transactions, and the prohibition, restriction or regulation of certain capital account transactions under section 6;
(b) the manner and the form in which the declaration is to be furnished under clause (a) of sub-section (1) of section 7;
(c) the period within which and the manner of repatriation of foreign exchange under section 8;
(d) the limit up to which any person may possess foreign currency or foreign coins under clause (a) of section 9;
(e) the class of persons and the limit up to which foreign currency account may be held or operated under clause (b) of section 9;
(f) the limit up to which foreign exchange acquired may be exempted under clause (d) of section 9;
(g) the limit up to which foreign exchange acquired may be retained under clause (e) of section 9;
(h) any other matter which is required to be, or may be, specified.
Rules and regulations to be laid before Parliament.
48. Every rule and regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation, or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation.
Repeal and saving.
49. (1) The Foreign Exchange Regulation Act, 1973 (46 of 1973) is hereby repealed and the Appellate Board constituted under sub-section (1) of section 52 of the said Act (hereinafter referred to as the repealed Act) shall stand dissolved.
(2) On the dissolution of the said Appellate Board, the person appointed as Chairman of the Appellate Board and every other person appointed as Member and holding office as such immediately before such date shall vacate their respective offices and no such Chairman or other person shall be entitled to claim any compensation for the premature termination of the term of his office or of any contract of service.
(3) Notwithstanding anything contained in any other law for the time being in force, no court shall take cognizance of an offence under the repealed Act and no adjudicating officer shall take notice of any contravention under section 51 of the repealed Act after the expiry of a period of two years from the date of the commencement of this Act.
(4) Subject to the provisions of sub-section (3) all offences committed under the repealed Act shall continue to be governed by the provisions of the repealed Act as if that Act had not been repealed.
(5) Notwithstanding such repeal,—
(a) anything done or any action taken or purported to have been done or taken including any rule, notification, inspection, order or notice made or issued or any appointment, confirmation or declaration made or any licence, permission, authorization or exemption granted or any document or instrument executed or any direction given under the Act hereby repealed shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act;
(b) any appeal preferred to the Appellate Board under sub-section (2) of section 52 of the repealed Act but not disposed of before the commencement of this Act shall stand transferred to and shall be disposed of by the Appellate Tribunal constituted under this Act;
(c) every appeal from any decision or order of the Appellate Board under sub-section (3) or sub-section (4) of section 52 of the repealed Act shall, if not filed before the commencement of this Act, be filed before the High Court within a period of sixty days of such commencement :
Provided that the High Court may entertain such appeal after the expiry of the said period of sixty days if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period.
(6) Save as otherwise provided in sub-section (3), the mention of particular matters in sub-sections (2), (4) and (5) shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 (10 of 1897) with regard to the effect of repeal.
BE it enacted by Parliament in the Fiftieth Year of the Republic of India as follows:—
CHAPTER I
PRELIMINARY
Short title, extent, application and commencement.
1. (1) This Act may be called the Foreign Exchange Management Act, 1999.
(2) It extends to the whole of India.
(3) It shall also apply to all branches, offices and agencies outside India owned or controlled by a person resident in India and also to any contravention thereunder committed outside India by any person to whom this Act applies.
(4) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint:
Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.
Definitions
2. In this Act, unless the context otherwise requires,—
(a) "Adjudicating Authority" means an officer authorised under sub-section (1) of section 16;
(b) "Appellate Tribunal" means the Appellate Tribunal for Foreign Exchange established under section 18;
(c) "authorised person" means an authorised dealer, money changer, off-shore banking unit or any other person for the time being authorised under sub-section (1) of section 10 to deal in foreign exchange or foreign securities;
(d) "Bench" means a Bench of the Appellate Tribunal;
(e) "capital account transaction" means a transaction which alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India, and includes transactions referred to in sub-section (3) of section 6;
(f) "Chairperson" means the Chairperson of the Appellate Tribunal;
(g) "chartered accountant" shall have the meaning assigned to it in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949);
(h) "currency" includes all currency notes, postal notes, postal orders, money orders, cheques, drafts, travellers cheques, letters of credit, bills of exchange and promissory notes, credit cards or such other similar instruments, as may be notified by the Reserve Bank;
(i) "currency notes" means and includes cash in the form of coins and bank notes;
(j) "current account transaction" means a transaction other than a capital account transaction and without prejudice to the generality of the foregoing such transaction includes:-
(i) payments due in connection with foreign trade, other current business,services, and short-term banking and credit facilities in the ordinary course of business,
(ii) payments due as interest on loans and as net income from investments,
(iii) remittances for living expenses of parents, spouse and children residing abroad, and
(iv) expenses in connection with foreign travel, education and medical care of parents, spouse and children;
(k) "Director of Enforcement" means the Director of Enforcement appointed under sub-section (1) of section 36;
(l) "export", with its grammatical variations and cognate expressions, means—
(i) the taking out of India to a place outside India any goods,
(ii) provision of services from India to any person outside India;
(m) "foreign currency" means any currency other than Indian currency;
(n) "foreign exchange" means foreign currency and includes,—
(i) deposits, credits and balances payable in any foreign currency,
(ii) drafts, travellers cheques, letters of credit or bills of exchange, expressed or drawn in Indian currency but payable in any foreign currency,
(iii) drafts, travellers cheques, letters of credit or bills of exchange drawn by banks, institutions or persons outside India, but payable in Indian currency;
(o) "foreign security" means any security, in the form of shares, stocks, bonds, debentures or any other instrument denominated or expressed in foreign currency and includes securities expressed in foreign currency, but where redemption or any form of return such as interest or dividends is payable in Indian currency;
(p) "import", with its grammatical variations and cognate expressions, means bringing into India any goods or services;
(q) "Indian currency" means currency which is expressed or drawn in Indian rupees but does not include special bank notes and special one rupee notes issued under section 28A of the Reserve Bank of India Act, 1934 (2 of 1934);
(r) "legal practitioner" shall have the meaning assigned to it in clause (i) of sub-section (1) of section 2 of the Advocates Act, 1961 (25 of 1961);
(s) "Member" means a Member of the Appellate Tribunal and includes the Chairperson thereof;
(t) "notify" means to notify in the Official Gazette and the expression "notification" shall be construed accordingly;
(u) "person" includes—
(i) an individual,
(ii) a Hindu undivided family,
(iii) a company,
(iv) a firm,
(v) an association of persons or a body of individuals, whether incorporated or not,
(vi) every artificial juridical person, not falling within any of the preceding sub-clauses, and
(vii) any agency, office or branch owned or controlled by such person;
(v) "person resident in India" means—
(i) a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include—
(A) a person who has gone out of India or who stays outside India, in either case—
(a) for or on taking up employment outside India, or
(b) for carrying on outside India a business or vocation outside India, or
(c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;
(B) a person who has come to or stays in India, in either case, otherwise than—
(a) for or on taking up employment in India, or
(b) for carrying on in India a business or vocation in India, or
(c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;
(ii) any person or body corporate registered or incorporated in India,
(iii) an office, branch or agency in India owned or controlled by a person resident outside India,
(iv) an office, branch or agency outside India owned or controlled by a person resident in India;
(w) "person resident outside India" means a person who is not resident in India;
(x) "prescribed" means prescribed by rules made under this Act;
(y) "repatriate to India" means bringing into India the realised foreign exchange and—
(i) the selling of such foreign exchange to an authorised person in India in exchange for rupees, or
(ii) the holding of realised amount in an account with an authorised person in India to the extent notified by the Reserve Bank, and includes use of the realised amount for discharge of a debt or liability denominated in foreign exchange and the expression "repatriation" shall be construed accordingly;
(z) "Reserve Bank" means the Reserve Bank of India constituted under sub-section (1) of section 3 of the Reserve Bank of India Act, 1934 (2 of 1934);
(za) "security" means shares, stocks, bonds and debentures, Government securities as defined in the Public Debt Act, 1944 (18 of 1944), savings certificates to which the Government Savings Certificates Act, 1959 (46 of 1959) applies, deposit receipts in respect of deposits of securities and units of the Unit Trust of India established under sub-section (1) of section 3 of the Unit Trust of India Act, 1963 (52 of 1963) or of any mutual fund and includes certificates of title to securities, but does not include bills of exchange or promissory notes other than Government promissory notes or any other instruments which may be notified by the Reserve Bank as security for the purposes of this Act;
(zb) "service" means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, medical assistance, legal assistance, chit fund, real estate, transport, processing, supply of electrical or other energy, boarding or lodging or both, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service;
(zc) "Special Director (Appeals)" means an officer appointed under section 18;
(zd) "specify" means to specify by regulations made under this Act and the expression "specified" shall be construed accordingly;
(ze) "transfer" includes sale, purchase, exchange, mortgage, pledge, gift, loan or any other form of transfer of right, title, possession or lien.
CHAPTER II
Regulation And Management Of Foreign Exchange Dealing in foreign exchange, etc.
3. Save as otherwise provided in this Act, rules or regulations made thereunder, or with the general or special permission of the Reserve Bank, no person shall—
(a) deal in or transfer any foreign exchange or foreign security to any person not being an authorised person;
(b) make any payment to or for the credit of any person resident outside India in any manner;
(c) receive otherwise through an authorised person, any payment by order or on behalf of any person resident outside India in any manner;
Explanation.—For the purpose of this clause, where any person in, or resident in, India receives any payment by order or on behalf of any person resident outside India through any other person (including an authorised person) without a corresponding inward remittance from any place outside India, then, such person shall be deemed to have received such payment otherwise than through an authorised person;
(d) enter into any financial transaction in India as consideration for or in association with acquisition or creation or transfer of a right to acquire, any asset outside India by any person.
Explanation.—For the purpose of this clause, "financial transaction" means making any payment to, or for the credit of any person, or receiving any payment for, by order or on behalf of any person, or drawing, issuing or negotiating any bill of exchange or promissory note, or transferring any security or acknowledging any debt.
Holding of foreign exchange, etc.
4. Save as otherwise provided in this Act, no person resident in India shall acquire, hold, own, possess or transfer any foreign exchange, foreign security or any immovable property situated outside India.
Current account transactions.
5. Any person may sell or draw foreign exchange to or from an authorised person if such sale or drawal is a current account transaction:
Provided that the Central Government may, in public interest and in consultation with the Reserve Bank, impose such reasonable restrictions for current account transactions as may be prescribed.
Capital account transactions.
6. (1) Subject to the provisions of sub-section (2), any person may sell or draw foreign exchange to or from an authorised person for a capital account transaction.
(2) The Reserve Bank may, in consultation with the Central Government, specify—
(a) any class or classes of capital account transactions which are permissible;
(b) the limit up to which foreign exchange shall be admissible for such transactions :
Provided that the Reserve Bank shall not impose any restriction on the drawal of foreign exchange for payments due on account of amortization of loans or for depreciation of direct investments in the ordinary course of business.
(3) Without prejudice to the generality of the provisions of sub-section (2), the Reserve Bank may, by regulations, prohibit, restrict or regulate the following—
(a) transfer or issue of any foreign security by a person resident in India;
(b) transfer or issue of any security by a person resident outside India;
(c) transfer or issue of any security or foreign security by any branch, office or agency in India of a person resident outside India;
(d) any borrowing or lending in foreign exchange in whatever form or by whatever name called;
(e) any borrowing or lending in rupees in whatever form or by whatever name called between a person resident in India and a person resident outside India;
(f) deposits between persons resident in India and persons resident outside India;
(g) export, import or holding of currency or currency notes;
(h) transfer of immovable property outside India, other than a lease not exceeding five years, by a person resident in India;
(i) acquisition or transfer of immovable property in India, other than a lease not exceeding five years, by a person resident outside India;
(j) giving of a guarantee or surety in respect of any debt, obligation or other liability incurred—
(i) by a person resident in India and owed to a person resident outside India; or
(ii) by a person resident outside India.
(4) A person resident in India may hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India.
(5) A person resident outside India may hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if such currency, security or property was acquired, held or owned by such person when he was resident in India or inherited from a person who was resident in India.
(6) Without prejudice to the provisions of this section, the Reserve Bank may, by regulation, prohibit, restrict, or regulate establishment in India of a branch, office or other place of business by a person resident outside India, for carrying on any activity relating to such branch, office or other place of business.
Export of goods and services.
7. (1) Every exporter of goods shall—
(a) furnish to the Reserve Bank or to such other authority a declaration in such form and in such manner as may be specified, containing true and correct material particulars, including the amount representing the full export value or, if the full export value of the goods is not ascertainable at the time of export, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in a market outside India;
(b) furnish to the Reserve Bank such other information as may be required by the Reserve Bank for the purpose of ensuring the realisation of the export proceeds by such exporter.
(2) The Reserve Bank may, for the purpose of ensuring that the full export value of the goods or such reduced value of the goods as the Reserve Bank determines, having regard to the prevailing market conditions, is received without any delay, direct any exporter to comply with such requirements as it deems fit.
(3) Every exporter of services shall furnish to the Reserve Bank or to such other authorities a declaration in such form and in such manner as may be specified, containing the true and correct material particulars in relation to payment for such services.
Realisation and repatriation of foreign exchange.
8. Save as otherwise provided in this Act, where any amount of foreign exchange is due or has accrued to any person resident in India, such person shall take all reasonable steps to realise and repatriate to India such foreign exchange within such period and in such manner as may be specified by the Reserve Bank.
Exemption from realisation and repatriation in certain cases.
9. The provisions of sections 4 and 8 shall not apply to the following, namely:—
(a) possession of foreign currency or foreign coins by any person up to such limit as the Reserve Bank may specify;
(b) foreign currency account held or operated by such person or class of persons and the limit up to which the Reserve Bank may specify;
(c) foreign exchange acquired or received before the 8th day of July, 1947 or any income arising or accruing thereon which is held outside India by any person in pursuance of a general or special permission granted by the Reserve Bank;
(d) foreign exchange held by a person resident in India up to such limit as the Reserve Bank may specify, if such foreign exchange was acquired by way of gift or inheritance from a person referred to in clause (c), including any income arising therefrom;
(e) foreign exchange acquired from employment, business, trade, vocation, services, honorarium, gifts, inheritance or any other legitimate means up to such limit as the Reserve Bank may specify; and
(f) such other receipts in foreign exchange as the Reserve Bank may specify.
CHAPTER III
Authorised Person
10. (1) The Reserve Bank may, on an application made to it in this behalf, authorise any person to be known as authorised person to deal in foreign exchange or in foreign securities, as an authorised dealer, money changer or off-shore banking unit or in any other manner as it deems fit.
(2) An authorisation under this section shall be in writing and shall be subject to the conditions laid down therein.
(3) An authorisation granted under sub-section (1) may be revoked by the Reserve Bank at any time if the Reserve Bank is satisfied that—
(a) it is in public interest so to do; or
(b) the authorised person has failed to comply with the condition subject to which the authorisation was granted or has contravened any of the provisions of the Act or any rule, regulation, notification, direction or order made thereunder:
Provided that no such authorisation shall be revoked on any ground referred to in clause (b) unless the authorised person has been given a reasonable opportunity of making a representation in the matter.
(4) An authorised person shall, in all his dealings in foreign exchange or foreign security, comply with such general or special directions or orders as the Reserve Bank may, from time to time, think fit to give, and, except with the previous permission of the Reserve Bank, an authorised person shall not engage in any transaction involving any foreign exchange or foreign security which is not in conformity with the terms of his authorisation under this section.
(5) An authorised person shall, before undertaking any transaction in foreign exchange on behalf of any person, require that person to make such declaration and to give such information as will reasonably satisfy him that the transaction will not involve, and is not designed for the purpose of any contravention or evasion of the provisions of this Act or of any rule, regulation, notification, direction or order made thereunder, and where the said person refuses to comply with any such requirement or makes only unsatisfactory compliance therewith, the authorised person shall refuse in writing to undertake the transaction and shall, if he has reason to believe that any such contravention or evasion as aforesaid is contemplated by the person, report the matter to the Reserve Bank.
(6) Any person, other than an authorised person, who has acquired or purchased foreign exchange for any purpose mentioned in the declaration made by him to authorised person under sub-section (5) does not use it for such purpose or does not surrender it to authorised person within the specified period or uses the foreign exchange so acquired or purchased for any other purpose for which purchase or acquisition of foreign exchange is not permissible under the provisions of the Act or the rules or regulations or direction or order made thereunder shall be deemed to have committed contravention of the provisions of the Act for the purpose of this section.
Reserve Bank’s powers to issue directions to authorised person.
11. (1) The Reserve Bank may, for the purpose of securing compliance with the provisions of this Act and of any rules, regulations, notifications or directions made thereunder, give to the authorised persons any direction in regard to making of payment or the doing or desist from doing any act relating to foreign exchange or foreign security.
(2) The Reserve Bank may, for the purpose of ensuring the compliance with the provisions of this Act or of any rule, regulation, notification, direction or order made thereunder, direct any authorised person to furnish such information, in such manner, as it deems fit.
(3) Where any authorised person contravenes any direction given by the Reserve Bank under this Act or fails to file any return as directed by the Reserve Bank, the Reserve Bank may, after giving reasonable opportunity of being heard, impose on the authorised person a penalty which may extend to ten thousand rupees and in the case of continuing contravention with an additional penalty which may extend to two thousand rupees for every day during which such contravention continues.
Power of Reserve Bank to inspect authorised person.
12. (1) The Reserve Bank may, at any time, cause an inspection to be made, by any officer of the Reserve Bank specially authorised in writing by the Reserve Bank in this behalf, of the business of any authorised person as may appear to it to be necessary or expedient for the purpose of—
(a) verifying the correctness of any statement, information or particulars furnished to the Reserve Bank;
(b) obtaining any information or particulars which such authorised person has failed to furnish on being called upon to do so;
(c) securing compliance with the provisions of this Act or of any rules, regulations, directions or orders made thereunder.
(2) It shall be the duty of every authorised person, and where such person is a company or a firm, every director, partner or other officer of such company or firm, as the case may be, to produce to any officer making an inspection under sub-section (1), such books, accounts and other documents in his custody or power and to furnish any statement or information relating to the affairs of such person, company or firm as the said officer may require within such time and in such manner as the said officer may direct.
CHAPTER IV
Contravention And Penalties
Penalties
13. (1) If any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorisation is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such contravention is a continuing one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues.
(2) Any Adjudicating Authority adjudging any contravention under sub-section (1), may, if he thinks fit in addition to any penalty which he may impose for such contravention direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government and further direct that the foreign exchange holdings, if any of the persons committing the contraventions or any part thereof, shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf.
Explanation.—For the purposes of this sub-section, "property" in respect of which contravention has taken place, shall include—
(a) deposits in a bank, where the said property is converted into such deposits;
(b) Indian currency, where the said property is converted into that currency; and
(c) any other property which has resulted out of the conversion of that property.
Enforcement of the orders of Adjudicating Authority.
14. (1) Subject to the provisions of sub-section (2) of section 19, if any person fails to make full payment of the penalty imposed on him under section 13 within a period of ninety days from the date on which the notice for payment of such penalty is served on him, he shall be liable to civil imprisonment under this section.
(2) No order for the arrest and detention in civil prison of a defaulter shall be made unless the Adjudicating Authority has issued and served a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and to show cause why he should not be committed to the civil prison, and unless the Adjudicating Authority, for reasons in writing, is satisfied—
(a) that the defaulter, with the object or effect of obstructing the recovery of penalty, has after the issue of notice by the Adjudicating Authority, dishonestly transferred concealed, or removed any part of his property, or
(b) that the defaulter has, or has had since the issuing of notice by the Adjudicating Authority, the means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same.
(3) Notwithstanding anything contained in sub-section (1), a warrant for the arrest of the defaulter may be issued by the Adjudicating Authority if the Adjudicating Authority is satisfied, by affidavit or otherwise, that with the object or effect of delaying the execution of the certificate the defaulter is likely to abscond or leave the local limits of the jurisdiction of the Adjudicating Authority.
(4) Where appearance is not made pursuant to a notice issued and served under sub-section (1), the Adjudicating Authority may issue a warrant for the arrest of the defaulter.
(5) A warrant of arrest issued by the Adjudicating Authority under sub-section (3) or sub-section
(4) may also be executed by any other Adjudicating Authority within whose jurisdiction the defaulter may for the time being be found.
(6) Every person arrested in pursuance of a warrant of arrest under this section shall be brought before the Adjudicating Authority issuing the warrant as soon as practicable and in any event within twenty-four hours of his arrest (exclusive of the time required for the journey):
Provided that, if the defaulter pays the amount entered in the warrant of arrest as due and the costs of the arrest to the officer arresting him, such officer shall at once release him.
Explanation.—For the purposes of this sub-section, where the defaulter is a Hindu undivided family, the karta thereof shall be deemed to be the defaulter.
(7) When a defaulter appears before the Adjudicating Authority pursuant to a notice to show cause or is brought before the Adjudicating Authority under this section, the Adjudicating Authority shall give the defaulter an opportunity showing cause why he should not be committed to the civil prison.
(8) Pending the conclusion of the inquiry, the Adjudicating Authority may, in his discretion, order the defaulter to be detained in the custody of such officer as the Adjudicating Authority may think fit or release him on his furnishing the security to the satisfaction of the Adjudicating Authority for his appearance as and when required.
(9) Upon the conclusion of the inquiry, the Adjudicating Authority may make an order for the detention of the defaulter in the civil prison and shall in that event cause him to be arrested if he is not already under arrest:
Provided that in order to give a defaulter an opportunity of satisfying the arrears, the Adjudicating Authority may, before making the order of detention, leave the defaulter in the custody of the officer arresting him or of any other officer for a specified period not exceeding fifteen days, or release him on his furnishing security to the satisfaction of the Adjudicating Authority for his appearance at the expiration of the specified period if the arrears are not satisfied.
(10) When the Adjudicating Authority does not make an order of detention under sub-section (9), he shall, if the defaulter is under arrest, direct his release.
(11) Every person detained in the civil prison in execution of the certificate may be so detained,—
(a) where the certificate is for a demand of an amount exceeding rupees one crore, up to three years, and
(b) in any other case, up to six months:
Provided that he shall be released from such detention on the amount mentioned in the warrant for his detention being paid to the officer-in-charge of the civil prison.
(12) A defaulter released from detention under this section shall not, merely by reason of his release, be discharged from his liability for the arrears, but he shall not be liable to be arrested under the certificate in execution of which he was detained in the civil prison.
(13) A detention order may be executed at any place in India in the manner provided for the execution of warrant of arrest under the Code of Criminal Procedure, 1973 (2 of 1974).
Power to compound contravention.
15. (1) Any contravention under section 13 may, on an application made by theperson committing such contravention, be compounded within one hundred and eighty days from the date of receipt of application by the Director of Enforcement or such other officers of the Directorate of Enforcement and Officers of the Reserve Bank as may be authorised in this behalf by the Central Government in such manner as may be prescribed.
(2) Where a contravention has been compounded under sub-section (1), no proceeding or further proceeding, as the case may be, shall be initiated or continued, as the case may be, against the person committing such contravention under that section, in respect of the contravention so compounded.
CHAPTER V
CAdjudication And Appeal
Appointment of Adjudicating Authority.
16. (1) For the purpose of adjudication under section 13, the Central Govern-
ment may, by an order published in the Official Gazette, appoint as many officers of the Central Government as it may think fit, as the Adjudicating Authorities for holding an inquiry in the manner prescribed after giving the person alleged to have committed contravention under section 13, against whom a complaint has been made under sub-section
(2) (hereinafter in this section referred to as the said person) a reasonable opportunity of being heard for the purpose of imposing any penalty:
Provided that where the Adjudicating Authority is of opinion that the said person is likely to abscond or is likely to evade in any manner, the payment of penalty, if levied, it may direct the said person to furnish a bond or guarantee for such amount and subject to such conditions as it may deem fit.
(2) The Central Government shall, while appointing the Adjudicating Authorities under sub-section (1), also specify in the order published in the Official Gazette, their respective jurisdictions.
(3) No Adjudicating Authority shall hold an enquiry under sub-section (1) except upon a complaint in writing made by any officer authorised by a general or special order by the Central Government.
(4) The said person may appear either in person or take the assistance of a legal practitioner or a chartered accountant of his choice for presenting his case before the Adjudicating Authority.
(5) Every Adjudicating Authority shall have the same powers of a civil court which are conferred on the Appellate Tribunal under sub-section (2) of section 28 and—
(a) all proceedings before it shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code (45 of 1860);
(b) shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974).
(6) Every Adjudicating Authority shall deal with the complaint under sub-section (2) as expeditiously as possible and endeavour shall be made to dispose of the complaint finally within one year from the date of receipt of the complaint :
Provided that where the complaint cannot be disposed off within the said period, the Adjudicating Authority shall record periodically the reasons in writing for not disposing off the complaint within the said period.
Appeal to Special Director (Appeals).
17. (1) The Central Government shall, by notification, appoint one or more Special Directors (Appeals) to hear appeals against the orders of the Adjudicating Authorities under this section and shall also specify in the said notification the matter and places in relation to which the Special Director (Appeals) may exercise jurisdiction.
(2) Any person aggrieved by an order made by the Adjudicating Authority, being an Assistant Director of Enforcement or a Deputy Director of Enforcement, may prefer an appeal to the Special Director (Appeals).
(3) Every appeal under sub-section (1) shall be filed within forty-five days from the date on which the copy of the order made by the Adjudicating Authority is received by the aggrieved person and it shall be in such form, verified in such manner and be accompanied by such fee as may be prescribed :
Provided that the Special Director (Appeals) may entertain an appeal after the expiry of the said period of forty-five days, if he is satisfied that there was sufficient cause for not filing it within that period.
(4) On receipt of an appeal under sub-section (1), the Special Director (Appeals) may after giving the parties to the appeal an opportunity of being heard, pass such order thereon as he thinks fit confirming, modifying or setting aside the order appealed against.
(5) The Special Director (Appeals) shall send a copy of every order made by him to the parties to appeal and to the concerned Adjudicating Authority.
(6) The Special Director (Appeals) shall have the same powers of a civil court which are conferred on the Appellate Tribunal under sub-section (2) of section 28 and—
(a) all proceedings before him shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code (45 of 1860);
(b) shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974).
Establishment of Appellate Tribunal.
18. The Central Government shall, by notification, establish an Appellate Tribunal to be known as the Appellate Tribunal for Foreign Exchange to hear appeals against the orders of the Adjudicating Authorities and the Special Director (Appeals) under this Act.
Appeal to Appellate Tribunal.
19. (1) Save as provided in sub-section (2), the Central Government or any person aggrieved by an order made by an Adjudicating Authority, other than those referred to sub-section (1) of section 17, or the Special Director (Appeals), may prefer an appeal to the Appellate Tribunal:
Provided that any person appealing against the order of the Adjudicating Authority or the Special Director (Appeals) levying any penalty, shall while filing the appeal, deposit the amount of such penalty with such authority as may be notified by the Central Government :
Provided further that where in any particular case, the Appellate Tribunal is of the opinion that the deposit of such penalty would cause undue hardship to such person, the Appellate Tribunal may dispense with such deposit subject to such conditions as it may deem fit to impose so as to safeguard the realisation of penalty.
(2) Every appeal under sub-section (1) shall be filed within a period of forty-five days from the date on which a copy of the order made by the Adjudicating Authority or the Special Director (Appeals) is received by the aggrieved person or by the Central Government and it shall be in such form, verified in such manner and be accompanied by such fee as may be prescribed :
Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period.
(3) On receipt of an appeal under sub-section (1), the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against.
(4) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned Adjudicating Authority or the Special Director (Appeals), as the case may be.
(5) The appeal filed before the Appellate Tribunal under sub-section (1) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within one hundred and eighty days from the date of receipt of the appeal:
Provided that where any appeal could not be disposed of within the said period of one hundred and eighty days, the Appellate Tribunal shall record its reasons in writing for not disposing of the appeal within the said period.
(6) The Appellate Tribunal may, for the purpose of examining the legality, propriety or correctness of any order made by the Adjudicating Authority under section 16 in relation to any proceeding, on its own motion or otherwise, call for the records of such proceedings and make such order in the case as it thinks fit.
Composition of Appellate Tribunal.
20. (1) The Appellate Tribunal shall consist of a Chairperson and such number of Members as the Central Government may deem fit.
(2) Subject to the provisions of this Act,—
(a) the jurisdiction of the Appellate Tribunal may be exercised by Benches thereof;
(b) a Bench may be constituted by the Chairperson with one or more Members as the Chairperson may deem fit;
(c) the Benches of the Appellate Tribunal shall ordinarily sit at New Delhi and at such other places as the Central Government may, in consultation with the Chairperson, notify;
(d) the Central Government shall notify the areas in relation to which each Bench of the Appellate Tribunal may exercise jurisdiction.
(3) Notwithstanding anything contained in sub-section (2), the Chairperson may transfer a Member from one Bench to another Bench.
(4) If at any stage of the hearing of any case or matter it appears to the Chairperson or a Member that the case or matter is of such a nature that it ought to be heard by a Bench consisting of two Members, the case or matter may be transferred by the Chairperson or, as the case may be, referred to him for transfer, to such Bench as the Chairperson may deem fit.
Qualifications for appointment of Chairperson, Member and Special Director (Appeals).
21. (1) A person shall not be qualified for appointment as the Chairperson or a Member unless he—
(a) in the case of Chairperson, is or has been, or is qualified to be, a Judge of a High Court; and
(b) in the case of a Member, is or has been, or is qualified to be, a District Judge.
(2) A person shall not be qualified for appointment as a Special Director (Appeals) unless he—
(a) has been a member of the Indian Legal Service and has held a post in Grade I of that Service; or
(b) has been a member of the Indian Revenue Service and has held a post equivalent to a Joint Secretary to the Government of India.
Term of office.
22. The Chairperson and every other Member shall hold office as such for a term of five years from the date on which he enters upon his office :
Provided that no Chairperson or other Member shall hold office as such after he has attained,—
(a) in the case of the Chairperson, the age of sixty-five years;
(b) in the case of any other Member, the age of sixty-two years.
Terms and conditions of service.
23. The salary and allowances payable to and the other terms and conditions of service of the Chairperson, other Members and the Special Director (Appeals) shall be such as may be prescribed:
Provided that neither the salary and allowances nor the other terms and conditions of service of the Chairperson or a Member shall be varied to his disadvantage after appointment.
Vacancies.
24. If, for reason other than temporary absence, any vacancy occurs in the office of the Chairperson or a Member, the Central Government shall appoint another person in accordance with the provisions of this Act to fill the vacancy and the proceedings may be continued before the Appellate Tribunal from the stage at which the vacancy is filled.
Resignation and removal.
25. (1) The Chairperson or a Member may, by notice in writing under his hand addressed to the Central Government, resign his office:
Provided that the Chairperson or a Member shall, unless he is permitted by the Central Government to relinquish his office sooner, continue to hold office until the expiry of three months from the date of receipt of such notice or until a person duly appointed as his successor enters upon his office or until the expiry of term of office, whichever is the earliest.
(2) The Chairperson or a Member shall not be removed from his office except by an order by the Central Government on the ground of proved misbehaviour or incapacity after an inquiry made by such person as the President may appoint for this purpose in which the Chairperson or a Member concerned has been informed of the charges against him and given a reasonable opportunity of being heard in respect of such charges.
Member to act as Chairperson in certain circumstances.
26. (1) In the event of the occurrence of any vacancy in the office of the Chairperson by reason of his death, resignation or otherwise, the senior-most Member shall act as the Chairperson until the date on which a new Chairperson, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office.
(2) When the Chairperson is unable to discharge his functions owing to absence, illness or any other cause, the seniormost Member shall discharge the functions of the Chairperson until the date on which the Chairperson resumes his duties.
Staff of Appellate Tribunal and Special Director (Appeals).
27. (1) The Central Government shall provide the Appellate Tribunal and the Special Director (Appeals) with such officers and employees as it may deem fit.
(2) The officers and employees of the Appellate Tribunal and office of the Special Director (Appeals) shall discharge their functions under the general superintendence of the Chairperson and the Special Director (Appeals), as the case may be.
(3) The salaries and allowances and other conditions of service of the officers and employees of the Appellate Tribunal and office of the Special Director (Appeals) shall be such as may be prescribed.
Procedure and powers of Appellate Tribunal and Special Director (Appeals)
28. (1) The Appellate Tribunal and the Special Director (Appeals) shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908) but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, the Appellate Tribunal and the Special Director (Appeals) shall have powers to regulate its own procedure.
(2) The Appellate Tribunal and the Special Director (Appeals) shall have, for the purposes of discharging its functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908); while trying a suit, in respect of the following matters, namely:—
(a) summoning and enforcing the attendance of any person and examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872 (1 of 1872) requisitioning any public record or document or copy of such record or document from any office;
(e) issuing commissions for the examination of witnesses or documents;
(f) reviewing its decisions;
(g) dismissing a representation of default or deciding it ex parte;
(h) setting aside any order of dismissal of any representation for default or any order passed by it ex parte; and
(i) any other matter which may be prescribed by the Central Government.
(3) An order made by the Appellate Tribunal or the Special Director (Appeals) under this Act shall be executable by the Appellate Tribunal or the Special Director (Appeals) as a decree of civil court and, for this purpose, the Appellate Tribunal and the Special Director (Appeals) shall have all the powers of a civil court.
(4) Notwithstanding anything contained in sub-section (3), the Appellate Tribunal or the Special Director (Appeals) may transmit any order made by it to a civil court having local jurisdiction and such civil court shall execute the order as if it were a decree made by that court.
(5) All proceedings before the Appellate Tribunal and the Special Director (Appeals) shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code (45 of 1860) and the Appellate Tribunal shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974)
Distribution of business amongst Benches.
29. Where Benches are constituted, the Chairperson may, from time to time, by notification, make provisions as to the distribution of the business of the Appellate Tribunal amongst the Benches and also provide for the matters which may be dealt with by each Bench.
Power of Chairperson to transfer cases.
30. On the application of any of the parties and after notice to the parties, and after hearing such of them as he may desire to be heard, or on his own motion without such notice, the Chairperson may transfer any case pending before one Bench, for disposal, to any other Bench.
Decision to be by majority.
31. If the Members of a Bench consisting of two Members differ in opinion on any point, they shall state the point or points on which they differ, and make a reference to the Chairperson who shall either hear the point or points himself or refer the case for hearing on such point or points by one or more of the other Members of the Appellate Tribunal and such point or points shall be decided according to the opinion of the majority of the Members of the Appellate Tribunal who have heard the case, including those who first heard it.
Right of appellant to take assistance of legal practitioner or chartered accountant and of Government, to appoint presenting officers.
32. (1) A person preferring an appeal to the Appellate Tribunal or the Special Director (Appeals) under this Act may either appear in person or take the assistance of a legal practitioner or a chartered accountant of his choice to present his case before the Appellate Tribunal or the Special Director (Appeals), as the case may be.
(2) The Central Government may authorise one or more legal practitioners or chartered accountants or any of its officers to act as presenting officers and every person so authorised may present the case with respect to any appeal before the Appellate Tribunal or the Special Director (Appeals), as the case may be.
Members, etc. to be public servants.
33. The Chairperson, Members and other officers and employees of the Appellate Tribunal, the Special Director (Appeals) and the Adjudicating Authority shall be deemed to be public servants within the meaning of section 21 of the Indian Penal Code (45 of 1860).
Civil court not to have jurisdiction.
34. No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which an Adjudicating Authority or the Appellate Tribunal or the Special Director (Appeals) is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.
Appeal to High Court.
35. Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal on any question of law arising out of such order:
Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days.
Explanation.—In this section "High Court" means—
(a) the High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain; and
(b) where the Central Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one respondent, any of the respondents, ordinarily resides or carries on business or personally works for gain.
CHAPTER VI
Directorate Of Enforcement
Directorate of Enforcement.
36. (1) The Central Government shall establish a Directorate of Enforcement with a Director and such other officers or class of officers as it thinks fit, who shall be called officers of Enforcement, for the purposes of this Act.
(2) Without prejudice to provisions of sub-section (1), the Central Government may authorise the Director of Enforcement or an Additional Director of Enforcement or a Special Director of Enforcement or a Deputy Director of Enforcement to appoint officers of Enforcement below the rank of an Assistant Director of Enforcement.
(3) Subject to such conditions and limitations as the Central Government may impose, an officer of Enforcement may exercise the powers and discharge the duties conferred or imposed on him under this Act.
Power of search, seizure, etc.
37. (1) The Director of Enforcement and other officers of Enforcement, not below the rank of an Assistant Director, shall take up for investigation the contravention referred to in section 13.
(2) Without prejudice to the provisions of sub-section (1), the Central Government may also, by notification, authorise any officer or class of officers in the Central Government, State Government or the Reserve Bank, not below the rank of an Under Secretary to the Government of India to investigate any contravention referred to in section 13.
(3) The officers referred to in sub-section (1) shall exercise the like powers which are conferred on income-tax authorities under the Income-tax Act, 1961 (43 of 1961) and shall exercise such powers, subject to such limitations laid down under that Act.
Empowering other officers.
38. (1) The Central Government may, by order and subject to such conditions and limitations as it thinks fit to impose, authorise any officer of customs or any central excise officer or any police officer or any other officer of the Central Government or a State Government to exercise such of the powers and discharge such of the duties of the Director of Enforcement or any other officer of Enforcement under this Act as may be stated in the order.
(2) The officers referred to in sub-section (1) shall exercise the like powers which are conferred on the income-tax authorities under the Income-tax Act, 1961 (43 of 1961), subject to such conditions and limitations as the Central Government may impose.
CHAPTER VII
Miscellaneous
Presumption as to documents in certain cases.
39. Where any document—
(i) is produced or furnished by any person or has been seized from the custody or control of any person, in either case, under this Act or under any other law; or
(ii) has been received from any place outside India (duly authenticated by such authority or person and in such manner as may be prescribed) in the course of investigation of any contravention under this Act alleged to have been committed by any person, and such document is tendered in any proceeding under this Act in evidence against him, or against him and any other person who is proceeded against jointly with him, the court or the Adjudicating Authority, as the case may be, shall—
(a) presume, unless the contrary is proved, that the signature and every other part of such document which purports to be in the handwriting of any particular person or which the court may reasonably assume to have been signed by, or to be in the handwriting of, any particular person, is in that person’s handwriting, and in the case of a document executed or attested, that it was executed or attested by the person by whom it purports to have been so executed or attested;
(b) admit the document in evidence notwithstanding that it is not duly stamped, if such document is otherwise admissible in evidence;
(c) in a case falling under clause (i), also presume, unless the contrary is proved, the truth of the contents of such document.
Suspension of operation of this Act.
40. (1) If the Central Government is satisfied that circumstances have arisen rendering it necessary that any permission granted or restriction imposed by this Act should cease to be granted or imposed, or if it considers necessary or expedient so to do in public interest, the Central Government may, by notification, suspend or relax to such extent either indefinitely or for such period as may be notified, the operation of all or any of the provisions of this Act.
(2) Where the operation of any provision of this Act has under sub-section (1) been suspended or relaxed indefinitely, such suspension or relaxation may, at any time while this Act remains in force, be removed by the Central Government by notification.
(3) Every notification issued under this section shall be laid, as soon as may be after it is issued, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the notification or both Houses agree that the notification should not be issued, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that notification.
Power of Central Government to give directions.
41. For the purposes of this Act, the Central Government may, from time to time, give to the Reserve Bank such general or special directions as it thinks fit, and the Reserve Bank shall, in the discharge of its functions under this Act, comply with any such directions.
Contravention by companies.
42. (1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly :
Provided that nothing contained in this sub-section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised due diligence to prevent such contravention.
(2) Notwithstanding anything contained in sub-section (1), where a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly.
Explanation.—For the purposes of this section—
(i) "company" means any body corporate and includes a firm or other association of individuals; and
(ii) "director", in relation to a firm, means a partner in the firm.
Death or insolvency in certain cases.
43. Any right, obligation, liability, proceeding or appeal arising in relation to the provisions of section 13 shall not abate by reason of death or insolvency of the person liable under that section and upon such death or insolvency such rights and obligations shall devolve on the legal representative of such person or the official receiver or the official assignee, as the case may be :
Provided that a legal representative of the deceased shall be liable only to the extent of the inheritance or estate of the deceased.
Bar of legal proceedings.
44. No suit, prosecution or other legal proceeding shall lie against the Central Government or the Reserve Bank or any officer of that Government or of the Reserve Bank or any other person exercising any power or discharging any functions or performing any duties under this Act, for anything in good faith done or intended to be done under this Act or any rule, regulation, notification, direction or order made thereunder.
Removal of difficulties.
45. (1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, do anything not inconsistent with the provisions of this Act for the purpose of removing the difficulty:
Provided that no such order shall be made under this section after the expiry of two years from the commencement of this Act.
(2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament.
Power to make rules.
46. (1) The Central Government may, by notification, make rules to carry out the provisions of this Act.
(2) Without prejudice to the generality of the foregoing power, such rules may provide for,—
(a) the imposition of reasonable restrictions on current account transactions under section 5;
(b) the manner in which the contravention may be compounded under sub-section (1) of section 15;
(c) the manner of holding an inquiry by the Adjudicating Authority under sub-section (1) of section 16;
(d) the form of appeal and fee for filing such appeal under sections 17 and 19;
(e) the salary and allowances payable to and the other terms and conditions of service of the Chairperson and other Members of the Appellate Tribunal and the Special Director (Appeals) under section 23;
(f) the salaries and allowances and other conditions of service of the officers and employees of the Appellate Tribunal and the office of the Special Director (Appeals) under sub-section (3) of section 27;
(g) the additional matters in respect of which the Appellate Tribunal and the Special Director (Appeals) may exercise the powers of civil court under clause (i) of sub-section (2) of section 28;
(h) the authority or person and the manner in which any document may be authenticated under clause (ii) of section 39; and
(i) any other matter which is required to be, or may be, prescribed.
Power to make regulations.
47. (1) The Reserve Bank may, by notification, make regulations to carry out the provisions of this Act and the rules made thereunder.
(2) Without prejudice to the generality of the foregoing power, such regulations may provide for,—
(a) the permissible classes of capital account transactions, the limits of admissibility of foreign exchange for such transactions, and the prohibition, restriction or regulation of certain capital account transactions under section 6;
(b) the manner and the form in which the declaration is to be furnished under clause (a) of sub-section (1) of section 7;
(c) the period within which and the manner of repatriation of foreign exchange under section 8;
(d) the limit up to which any person may possess foreign currency or foreign coins under clause (a) of section 9;
(e) the class of persons and the limit up to which foreign currency account may be held or operated under clause (b) of section 9;
(f) the limit up to which foreign exchange acquired may be exempted under clause (d) of section 9;
(g) the limit up to which foreign exchange acquired may be retained under clause (e) of section 9;
(h) any other matter which is required to be, or may be, specified.
Rules and regulations to be laid before Parliament.
48. Every rule and regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation, or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation.
Repeal and saving.
49. (1) The Foreign Exchange Regulation Act, 1973 (46 of 1973) is hereby repealed and the Appellate Board constituted under sub-section (1) of section 52 of the said Act (hereinafter referred to as the repealed Act) shall stand dissolved.
(2) On the dissolution of the said Appellate Board, the person appointed as Chairman of the Appellate Board and every other person appointed as Member and holding office as such immediately before such date shall vacate their respective offices and no such Chairman or other person shall be entitled to claim any compensation for the premature termination of the term of his office or of any contract of service.
(3) Notwithstanding anything contained in any other law for the time being in force, no court shall take cognizance of an offence under the repealed Act and no adjudicating officer shall take notice of any contravention under section 51 of the repealed Act after the expiry of a period of two years from the date of the commencement of this Act.
(4) Subject to the provisions of sub-section (3) all offences committed under the repealed Act shall continue to be governed by the provisions of the repealed Act as if that Act had not been repealed.
(5) Notwithstanding such repeal,—
(a) anything done or any action taken or purported to have been done or taken including any rule, notification, inspection, order or notice made or issued or any appointment, confirmation or declaration made or any licence, permission, authorization or exemption granted or any document or instrument executed or any direction given under the Act hereby repealed shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act;
(b) any appeal preferred to the Appellate Board under sub-section (2) of section 52 of the repealed Act but not disposed of before the commencement of this Act shall stand transferred to and shall be disposed of by the Appellate Tribunal constituted under this Act;
(c) every appeal from any decision or order of the Appellate Board under sub-section (3) or sub-section (4) of section 52 of the repealed Act shall, if not filed before the commencement of this Act, be filed before the High Court within a period of sixty days of such commencement :
Provided that the High Court may entertain such appeal after the expiry of the said period of sixty days if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period.
(6) Save as otherwise provided in sub-section (3), the mention of particular matters in sub-sections (2), (4) and (5) shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 (10 of 1897) with regard to the effect of repeal.
Foreign Exchange Regulation Act - 1973
FOREIGN EXCHANGE REGULATION ACT, 1973
(Act 46 of 1973)
[As amended by the Foreign Exchange Regulation
(Amendment) Act, 1993]
(Act 29 of 1993)
An Act to consolidate and amend the law regulating certain payments, dealings in foreign exchange and securities, transactions indirectly affecting foreign exchange and the import and export of currency, for the conservation of the foreign exchange resources of the country and the proper utilisation thereof in the interests of the economic development of the country.
BE it enacted by Parliament in the Twenty-fourth Year of the Republic of India as follows :
Short title, extent, application and commencement
1. (1) This Act may be called the Foreign Exchange Regulation Act, 1973.
(2) It extends to the whole of India.
(3) It applies also to all citizens of India outside India and to branches and agencies outside India of companies or bodies corporate, registered or incorporated in India.
(4) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint in this behalf:
Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.
Definitions
2. In this Act, unless the context otherwise requires, -
(a) "Appellate Board" means the Foreign Exchange Regulation Appellate Board constituted by the Central Government under sub-section(1)of section 52;
(b) "authorised dealer" means a person for the time being authorised under section 6 to deal in foreign exchange;
(c) "bearer certificate" means a certificate of title to securities by the delivery of which (with or without endorsement) the title to the securities is transferable;
(d) "certificate of title to a security" means any document used in the ordinary course of business as proof of the possession or control of the security, or authorising or purporting to authorise, either by an endorsement or by delivery, the possessor of the document to transfer or receive the security thereby represented;
(e) "coupon" means a coupon representing dividends or interest on a security;
The provisions of F.E.R. (Amendment) Act, 1993 (hereafter referred to as Act 29 of 1993) came into force on the 8th day of January 1993.
(f) "currency" includes all coins, currency notes, banks notes, postal notes, postal orders, money orders, cheques, drafts, traveller's cheques, letters of credit, bills of exchange and promissory notes;
(g) "foreign currency" means any currency other than Indian currency;
(h) "foreign exchange" means foreign currency and includes -
(i) all deposits, credits and balances payable in any foreign currency, and any drafts, traveller's cheques, letters of credit and bills of exchange, expressed or drawn in Indian currency but payable in any foreign currency;
(ii) any instrument payable, at the option of the drawee or holder thereof or any other party thereto, either in Indian currency or in foreign currency or partly in one and partly in the other;
(i) "foreign security" means any security created or issued elsewhere than in India, and any security the principal of or interest on which is payable in any foreign currency or elsewhere than in India;
(j) Deleted by Act 29 of 1993
(k) "Indian currency" means currency which is expressed or drawn in Indian rupees but does not include special bank notes and special one-rupee notes issued under section 28A of the Reserve Bank of India Act, 1934;
(l) "Indian custom waters" means the waters extending into the sea to a distance of twelve nautical miles measured from the appropriate base line on the coast of India and includes any bay, gulf, harbour, creek or tidal river;.(m) "money-changer" means a person for the time being authorised under section 7 to deal in foreign currency;
(n) "overseas market", in relation to any goods, means the market in the country outside India and in which such goods are intended to be sold;
(o) "owner", in relation to any security, includes any person who has power to sell or transfer the security, or who has the custody thereof or who receives, whether on his own behalf or on behalf of any other person, dividends or interest thereon, and who has any interest therein, and in a case where any security is held on any trust or dividends or interest thereon are paid into a trust fund, also includes any trustee or any person entitled to enforce the performance of the trust or to revoke or vary, with or without the consent of any other person, the trust or any terms thereof, or to control the investment of the trust moneys;
(p) "person resident in India" means -
(i) a citizen of India, who has, at any time after the 25th day of March, 1947, been staying in India but does not include a citizen of India who has gone out of, or stays outside, India, in either case-- (a) for or on taking up employment outside India, or (b) for carrying on outside India a business or vocation outside India, or (c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;
(ii) a citizen of India, who having ceased by virtue of paragraph (a) or paragraph (b) or paragraph (c) of sub-clause (I) to be resident in India, returns to, or stays in, India, in either case -(a) for or on taking up employment in India, or (b) for carrying on in India a business or vocation in India, or.(c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;
(iii) a person, not being a citizen of India, who has come to, or stays in, India, in either case -(a) for or on taking up employment in India, or (b) for carrying on in India a business or vocation in India, or (c) for staying with his or her spouse, such spouse being a person resident in India, or (d) for any other purposes, in such circumstances as would indicate his intention to stay in India for an uncertain period;
(iv) a citizen of India, who, not having stayed in India at any time after the 25th day of March, 1947, comes to India for any of the purposes referred to in paragraphs (a), (b) and (c) of sub-clause (iii) or for the purpose and in the circumstances referred to in paragraph (d) of that sub-clause or having come to India stays in India for any such purpose and in such circumstances.
Explanation - A person, who has, by reason only of paragraph (a) or paragraph (b) or paragraph (d) of sub-clause (iii) been resident in India, shall, during any period in which he is outside India, be deemed to be not resident in India;
(q) "person resident outside India" means a person who is not resident in India;
(r) "precious stone" includes pearl and semi-precious stone and such other stone or gem as the Central Government may for the purposes of this Act, notify in this behalf in the Official Gazette;
(s) "prescribed" means prescribed by rules made under this Act;
(t) "Reserve Bank" means the Reserve Bank of India;.(u) "security" means shares, stocks, bonds, debentures, debenture stock, Government securities as defined in the Public Debt Act, 1944, savings certificates to which the Government Savings Certificates Act, 1959 applies, deposit receipts in respect of deposits of securities, and units or sub-units of unit trusts and includes certificates of title to securities, but does not include bills of exchange or promissory notes other than Government promissory notes;
(v) Deleted by Act 29 of 1993
(w) "transfer", in relation to any security, includes transfer by way of loan or security.
Classes of officers of Enforcement
3. There shall be the following classes of officers of Enforcement, namely:-
(a) Directors of Enforcement;
(b) Additional Directors of Enforcement;
(c) Deputy Directors of Enforcement;
(d) Assistant Directors of Enforcement; and
(e) such other class of officers of Enforcement as may be appointed for the purposes of this Act.
Appointment and powers of officers of Enforcement
4. (1) The Central Government may appoint such persons as it thinks fit to be officers of Enforcement.
(2) Without prejudice to the provisions of sub-section (1), the Central Government may authorise a Director of Enforcement or an Additional Director of Enforcement or a Deputy Director of Enforcement or an Assistant Director of Enforcement to appoint officers of Enforcement below the rank of an Assistant Director of Enforcement.
(3) Subject to such conditions and limitations as the Central Government may impose, an officer of Enforcement may exercise the powers and discharge the duties conferred or imposed on him under this Act.
Entrustment of functions of Director
5. The Central Government may, by order and subject to such conditions and limitations as it thinks fit to impose, authorise any officer of customs or any Central Excise Officer or any police officer or any other officer of the Central Government or a State Government to exercise such of the powers and discharge such of the duties of the Director of Enforcement or any other officer of Enforcement under this Act as may be specified in the order.
Authorised dealers in foreign exchange
6. (1) The Reserve Bank may, on an application made to it in this behalf, authorise any person to deal in foreign exchange.
(2) An authorisation under this section shall be in writing and -
(i) may authorise transactions of all descriptions in foreign currencies or may be restricted to authorising dealings in specified foreign currencies only;
(ii) may authorise dealings in all foreign currencies or may be restricted to authorising specified transactions only;
(iii) may be granted to be effective for a specified period, or within specified amounts;
(iv) may be granted subject to such conditions as may be specified therein.
(3) Any authorisation granted under sub-section (1) may be revoked by the Reserve Bank at any time if the Reserve Bank is satisfied that, - (i) it is in the public interest to do so;or (ii) the authorised dealer has not complied with the conditions subject to which the authorisation was granted or has contravened any of the provisions of this Act or of any rule, notification, direction or order made thereunder:
Provided that no such authorisation shall be revoked on the ground specified in clause (ii) unless the authorised dealer has been given a reasonable opportunity for making a representation in the matter.
(4) Any authorised dealer shall, in all his dealings in foreign exchange and in the exercise and discharge of the powers and of the functions delegated to him under section 74, comply with such general or special directions or instructions as the Reserve Bank may, from time to time, think fit to give, and, except with the previous permission of the Reserve Bank, an authorised dealer shall not engage in any transaction involving any foreign exchange which is not in conformity with the terms of his authorisation under this section.
(5) An authorised dealer shall, before undertaking any transaction in foreign exchange on behalf of any person, require that person to make such declarations and to give such information as will reasonably satisfy him that the transaction will not involve, and is not designed for the purpose of, any contravention or evasion of the provisions of this Act or of any rule, notification, direction or order made thereunder, and where the said person refuses to comply with any such requirement or makes only unsatisfactory compliance therewith, the authorised dealer shall refuse to undertake the transaction and shall, if he has reason to believe that any such contravention or evasion as aforesaid is contemplated by the person, report the matter to the Reserve Bank.
Money-changers
7. (1) The Reserve Bank may, on an application made to it in this behalf, authorise any person to deal in foreign currency.
(2) An authorisation under this section shall be in writing and -(i) may authorise dealings in all foreign currencies or may be restricted to authorising dealings in specified foreign currencies only; (ii) may authorise transactions of all descriptions in foreign currencies or may be restricted to authorising specified transactions only; (iii) may be granted with respect to a particular place where alone the money changer shall carry on his business; (iv) may be granted to be effective for a specified period, or within specified amounts; (v) may be granted subject to such conditions as may be specified therein.
(3) Any authorisation granted under sub-section (1) may be revoked by the Reserve Bank at any time if the Reserve Bank is satisfied that -( i) it is in the public interest to do so; or (ii) the money-changer has not complied with the conditions subject to which the.authorisation was granted or has contravened any of the provisions of this Act or of any rule, notification, direction or order made thereunder:
Provided that no such authorisation shall be revoked on the ground specified in clause (ii) unless the money-changer has been given a reasonable opportunity for making a representation in the matter.
(4) The provisions of sub-sections (4) and (5) of section 6 shall, in so far as they are applicable, apply in relation to a money-changer as they apply in relation to an authorised dealer.
Explanation - In this section, "foreign currency" means foreign currency in the form of notes, coins or traveller's cheques and "dealing" means purchasing foreign currency in the form of notes, coins or traveller's cheques or selling foreign currency in the form of notes or coins.
Restrictions on dealing in foreign exchange
8. (1) Except with the previous general or special permission of the Reserve Bank, no person other than an authorised dealer shall in India, and no person resident in India other than an authorised dealer shall outside India, purchase or otherwise acquire or borrow from, or sell, or otherwise transfer or lend to or exchange with, any person not being an authorised dealer, any foreign exchange:
Provided that nothing in this sub-section shall apply to any purchase or sale of foreign currency effected in India between any person and a money-changer.
Explanation - For the purposes of this sub-section, a person, who deposits foreign exchange with another persons or opens an account in foreign exchange with another person, shall be deemed to lend foreign exchange to such other person.
(2) Except with the previous general or special permission of the Reserve Bank, no person, whether an authorised dealer or a money-changer or otherwise, shall enter into any transaction which provides for the conversion of Indian currency into foreign currency or foreign currency into Indian currency at rates of exchange other than the rates for the time being authorised by the Reserve Bank.
(3) Where any foreign exchange is acquired by any person, other than an authorised dealer or a money-changer, for any particular purpose, or where any person has been permitted conditionally to aquire foreign exchange, the said person shall not use the foreign exchange so acquired otherwise than for that purpose or, as the case may be, fail to comply with any condition to which the permission granted to him is subject, and where any foreign exchange so acquired cannot be so used or the conditions cannot be complied with, the said person shall,within a period of thirty days from the date on which he comes to know that such foreign exchange cannot be so used or the conditions cannot be complied with, sell the foreign exchange to an authorised dealer or to a money-changer.
(4) For the avoidance of doubt, it is hereby declared that where a person acquires foreign exchange for sending or bringing into India any goods but sends or brings no such goods or does not send or bring goods of a value representing the foreign exchange acquired, within a reasonable time or sends or brings any goods of a kind, quality or quantity different from that specified by him at the time of acquisition of the foreign exchange, such person shall, unless the contrary is proved, be presumed not to have been able to use the foreign exchange for the purpose for which he acquired it or, as the case may be, to have used the foreign exchange so acquired otherwise than for the purposes for which it was acquired.
(5) Nothing in this section shall be deemed to prevent a person from buying from any post office, in accordance with any law or rules made thereunder for the time being in force, any foreign exchange in the form of postal orders or money orders.
Restrictions on payments
9. (1) Save as may be provided in and in accordance with any general or special exemption from the provisions of this sub-section which may be granted conditionally or unconditionally \by the Reserve Bank, no person in, or resident in, India shall -(a) make any payment to or for the credit of any person resident outside India;
(b) receive, otherwise than through an authorised dealer, any payment by order or on behalf of any person resident outside in India.
Explanation - For the purposes of this clause, where any person in, or resident in, India receives any payment by order or on behalf of any person resident outside India through any other person (including an authorised dealer) without a corresponding inward remittance from any place outside India, then, such person shall be deemed to have received such payment otherwise than through an authorised dealer;
(c) draw, issue or negotiate any bill of exchange or promissory note or acknowledge any debt, so that a right (whether actual or contingent) to receive a payment is created or transferred in favour of any person resident outside India;
(d) make any payment to, or for the credit of, any person by order or on behalf of any person resident outside India;
(e) place any sum to the credit of any person resident outside India;
(f) make any payment to, or for the credit of, any person or receive any payment for, or by order or on behalf of, any person as consideration for or in association with -(i) the receipt by any person of a payment or the acquisition by any person of property outside India, (ii) the creation or transfer in favour of any person of a right (whether actual or contingent) to receive payment or acquire property outside India;
(g) draw, issue or negotiate any bill of exchange or promissory note, transfer any security or acknowledge any debt, so that a right (whether actual or contingent) to receive a payment is created or transferred in favour of any person as consideration for or in association with any matter referred to in clause (f).
(2) Nothing in sub-section (1) shall render unlawful -(a) the making of any payment already authorised either with foreign exchange obtained from an authorised dealer or a money-changer under section 8 or with foreign exchange retained by a person in pursuance of an authorisation granted by the Reserve Bank; (b) the making of any payment with foreign exchange received by way of salary or payment for services not arising from any business in, or anything done while in, India.
(3) Save as may be provided in, and in accordance with, any general or special exemption from the provisions of this sub-section, which may be granted conditionally or unconditionally by the reserve Bank, no person shall remit or cause to be remitted any amount from any foreign country into India except in such a way that the remittance is received in India only through an authorised dealer.
(4) Nothing in this section shall restrict the doing by any person of anything within the scope of any authorisation or exemption granted under this Act.
(5) For the purposes of this section and section 19, "security" includes coupons or warrants representing dividends or interest and life or endownment insurance policies.
Blocked accounts
10. (1) Where an exemption from the provisions of section 9 is granted by the Reserve Bank in respect of payment of any sum to any person resident outside India and the exemption is made subject to the condition that the payment is made to a blocked account -(a) the payment shall be made to a blocked account in the name of that person in such manner as the Reserve Bank may, by general or special order, direct; (b) the crediting of that sum to that account shall, to the extent of the sum credited, be a good discharge to the person making the payment.
(2) No sum standing at the credit of a blocked account shall be drawn on except in accordance with any general or special permission which may be granted conditionally or otherwise by the Reserve Bank.
(3) In this section, "blocked account" means an account opened, whether before or after the commencement of this Act, as a blocked account at any office or branch in India of a bank authorised in this behalf by the Reserve Bank, or an account blocked, whether before or after such commencement, by order of the Reserve Bank.
11. Deleted by Act 29 of 1983
12. Deleted by Act 29 of 1993
Restrictions on import and export of certain currency
13. (1) The Central Government may, by notification in the Official Gazette, order that, subject to such exemption, if any, as may be specified in the notification, no person shall, except with the general or special permission of the Reserve Bank and on payment of the fee, if any, prescribed, bring or send into India any foreign exchange or any Indian currency.
Explanation - For the purposes of this sub-section, the bringing or sending into any port or place in India of any such article as aforesaid intended to be taken out of India without being removed from the ship or conveyance in which it is being carried shall nonetheless be deemed to be a bringing, or, as the case may be, sending, into India of that article.
(2) No person shall, except with the general or special permission of the Reserve Bank or the written permission of a person authorised in this behalf by the Reserve Bank, take or send out of India any Indian currency or foreign exchange other than foreign exchange obtained by him from an authorised dealer or from a money-changer.
Acquisition by Central Government of foreign exchange
14. The Central Government may, by notification in the Official Gazette, order every person in, or resident in, India -(a) who owns or holds such foreign exchange as may be specified in the notification, to offer it, or cause it to be offered, for sale to the Reserve Bank on behalf of the Central Government or to such person, as the Reserve Bank may authorise for the purpose, at such price as the Central Government may fix, being a price which is not less than the price calculated at the rate of exchange for the time being authorised by the Reserve Bank; (b) who is entitled to assign any right to receive such foreign exchange as may be specified in the notification, to transfer that right to the Reserve Bank on behalf of the Central Government on payment of such consideration therefor as the Central Government may fix having regard to the rate for the time being authorised by the Reserve Bank in pursuance of sub-section
(2) of section 8 for conversion into Indian currency of the foreign currency in which such foreign exchange is expressed:
Provided that the Central Government may, by the said notification or by a separate order, except any person or class of persons from the operation of the order made in the said notification:
Provided further that nothing in this section shall apply to any foreign exchange acquired by a person from an authorised dealer or from a money-changer and retained by him with the permission of the Reserve Bank for any purpose.
15. Deleted by Act 29 of 1993
Duty of persons entitled to receive foreign exchange
16. (1) No person who has a right to receive any foreign exchange or to receive from a person resident outside India a payment in rupees shall, except with the general or special permission of the Reserve Bank, do or refrain from doing anything, or take or refrain from taking any action, which has the effect of securing -(a) that the receipt by him of the whole or part of that foreign exchange or payment is delayed, or (b) that the foreign exchange or payment ceases in whole or in part to be receivable by him.
(2) Where a person has failed to comply with the requirements of sub-section (1) in relation to any foreign exchange or payment in rupees, the Reserve Bank may give to him such directions as appear to be expedient for the purposes of securing the receipt of the foreign exchange or payment, as the case may be.
17. Deleted by Act 29 of 1993.
Payment for exported goods
18. (1) (a) The Central Government may, by notification in the Official Gazette, prohibit the taking or sending out by land, sea or air (hereafter in this section referred to as export) of all goods or of any goods or class of goods specified in the notification from India directly or indirectly to any place so specified unless the exporter furnishes to the prescribed authority a declaration in the prescribed form supported by such evidence as may be prescribed or so specified and true in all material particulars which, among others, shall include the amount representing -(i) the full export value of the goods; or (ii) if the full export value of the goods is not ascertainable at the time of export, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in the overseas market, and affirms in the said declaration that the full export value of the goods (whether ascertainable at the time of export or not) has been, or will within the prescribed period be, paid in the prescribed manner.
(b) If the Central Government is of opinion that it is necessary or expedient in the public interest so to do, it may, by notification in the Official Gazette, specify any goods, from among those goods to which a notification under clause (a) applies, and direct that in respect of the goods so specified, where an exporter makes a declaration under sub-clause (ii) of clause (a) of the value which he, having regard to the prevailing market conditions expects to receive on the sale of such goods in the overseas market, he shall not, except with the permission of the Reserve Bank on an application made to the Reserve Bank by the exporter in this behalf, authorise or permit or allow or in any manner be a party to, the sale of such goods for a value less than that declared:
Provided that no permission shall be refused by the Reserve Bank under this clause unless the exporter has been given a reasonable opportunity for making a representation in the matter:
Provided further that where the exporter makes an application to the Reserve Bank for permission under this clause and the Reserve Bank does not, within a period of twenty days from the date of receipt of the application, communicate to the exporter that permission applied for has been refused, it shall be presumed that Reserve Bank has granted such permission.
Explanation - In computing the period of twenty days for the purposes of the second proviso, the period, if any, taken by the Reserve Bank for giving an opportunity to the exporter for making a representation under the first proviso shall be excluded..(2) Where any export of goods, to which a notification under clause (a) of sub-section (1) applies, has been made, no person shall, except with the permission of the Reserve Bank, do or refrain from doing anything, or take or refrain from taking any action, which has the effect of securing -(A) in a case falling under sub-clause (i) or sub-clause (ii) of clause (a) of sub-section(1), -(a) that payment for the goods -(i) is made otherwise than in the prescribed manner, or (ii) is delayed beyond the period prescribed under clause (a) of sub-section (1), or (b) that the proceeds of sale of the goods exported do not represent the full export value of the goods subject to such deductions, if any, as may be allowed by the Reserve Bank; and (B) in a case falling under sub-clause (ii) of clause (a) of sub-section (1), also that the sale of the goods is delayed to an extent which is unreasonable having regard to the ordinary course of trade:
Provided that no proceedings in respect of any contravention of the provisions of this sub-section shall be instituted unless the prescribed period has expired and payment for the goods representing the full export value has not been made in the prescribed manner within the prescribed period.
(3) Where in relation to any goods to which a notification under clause (a) of sub-section (1) applies the prescribed period has expired and payment therefor has not been made as aforesaid, it shall be presumed, unless the contrary is proved by the person who has sold or is entitled to sell the goods or to procure the sale thereof, that such person has not taken all reasonable steps to receive or recover the payment for the goods as aforesaid and he shall accordingly be presumed to have contravened the provisions of sub-section (2)..(4) Where in relation to any goods to which a notification under clause (a) of sub-section (1) applies the prescribed period has expired and payment therefor has not been made as aforesaid, the Reserve Bank may give to any person who has sold the goods or who is entitled to sell the goods or procure the sale thereof, such directions as appear to it to be expedient for the purpose of securing -(i) if the goods have been sold, the payment therefor, or (ii) if the goods have not been sold, either the sale of the goods and payment therefor as aforesaid, or the re-import of the goods into India as the circumstances permit, within such period as the Reserve Bank may specify in this behalf and without prejudice to the generality of the foregoing provision, may direct that the goods, the right to receive the payment therefor or any other right to enforce such payment shall be transferred or assigned to the Central Government or to a person specified in the directions.
(5) Where any goods or a right to receive payment or any other right to enforce such payment, are or is transferred or assigned in accordance with sub-section (4), the Central Government shall pay to the person transferring or assigning the same, the amount recovered by or on behalf of the Central Government in respect of the goods, after deducting all costs, charges and expenses incurred by the Central Government in selling the goods or in recovering or realising the amount in respect of such goods.
(6) Without prejudice to the provisions of sub-section(1), where the value of the goods specified in the declaration furnished under that sub-section is less than the amount which in the opinion of the Reserve Bank, in a case falling under sub-clause (i) of clause (a) of that sub-section, represents the full export value of those goods, or in a case falling under sub-clause (ii) of that clause, the value which the exporter can, having regard to the prevailing market conditions, expect to receive on the sale of the goods in the overseas market, the Reserve Bank may issue an order requiring the person holding the shipping documents to retain possession thereof until such time as the exporter of the goods has made arrangements for the Reserve Bank or a person authorised by the Reserve Bank to receive on behalf of the exporter payment in the prescribed manner of an amount which in the opinion of the Reserve Bank represents the full export value of such goods or the value which the exporter, having regard to the prevailing market conditions, can be expected to receive on the sale of the goods in the overseas market..(7) For the purpose of ensuring compliance with provisions of this section and any order or direction made thereunder, the Reserve Bank or the prescribed authority referred to in sub-section (1) may require any person making any export of goods to which a notification under clause (a) of that sub-section applies to exhibit contracts with his foreign buyer or other evidence to show that the full export value of the goods, or, as the case may be, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in the overseas market, has been, or will within the prescribed period be, paid in the prescribed manner.
(8) Without prejudice to the provisions of sub-section (1), where the Reserve Bank has permitted any authorised dealer to accept for negotiation or collection of shipping documents covering exports from his constituent [not being a person who has signed the declaration in terms of sub-section (1)], such authorised dealer shall, before accepting such documents for negotiation or collection, require the constituent concerned also to sign such declaration and thereupon such constituent shall be bound to comply with such requisition and the original declarant and such constituent signing the declaration shall each be considered to be the exporter for the purposes of this section, and shall be governed by the provisions thereof accordingly.
(9) Without prejudice to the provisions of sub-section (1), in relation to export of goods to which a notification under clause (a) of that sub-section applies, the Reserve Bank may, for the purpose of ensuring that the full export value of the goods or, as the case may be, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in the overseas market, is received in proper time or without delay, by general or special order, direct from time to time, that in respect of export of goods to any destination or any class of export transactions or any class of goods or class of exporters, the exporter shall, prior to the export of the goods, comply with any or all of the following conditions as may be specified in the order, namely:-(a) that any contract or other arrangement for the sale of the goods shall be registered in such manner and with such authority or organisation as may be specified in the order; (b) that the payment for the goods is covered by an irrevocable letter of credit or by such other arrangement or document as may be specified in the order; (c) that a copy of the declaration to be furnished to the prescribed authority under sub-section(1) shall be submitted to such authority or organisation as may be specified in the order for certifying that the value of the goods specified in such declaration represents the proper value thereof; (d) that any declaration to be furnished to the prescribed authority under sub-section (1) shall be submitted to the Reserve Bank for its prior approval, which may, having regard to the circumstances, be given or withheld or may be given subject to such conditions as the Reserve Bank may deem fit to impose:.Provided that no approval shall be withheld by the Reserve Bank under this clause unless the exporter has been given a reasonable opportunity for making a representation in the matter.
(10) Where the Central Government is of opinion that, in respect of any goods or class of goods or class of exporters, or in respect of export to any destination, the practice of exporting goods in accordance with any term to the effect that the goods will be sold on account of the exporter and the account of such sales rendered to the exporter has resulted or is likely to result in the full export value of the goods not being brought into India in the prescribed manner or within the prescribed period, it may, by general or special order, prohibit the export, in accordance with such term, of such goods or class of goods or by such exporters or to such destination.
Payment for lease, hire or other arrangement
18A. No person shall, except with the general or special permission of the Reserve Bank, take or send out by land, sea or air any goods from India to any place on lease or hire or under any arrangement other than sale or disposal in any other manner of such goods.
Regulation of export and transfer of securities
19. (1) Notwithstanding anything contained in section 81 of the Companies Act, 1956, no person shall, except with the general or special permission of the Reserve Bank, --
(a) take or send any security to any place outside India;
(b) transfer any security, or create or transfer any interest in a security, to or in favour of a person resident outside India;
(c) Deleted by Act 29 of 1993;
(d) issue, whether in India or elsewhere, any security which is registered or to be registered in India, to a person resident outside India;
(e) acquire, hold or dispose of any foreign security.
(2) Where the holder of a security is a nominee, neither he nor any person through whose agency the exercise of all or any of the holder's rights in respect of the security is controlled shall, except with the general or special permission of the Reserve Bank, do any act, whereby he recognises or gives effect to the substitution of another person as the person from whom he directly receives instructions, unless both the person previously instructing and the person substituted for that person were, immediately before the substitution, resident in India..(3) The Reserve Bank may, for the purpose of securing that the provisions of this section are not evaded, require that the person transferring any security and the person to whom such security is transferred shall subscribe to a declaration that the transferee is not resident outside India.
(4) Notwithstanding anything contained in any other law, no person shall, except with the permission of the Reserve Bank, -
(a) enter any transfer of securities in any register or book in which securities are registered or inscribed if he has any ground for suspecting that the transfer involves any contravention of the provisions of this section, or
(b) enter in any such register or book, in respect of any security whether in connection with the issue or transfer of the security or otherwise, an address outside India except by way of substitution for any such address in the same country or for the purpose of any transaction for which permission has been granted under this section with knowledge that it involves entry of the said address.
(c) Deleted by Act 29 of 1993
(5) Notwithstanding anything contained in any other law, no transfer of any share, bond or debenture of a company registered in India made by a person resident outside India or by a national of a foreign State to another person resident in India shall be valid unless such transfer is confirmed by the Reserve Bank on an application made to it in this behalf by the transferor or the transferee.
(6) If the Reserve Bank is of opinion that it is necessary or expedient in the public interest so to do, it may, by general or special permission exempt any transfer referred to in sub-section (5) or any class of such transfers from the operation of the provisions of that sub-section, subject to such conditions, if any, as may be specified in such permission.
(7) For the purposes of this section -
(a) "holder", in relation to a bearer security, means the person having physical custody of the security; provided that, where a bearer security is deposited with any person in a locked or sealed receptacle from which the person with whom it is deposited is not entitled to remove it without the authority of some other person, that other person shall be deemed to be the holder of the security;.(b) "nominee" means a holder of any security (including a bearer security) or any coupon representing dividends or interest who, as respects the exercise of any rights in respect of the security or coupon, is not entitled to exercise those rights except in accordance with the instructions given by some other person, and a person holding a security or coupon as a nominee shall be deemed to act as nominee for the person who is entitled to give instructions either directly or through the agency of one or more persons, as to the exercise by the holder of the security or coupon of any rights in respect thereof and is not, in so doing, himself under a duty to comply with instructions given by some other person.
20. Deleted by Act 29 of 1993
21. Deleted by Act 29 of 1993
Restrictions on issue of bearer securities
22. Except with the general or special permission of the Reserve Bank, no person shall, in India, and no person resident in India shall, outside India, create or issue any bearer certificate or coupon or so alter any document that it becomes a bearer certificate or coupon.
23. Deleted by Act 29 of 1993
Restriction on settlement etc.
24. No person resident in India shall, except with the general or special permission of the Reserve Bank, settle, or make a gift of, any property so that a person who at the time of the settlement or the making of the gift is resident outside India, elsewhere than in the territories notified in this behalf by the Reserve Bank, will have an interest in the property, or exercise any power for payment in favour of a person who at the time of the exercise of the power is resident outside India elsewhere than in such notified territories:
Provided that any settlement or gift made or any power exercised as aforesaid without the permission of the Reserve Bank shall not be invalid merely on the ground that such permission has not been obtained.
Restriction on holding of immovable property outside India
25. (1) No person resident in India shall, except with the general or special permission of the Reserve Bank, acquire or hold or transfer or dispose of by sale, mortgage, lease, gift, settlement or otherwise, any immovable property situate outside India:
Provided that nothing in this sub-section shall apply to the acquisition or transfer of any such immovable property by way of lease for a period not exceeding five years.
(2) Any person resident in India and holding any immovable property outside India at the commencement of this Act shall, before the expiry of a period of three months from such commencement or such further period as the Reserve Bank may allow in this behalf, declare such holding to the Reserve Bank in such form and containing such particulars as may be specified by the Reserve Bank.
(3) Deleted by Act 29 of 1993
(4) Nothing in this section shall apply to a national of a foreign State.
Certain provisions as to guarantee in respect of debt or other obligation
26. Except with the general or special permission of the Central Government, or the Reserve Bank, no person resident in India shall give a guarantee in respect of any debt or other obligation or liability-(i) of a person resident in India, and due or owing to a person resident outside India, or (ii) of a person resident outside India.
27. Deleted by Act 29 of 1993
Restrictions on the appointment of certain persons and companies as agents
28. (1) Without prejudice to the provisions of section 47 and notwithstanding anything contained in any of other provision of this Act or the Companies Act, 1956, a person resident outside India (whether a citizen of India or not) or a person who is not a citizen of India but is resident in India, or a company (other than a banking company) which is not incorporated under any law in force in India or any branch of such company, shall not, except with the general or special permission of the Reserve Bank act, or accept appointment, as agent in India of any person or company, in the trading or commercial transactions of such person or company, or
(2) Where any such person or company (including its branch) as is referred to in sub-section (1) acts or accepts appointment as such agent, without the permission of the Reserve Bank, such acting or appointment shall be void.
(3) Where any such person or company (including its branch) as is referred to in sub-section (1) acts as, or holds the appointment of, any such agent as is referred to in that sub-section at the commencement of this Act, such person or company (including its branch) shall, within a period of six months from such commencement or such further period as the Reserve Bank may allow in this behalf, make an application to the Reserve Bank in such form and containing such particulars as may be specified by the Reserve Bank for permission to continue to act, as such agent.
(4) On receipt of an application under sub-section (3), the Reserve Bank may, after making such inquiry as it deems fit, either allow the application subject to such conditions, if any, as the Reserve Bank may think fit to impose, or reject the application:
Provided that no application shall be rejected under this sub-section unless the parties who may be affected by such rejection have been given a reasonable opportunity for making a representation in the matter.
(5) Where any application has been rejected under sub-section (4), the acting, appointment or permission, as the case may be, shall be void on the expiry of a period of ninety days, or such other later date as may be specified by the Reserve Bank, from the date of receipt by the person or company (including its branch) concerned of the communication conveying such rejection.
(6) Where no application has been made under sub-section (3) by any such person or company (including its branch) as is referred to in sub-section (1), the Reserve Bank may, by order, direct such person or company (including its branch) to desist from such acting on the expiry of such period as may be specified in the direction:
Provided that no direction shall be made under this sub-section unless the parties who may be affected by such direction have been given a reasonable opportunity for making a representation in the matter.
(7) Where any direction made under sub-section (6) has not been complied with by any person or company (including its branch), then, without prejudice to any action that may be taken under this Act, the acting, shall be with effect from the expiry of the period specified in the direction.
Explanation - For the purposes of this section, -(a) "agent" includes any person or company (including its branch) who or which buys any goods with a view to sell such goods before any processing thereof; (b) "company" means any body corporate and includes a firm or other association of individuals; (c) "processing" means any art or process for producing, preparing or making an article by subjecting any material to a manual, mechanical, chemical, electrical or any other like operation but does not include any process incidental or ancillary to the completion of a manufactured product such as dividing, pressing, compressing, packing, re-packing, labeling, re-labeling, branding or the adoption of any such treatment as is necessary to render such product marketable to the consumer.
(d) Deleted by Act 29 of 1993
Restrictions on establishment of place of business in India
29. (1) Without prejudice to the provisions of section 28 and section 47 and notwithstanding anything contained in any other provisions of this Act or the provisions of the Companies Act, 1956, a person resident outside India (whether a citizen of India or not) or a person who is not a citizen of India but is resident in India or a company (other than a banking company) which is not incorporated under any law in force in India or any branch of such company, shall not, except with the general or special permission of the Reserve Bank, -(a) carry on in India, or establish in India a branch, office or other place of business for carrying on any activity of a trading, commercial or industrial nature, other than an activity for the carrying on of which permission of the Reserve Bank has been obtained under Section 28; or (b) acquire the whole or any part of any undertaking in India of any person or company carrying on any trade, commerce or industry or purchase the shares in India of any such company.
(1A)A company (other than a banking company) in which the non-resident interest is more than forty per cent, shall not, except with the general or special permission of the Reserve Bank, carry on in India any activity relating to agriculture or plantation or acquire the whole or any part of any undertaking in India of any person or company carrying on any activity relating to agriculture or plantation or purchase the shares in such company..(2) (a) Where any person or company (including its branch) referred to in sub-section (1) carries on any activity referred to in clause (a) of that sub-section at the commencement of this Act or has established a branch, office or other place of business for the carrying on of such activity at such commencement, then, such person or company (including its branch) may make an application to the Reserve Bank within a period of six months from such commencement or such further period as the Reserve Bank may allow in this behalf for permission to continue to carry on such activity or to continue the establishment of the branch, office or other place of business for the carrying on of such activity, as the case may be.
(b) Every application made under clause (a) shall be in such form and contain such particulars as may be specified by the reserve Bank.
(c) Where any application has been made under clause (a), the Reserve Bank may, after making such inquiry as it may deem fit, either allow the application subject to such conditions, if any, as the Reserve Bank may think fit to impose or reject the application:
Provided that no application shall be rejected under this clause unless the parties who may be affected by such rejection have been given a reasonable opportunity for making a representation in the matter.
(d) Where an application is rejected by the Reserve Bank under clause (c), the person or company (including its branch) concerned shall discontinue such activity or close down the branch, office or other place of business established for the carrying on of such activity, as the case may be, on the expiry of a period of ninety days or such other later date as may be specified by the Reserve Bank from the date of receipt by such person or company (including its branch) of the communication conveying such rejection.
(e) Where no application has been made under clause (a) by any person or company (including its branch), the Reserve Bank may, by order, direct such person or company (including its branch) to discontinue such activity or to close down the branch, office or other place of business established for the carrying on of such activity, as the case may be, on the expiry of such period as may be specified in the direction:
Provided that no direction shall be made under this clause unless the parties who may be effected by such direction have been given a reasonable opportunity for making a representation in the matter.
(3) Notwithstanding anything contained in sub-section (2), the Reserve Bank may, having regard to -
(i) the fact that any person or company (including its branch), referred to in sub-section (1), is carrying on any activity referred to in clause (a) of that sub-section at the commencement of this Act or has established a branch, office or other place of business for the carrying on of such activity at such commencement, in either case, in pursuance of any permission or licence granted by the Central Government;
and
(ii) the nature of the activity which is being, or intended to be, carried on by such person or company (including its branch), by order, exempt -(a) such person or company (including its branch); or (b) any class of such persons or companies (including their branches), in relation to such activity as may be specified in the order, from the operation of the provisions of sub-section (2) subject to such conditions as may be specified in the order:
Provided that the Reserve Bank shall not make any order under this sub-section in a case where the activity which is being, or intended to be, carried on is solely of a trading nature.
(4) (a) Where at the commencement of this Act any person or company (including its branch) referred to in sub-section (1) holds any shares in India of any company referred to in clause (b) of that sub-section, then, such person or company (including its branch) shall not be entitled to continue to hold such shares unless before the expiry of a period of six months from such commencement or such further period as the Reserve Bank may allow in this behalf such person or company (including its branch) has made an application to the Reserve Bank in such form and containing such particulars as may be specified by the Reserve Bank for permission to continue to hold such shares.
(b) Where an application has been made under clause (a), the Reserve Bank may, after making such inquiry as it may deem fit, either allow the application subject to such conditions, if any, as the Reserve Bank may think fit to impose or reject the application:
Provided that no application shall be rejected under this clause unless the parties who may be affected by such rejection have been given a reasonable opportunity for making a representation in the matter.
(c) Where an application has been rejected under clause (b) or where no application has been made under clause (a), the Reserve Bank may, if it is of opinion that it is expedient so to do for the purpose of conserving the foreign exchange, direct such person or company (including its branch) to sell or procure the sale of such shares:
Provided that no direction shall be made under this clause unless notice of such direction for a period of not less than ninety days has been given to the person or company (including its branch) to be affected by such direction.
Explanation - For the purposes of this section, -(i) "company" has the same meaning as in clause (b) of the Explanation to section 28:
(ii) "non-resident interest" means participation in the share capital by, or entitlement to the distributable profits of any individual or company resident outside India, or any company not incorporated under any law in force in India, or any branch of such company whether resident outside India or not.
Prior permission of Reserve Bank required for practising profession, etc. in India by nationals of foreign States
30. (1) No national of a foreign State shall, without the previous permission of the Reserve Bank practise any profession or carry on any occupation, trade or business in India in a case where such national desires to acquire any foreign exchange (such foreign exchange being intended for remittance outside India) out of any moneys received by him in India by reason of the practising of such profession or the carrying on of such occupation, trade or business, as the case may be.
(2) Where any national of a foreign State desires to obtain the permission of the Reserve Bank under sub-section (1), he may make an application to the Reserve Bank in such form, in such manner and containing such particulars as may be prescribed.
(3) On receipt of an application under sub-section (2), the Reserve Bank may, after making such inquiry as it deems fit, allow the application subject to such conditions, if any, as it may think fit to impose or reject the application:
Provided that no application shall be rejected under this sub-section unless the applicant has been given a reasonable opportunity for making a representation in the matter.
Restriction on acquisition, holding, etc., of immovable property in India
31. (1) No person who is not a citizen of India and no company (other than a banking company) which is not incorporated under any law in force in India shall, except with the previous general or special permission of the Reserve Bank, acquire or hold or transfer or dispose of by sale, mortgage, lease, gift, settlement or otherwise any immovable property situate in India:
Provided that nothing in this sub-section shall apply to the acquisition or transfer of any such immovable property by way of lease for a period not exceeding five years.
(2) Any person or company referred to in sub-section (1) and requiring a special permissionunder that sub-section for acquiring, or holding, or transferring, or disposing of, by sale, mortgage, lease, gift, settlement or otherwise any immovable property situate in India may make an application to the Reserve Bank in such form and containing such particulars as may be specified by the Reserve Bank.
(3) On receipt of an application under sub-section (2), the Reserve Bank may, after making such inquiry as it deems fit, either grant or refuse to grant the permission applied for:
Provided that no permission shall be refused unless the applicant has been given a reasonable opportunity for making a representation in the matter:
Provided further that if before the expiry of a period of ninety days from the date on which the application was received by the Reserve Bank, the Reserve Bank does not communicate to the applicant that the permission applied for has been refused, it shall be presumed that the Reserve Bank has granted such permission.
Explanation - In computing the period of ninety days for the purposes of the second proviso, the period, if any, taken by the Reserve Bank for giving an opportunity to the applicant for making a representation under the first proviso shall be excluded.
(4) Every person and company referred to in sub-section (1) holding at the commencement of this Act any immovable property situate in India shall, before the expiry of a period of ninety days from such commencement or such further period as the Reserve Bank may allow in this behalf, make a declaration in such form as may be specified by the Reserve Bank regarding the immovable property or properties held by such person or company.
32. Deleted by Act 29 of 1993.
Power to call for information
33. (1) The Central Government may, at any time by notification in the Official Gazette, direct the owners, subject to such exceptions, if any, as may be specified in the notification, of such foreign exchange or foreign securities or immovable properties held outside India as may be so specified, to submit a return, or from time to time returns, thereof to the Reserve Bank within such period, and giving such particulars, as may be so specified.
(2) Where for the purposes of this Act the Central Government or the Reserve Bank or any officer of Enforcement, not below the rank of a Chief Enforcement Officer, considers it necessary or expedient to obtain and examine any information, book or other document in the possession of any person or which in the opinion of the Central Government or the Reserve Bank or such officer it is possible for such person to obtain and furnish, the Central Government or the Reserve Bank or, as the case may be, such officer may, by order in writing, require any such person (whose name shall be specified in the order) to furnish, or to obtain and furnish, to the Central Government or the Reserve Bank or such officer or any person specified in the order with such information, book or other document and thereupon such person shall be bound to comply with such requisition.
Explanation - For the purposes of this section, section 34 and sections 36 to 41 (both inclusive), "document" includes Indian currency, foreign exchange and books of account.
APPENDIX I (Part 2 Of 2)
Power to search suspected persons and to seize documents
34. (1) If any officer of Enforcement authorised in this behalf by the Central Government, by general or special order, has reason to believe that any person has secreted about his person or in anything under his possession, ownership or control any documents which will be useful for, or relevant to, any investigation or proceeding under this Act, he may search that person or such thing and seize such documents.
(2) When any officer of Enforcement is about to search any person under the provisions of this section, the officer of Enforcement shall, if such person so requires, take such person without unnecessary delay to the nearest gazetted officer of Enforcement superior in rank to him or a magistrate.
(3) If such requisition is made, the officer of Enforcement may detain the person making it until he can bring him before the gazetted officer of Enforcement or the magistrate referred to in sub-section (2).
(4) The gazetted officer of Enforcement or the magistrate before whom any such person is brought shall, if he sees no reasonable ground for search, forthwith discharge the person but otherwise shall direct that search be made.
(5) Before making a search under the provisions of this section, the officer of Enforcement shall call upon two or more persons to attend and witness the search and may issue an order in writing to them or any of them so to do; and the search shall be made in the presence of such persons and a list of all documents seized in the course of such search shall be prepared by such officer and signed by such witnesses.
(6) No female shall be searched by any one excepting a female.
Power to arrest
35. (1) If any officer of Enforcement authorised in this behalf by the Central Government, by general or special order, has reason to believe that any person in India or within the Indian customs waters has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.
(2) Every person arrested under sub-section (1) shall, without unnecessary delay, be taken to a magistrate.
(3) Where any officer of Enforcement has arrested any person under sub-section (1), he shall, for the purpose of releasing such person on bail or otherwise, have the same powers and be subject to the same provisions as the officer-in-charge of a police station has, and is subject to, under the Code of Criminal Procedure, 1973.
Power to stop and search conveyances
36. If any officer of Enforcement authorised in this behalf by the Central Government, by general or special order, has reason to believe that any document which will be useful for, or relevant to, any investigation or proceeding under this Act is secreted in any aircraft or vehicle or on any animal in India or in any vessel in India or within the Indian customs waters, he may at any time stop any such vehicle or animal or vessel or, in the case of an aircraft, compel it to stop or land, and -
(a) rummage and search any part of the aircraft, vehicle or vessel;
(b) examine and search any goods in the aircraft, vehicle or vessel or on the animal;
(c) seize any such document as is referred to above;
(d) break open the lock of any door or package for exercising the powers conferred by clauses (a), (b) and (c), if the keys are withheld.
Power to search premises
37. (1) If any officer of Enforcement, not below the rank of an Assistant Director of Enforcement, has reason to believe that any documents which, in his opinion, will be useful for, or relevant to, any investigation or proceeding under this Act, are secreted in any place, he may authorise any officer of Enforcement to search for and seize or may himself search for and seize such documents.
(2) The provisions of the Code of Criminal Procedure, 1973, relating to searches, shall, so far as may be, apply to searches under this section subject to the modification that sub-section (5) of section 165 of the said Code shall have effect as if for the word "Magistrate", wherever it occurs, the words "Director of Enforcement or other officer exercising his powers" were substituted.
Power to seize documents, etc.
38. Without prejudice to the provisions of section 34 or section 36 or section 37, if any officer of Enforcement authorised in this behalf by the Central Government, by general or special order, has reason to believe that any document or thing will be useful for, or relevant to, any investigation or proceeding under this Act or in respect of which a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder has taken place, he may seize such document or thing.
Power to examine persons
39. The Director of Enforcement or any other officer of Enforcement authorised in this behalf by the Central Government, by general or special order, may, during the course of any investigation or proceeding under this Act,-
(a) require any person to produce or deliver any document relevant to the investigation or proceeding;
(b) examine any person acquainted with the facts and circumstances of the case.
Power to summon persons to give evidence and produce documents
40. (1) Any gazetted officer of Enforcement shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document during the course of any investigation or proceeding under this Act.
(2) A summons to produce documents may be for the production of certain specified documents or for the production of all documents of a certain description in the possession or under the control of the person summoned.
(3) All persons so summoned shall be bound to attend either in person or by authorised agents, as such officer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents as may be required:
Provided that the exemption under section 132 of the Code of Civil Procedure, 1908, shall be applicable to any requisition for attendance under this section.
(4) Every such investigation or proceeding as aforesaid shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the Indian Penal Code
Custody of documents, etc.
41. Where in pursuance of an order made under sub-section (2) of section 33 or of the provisions of section 34 or section 36 or section 37 or of a requisition or summons under section 39 or section 40, any document is furnished or seized and any officer of Enforcement has reason to believe that the said document would be evidence of the contravention of any of the provisions of this Act or of any rule, direction or order made thereunder, and that it would be necessary to retain the document in his custody, he may so retain the said document for a period not exceeding six months or if, before the expiry of the said period of six months, any proceedings -.(i) under section 51 have been commenced, until the disposal of those proceedings, including the proceedings, if any, before the Appellate Board and the High Court: or (ii) under section 56 have been commenced before a court, until the document has been filed in the court:
Provided that the aforesaid period of six months may, for reasons to be recorded in writing, be extended by the Director of Enforcement for a further period not exceeding six months.
Explanation - In computing the period during which a document (hereafter in this Explanation referred to as the said document) may be retained under this section, in any case where by reason of an injunction or order of any court (whether such injunction or order is in relation to the said document or is in relation to any other document reference to which would be necessary for examining or using the said document), -(a) the said document could not be examined fully for the purpose of determining whether it would be evidence of the contravention of any of the provisions of this Act or of any rule, direction or order made thereunder, or (b) the said document could not be used for commencing any proceedings under section 51 or section 56, or (c) the proceedings under section 51 or section 56 could not be commenced, the time of the continuance of the injunction or order, the day on which it was issued or made and the day on which it was withdrawn, shall be excluded.
Encashment of cheque, draft, etc.
42. (1) Where -(i) an investigation is being made into any alleged contravention of the provisions of section 13 or clause (a) of sub-section (1) of section 18 or section 18A or clause (a) of sub-section (1) of section 19, read with section 67;
or
(ii) an investigation is being made into any alleged contravention of any other provision of this Act or of any rule, direction or order made thereunder; or
(iii) any proceeding in respect of any such contravention as is referred to in clause (i) or clause (ii) is pending before an officer of Customs or an officer of Enforcement or a court, and any draft, cheque (including traveller's cheque) or other instrument being the subject matter of such investigation or proceeding is in the custody of an officer of Customs or of an officer of Enforcement or of a court, then, -(a) where such draft, cheque (including traveller's cheque) or other instrument is in the custody of an officer of Customs, the Collector of Customs; or
(b) where such draft, cheque (including traveller's cheque) or other instrument is in the custody of an officer of Enforcement, the Director of Enforcement;or
(c) where such draft, cheque (including traveller's cheque) or other instrument is in the custody of a court, the court, on an application made to it in this behalf by the Collector of Customs or, as the case may be, by the Director of Enforcement, may, by order, direct that the sum due under such draft, cheque (including traveller's cheque) or other instrument be encashed either through the Reserve Bank or such other agency as the Collector of Customs or the Director of Enforcement or the court, as the case may be, deems fit.
(2) Any proceeds realised in pursuance of a direction under sub-section (1) shall be kept in a separate account to be maintained by the prescribed authority in the prescribed manner.
(3) Where a direction is made under section 63, or an order has been made under the Customs Act, 1962 to confiscate any draft, cheque (including traveller's cheque) or other instrument the proceeds of which have been realised under sub-section (1), such proceeds shall vest in the Central Government and in all other cases such proceeds shall be paid to such person as may appear to the officer or the court, who or which made the direction under sub-section (1), to be entitled thereto in such currency and in such manner as he or it deems just together with interest at the rate of six per cent per annum from the date on which such draft, cheque (including traveller's cheque) or other instrument came into his or its custody till the date of payment:.Provided that nothing in this sub-section shall affect the liability of any person, who may receive the whole or any part of the proceeds, to pay the same to the person lawfully entitled thereto.
(4) Where any foreign currency, being the subject matter of any investigation or proceeding referred to in sub-section (1), is in the custody of an officer of Customs or of an officer of Enforcement or of a court, the Collector of Customs, the Director of Enforcement or, as the case may be, the court may, having regard to the security-risk involved in such custody, direct that the foreign currency be deposited in a bank in such manner as he or it may deem fit.
(5) Where any draft, cheque (including traveller's cheque) or other instrument is to be encashed under sub-section (1) or any foreign currency is to be deposited in a bank under sub-section (4), the Collector of Customs, the Director of Enforcement or, as the case may be, the court, may prepare or cause to be prepared an inventory of such draft, cheque or other instrument or foreign currency containing such details relating to its description, mark, numbers, country of origin and other particulars as may appear to be relevant to its identity in any proceeding under this Act and where the inventory is prepared or caused to be prepared by the Collector or the Director, the Collector or, as the case may be, the Director shall make an application to a Magistrate for the purpose of -(a) certifying the correctness of the inventory so prepared; or (b) taking, in the presence of the Magistrate photographs of such draft, cheque, other instrument or foreign currency, and certifying such photographs as true.
(6) Where an application is made under sub-section (5), the Magistrate shall, as soon as may be, allow the application.
Inspection
43. (1) Any officer of Enforcement not below the rank of an Assistant Director of Enforcement specially authorised in writing by the Director of Enforcement in this behalf, or any officer of the Reserve Bank specially authorised in writing by the Reserve Bank in this behalf, may inspect the books and accounts and other documents of any authorised dealer.
(2) It shall be the duty of every authorised dealer and, where the authorised dealer is a company or a firm, of every director, partner or other officer of the authorised dealer to produce to any officer making an inspection under sub-section (1) all such books, accounts and other documents in his custody or power and to furnish him with any statement or information relating to the affairs of the authorised dealer as the said officer may require of him within such time as the said officer may specify.
(3) Any officer making an inspection under sub-section (1) may examine on oath any authorised dealer or his agent or, where the authorised dealer is a company or a firm, any director, partner or other officer of the authorised dealer in relation to its business.
(4) If any person fails to produce any book, account or other document or to furnish any statement or information relating to the authorised dealer which, under sub-section (2), it is his duty to produce or furnish, or to answer any question relating to the business of the authorised dealer which he is asked by an officer making an inspection under this section, he shall be deemed to have contravened the provisions of this Act.
(5) The provisions of this section shall, so far as may be, apply in relation to a money-changer as they apply in relation to an authorised dealer.
Prohibition of disclosure of documents or information except in certain cases
44. (1) If the Director of Enforcement or any other officer of Enforcement not below the rank of an Assistant Director of Enforcement is of opinion that the contents of any documents which have come into his possession or control during the course of any investigation or proceeding under this Act would be useful for, or relevant to, any proceeding which is in progress or may be started under any other law for the time being in force, he may disclose such document or any information contained therein as he thinks fit to an officer duly authorised by or under such other law.
(2) If any officer of Enforcement, except in the discharge in good faith of his duty as such officer in accordance with sub-section (1), or in compliance with any requisition made under any law for the time being in force, discloses any document or information obtained by him in his official capacity, he shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.
Power of police officers and other officers to enter, search, etc.
45. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, any police officer not below the rank of a Deputy Superintendent of Police, or any other officer of the Central Government or a State Government authorised by the Central Government in this behalf may enter any public place and search and arrest without warrant any person found therein who is reasonably suspected of having committed or of committing or of being about to commit a contravention of the provisions of sub-section (1) of section 8.
Explanation - For the purposes of this sub-section, the expression "public place" includes any public conveyance, any hotel, any shop or any other place intended for use by, or accessible to, the public.
(2) Where any person is arrested under sub-section (1) by an officer other than a police officer, such officer shall, without unnecessary delay, take or send the person arrested before a magistrate having jurisdiction in the case or before the officer-in-charge of a police station.
(3) The provisions of the Code of Criminal Procedure, 1973, shall, subject to the provisions of this section, apply, so far as may be, in relation to any entry, search or arrest, made under this section.
(4) The provisions of this section shall have effect notwithstanding anything inconsistent therewith contained in any other provision of this Act.
Procedure in respect of foreign exchange or any other goods seized by police officers
46. (1) Where any police officer seizes any foreign exchange or any other goods which is alleged or suspected to have been stolen, or which is found, in either case, under circumstances which create suspicion of the commission of an offence under this Act, such police officer shall forthwith report the seizure of -
(i) such foreign exchange to the nearest officer of Enforcement, not below the rank of an Assistant Director of Enforcement; and
(ii) such other goods to the nearest officer of Customs, not below the rank of an Assistant Collector of Customs..(2) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, in every case referred to in sub-section (1), the police officer shall, immediately after the dismissal of the complaint or the conclusion of the inquiry or trial, as the case may be, cause -
(i) such foreign exchange to be delivered to an officer of Enforcement, not below the rank of an Assistant Director of Enforcement; and
(ii) such other goods to be conveyed to an officer of Customs, not below the rank of an Assistant Collector of Customs.
Contracts in evasion of the Act
47. (1) No person shall enter into any contract or agreement which would directly or indirectly evade or avoid in any way the operation of any provision of this Act or of any rule, direction or order made thereunder.
(2) Any provision of, or having effect under, this Act that a thing shall not be done without the permission of the Central Government or the Reserve Bank, shall not render invalid any agreement by any person to do that thing, if it is a term of the agreement that that thing shall not be done unless permission is granted by the Central Government or the Reserve Bank, as the case may be; and it shall be an implied term of every contract governed by the law of any part of India that anything agreed to be done by any term of that contract which is prohibited to be done by or under any of the provisions of this Act except with the permission of the Central Government or the Reserve Bank, shall not be done unless such permission is granted.
(3) Neither the provisions of this Act nor any term (whether express or implied) contained in any contract that anything for which the permission of the Central Government or the Reserve Bank is required by the said provisions shall not be done without that permission, shall prevent legal proceedings being brought in India to recover any sum which, apart from the said provisions and any such term, would be due, whether as debt, damages or otherwise, but -
(a) the said provisions shall apply to sums required to be paid by any judgement or order of any court as they apply in relation to other sums;
(b) no steps shall be taken for the purpose of enforcing any judgement or order for the payment of any sum to which the said provisions apply except as respects so much thereof as the Central Government or the Reserve Bank, as the case may be, may permit to be paid; and
(c) for the purpose of considering whether or not to grant such permission, the Central Government or the Reserve Bank, as the case may be, may require the person entitled to the benefit of the judgement or order and the debtor under the judgement or order, to produce such documents and to give such information as may be specified in the requisition.
(4) Notwithstanding anything contained in the Negotiable Instruments Act, 1881, neither the provisions of this Act or of any rule, direction or order made thereunder, nor any condition, whether expressed or to be implied having regard to those provisions, that any payment shall not be made without permission under this Act, shall be deemed to prevent any instrument being a bill of exchange or promissory note.
False statements
48. No person shall, when complying with any direction or order under section 33 or with any requirement under section 43 or when making any application or declaration to any authority or person for any purpose under this Act, give any information or make any statement which he knows or has reasonable cause to believe to be false, or not true, in any material particular.
Failure to comply with conditions subject to which permissions or licences have been given or granted under the Act to be contravention of the provisions of the Act
49. Where under any provision of this Act any permission or licence has been givenor granted to any person subject to any conditions and-
(i) such person fails to comply with all or any of such conditions;
or
(ii) any other person abets such person in not complying with all or any of such conditions, then, for the purposes of this Act, -
(a) in a case referred to in clause (i), such person shall be deemed to have contravened such provision;
and
(b) in a case referred to in clause (ii), such other person shall be deemed to have abetted the contravention of such provision.
Penalty
50. If any person contravenes any of the provisions of this Act [other than section 13, clause (a) of sub-section (1) of section 18, section 18A and clause (a) of sub-section (1) of section 19] or of any rule, direction or order made thereunder, he shall be liable to such penalty not exceeding five times the amount or value involved in any such contravention or five thousand rupees, whichever is more, as may be adjudged by the Director of Enforcement or any other officer of Enforcement not below the rank of an Assistant Director of Enforcement specially empowered in this behalf by order of the Central Government (in either case hereinafter referred to as the adjudicating officer).
Power to adjudicate
51. For the purpose of adjudging under section 50 whether any person has committed a contravention of any of the provisions of this Act (other than those referred to in that section) or of any rule, direction or order made thereunder, the adjudicating officer shall hold an inquiry in the prescribed manner after giving that person a reasonable opportunity for making a representation in the matter and if, on such inquiry, he is satisfied that the person has committed the contravention, he may impose such penalty as he thinks fit in accordance with the provisions of that section.
Appeal to Appellate Board
52. (1) The Central Government may, by notification in the Official Gazette, constitute an Appellate Board to be called the Foreign Exchange Regulation Appellate Board consisting of a Chairman [being a person who has for at least ten years held a civil judicial post or who has been a member of the Central Legal Service (not below Grade I) for at least three years or who has been in practice as an advocate for at least ten years] and such number of other members, not exceeding four, to be appointed by the Central Government for hearing appeals against the orders of the adjudicating officer made under section 51.
(2) Any person aggrieved by such order may, on payment of such fee as may be prescribed and after depositing the sum imposed by way of penalty under section 50 and within forty-five days from the date on which the order is served on the person committing the contravention, prefer an appeal to the Appellate Board:
Provided that the Appellate Board may entertain any appeal after the expiry of the said period of forty-five days, but not after ninety days, from the date aforesaid if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time:
Provided further that where the Appellate Board is of opinion that the deposit to be made will cause undue hardship to the appellant, it may, in its own discretion, dispense with such a deposit either unconditionally or subject to such conditions as it may deem fit..(3) On receipt of an appeal under sub-section (2), the Appellate Board may, after making such further inquiry as it deems fit, confirm, modify or set aside the order appealed against and the decision of the Appellate Board shall, subject to the provisions of section 54, be final and if the sum deposited by way of penalty under sub-section (2) exceeds the amount directed to be paid by the Appellate Board, the excess amount shall be refunded.
(4) The Appellate Board may, for the purpose of examining the legality, propriety or correctness of any order made by the adjudicating officer under section 50 read with section 51 in relation to any proceeding, on its own motion or otherwise, call for the records of such proceeding and make such order in the case as it thinks fit.
(5) No order of the adjudicating officer made under section 50 read with section 51 shall be varied by the Appellate Board so as to prejudicially affect any person without giving such person a reasonable opportunity for making a representation in the matter; and subject thereto, the Appellate Board shall follow such procedure, in respect of the proceedings before it,as may be prescribed.
(6) The powers and functions of the Appellate Board may be exercised and discharged by Benches consisting of two members and constituted by the Chairman of the Appellate Board:
Provided that if the members of the Bench differ on any point or points, they shall state the point or points on which they differ and refer the same to a third member (to be specified by the Chairman) for hearing on such point or points and such point or points shall be decided according to the opinion of that member:
Provided further that it shall be competent for the Chairman or any other member of the Appellate Board authorised by the Chairman in this behalf to exercise the powers and discharge the functions of the Appellate Board in respect of any appeal against an order imposing a penalty of an amount not exceeding Rupees two lakhs and fifty thousand.
Powers of the adjudicating officer and the Appellate Board to summon witnesses, etc.
53. (1) Without prejudice to any other provision contained in this Act, the adjudicating officer and the Appellate Board shall have all the powers of a civil court under the Code of Civil Procedure, 1908 while trying a suit, in respect of the following matters, namely:-(a) summoning and enforcing the attendance of witnesses;
(b) requiring the discovery and production of any document;
(c) requisitioning any public record or copy thereof from any court or office;
(d) receiving evidence on affidavits; and
(e) issuing commissions for the examination of witnesses or documents.
(2) The adjudicating officer or the Appellate Board while exercising any powers under this Act shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure,1973.
Appeal to High Court
54. An appeal shall lie to the High Court only on questions of law from any decision or order of the Appellate Board under sub-section (3) or sub-section (4) of section 52:
Provided that the High Court shall not entertain any appeal under this section if it is filed after the expiry of sixty days of the date of communication of the decision or order of the Appellate Board, unless the High Court is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time.
Explanation - In this section and in section 55, "High Court" means -(i) the High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain; and (ii) where the Central Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one respondent, any of the respondents, ordinarily resides or carries on business or personally works for gain.
Continuance of proceeding in the event of death or insolvency
55. (1) Where -(i) a penalty has been imposed under section 50 read with section 51 by the adjudicating officer on any person and no appeal against the order imposing such penalty has been preferred to the Appellate Board;or
(ii) any such appeal has been preferred to the Appellate Board, and -(a) in a case referred to in clause (i), such person dies or is adjudicated an.insolvent before preferring an appeal to the Appellate Board; or
(b) in a case referred to in clause (ii), such person dies or is adjudicated an insolvent during the pendency of the appeal, then, it shall be lawful for the legal representatives of such person, or the official assignee or the official receiver, as the case may be, to prefer an appeal to the Appellate Board, or as the case may be, to continue the appeal before the Appellate Board, in place of such person and the provisions of section 52 shall, so far as may be, apply or continue to apply to such appeal.
(2) Where -(i) after the passing of a decision or order by the Appellate Board, no appeal has been preferred to the High Court under section 54; or
(ii) any such appeal has been preferred to the High Court, and -(a) in a case referred to in clause (i), the person entitled to file the appeal dies or is adjudicated an insolvent before preferring an appeal to the High Court; or (b) in a case referred to in clause (ii), the person who had filed the appeal dies or is adjudicated an insolvent during the pendency of the appeal before the High Court, then, it shall be lawful for the legal representatives of such person, or the official assignee or the official receiver, as the case may be, to prefer an appeal to the High Court or to continue the appeal before the High Court in place of such person and the provisions of section 54 shall, so far as may be, apply or continue to apply to such appeal.
(3) The powers of the official assignee or the official receiver under sub-section (1) or sub-section (2) shall be exercised by him subject to the provisions of the Presidency-towns Insolvency Act, 1909, or the Provincial Insolvency Act, 1920, as the case may be.
Offences and prosecutions
56. (1) Without prejudice to any award of penalty by the adjudicating officer under this Act, if any person contravenes any of the provisions of this Act [other than section 13, clause (a) of sub-section (1) of section 18, section 18A clause (a) of sub-section (1) of section 19, sub-section (2) of section 44 and sections 57 and 58], or of any rule, direction or order made thereunder, he shall, upon conviction by a court, be punishable, -(i) in the case of an offence the amount or value involved in which exceeds one lakh of rupees, with imprisonment for a term which shall not be less than six months, but which may extend to seven years and with fine:
Provided that the court may, for any adequate and special reasons to be mentioned in the judgement, impose a sentence of imprisonment for a term of less than six months; (ii) in any other case, with imprisonment for a term which may extend to three years or with fine or with both.
(2) If any person convicted of an offence under this Act [not being an offence under section 13 or clause (a) of sub-section (1) of section 18 or section 18A or clause (a) of sub-section (1) of section 19 or sub/section (2) of section 44 or section 57 or section 58] is again convicted of an offence under this Act [not being an offence under section 13 or clause (a) of sub-section (1) of section 18 or section 18A or clause (a) of sub-section (1) of section 19 or sub-section (2) of section 44 or section 57 or section 58], he shall be punishable for the second and for every subsequent offence with imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine:
Provided that the court may, for any adequate and special reasons to be mentioned in the judgement, impose a sentence of imprisonment for a term of less than six months.
(3) Where a person having been convicted of an offence under this Act [not being an offence under section 13 or clause (a) of sub-section (1) of section 18 or section 18A or clause
(a) of sub-section (1) of section 19 or sub-section (2) of section 44 or section 57 or section 58] is again convicted of an offence under this Act [not being an offence under section 13 or clause (a) of sub-section (1) of section 18 or section 18A or clause (a) of sub-section (1) of section 19 or sub-section (2) of section 44 or section 57 or section 58], the court by which such person is convicted may, in addition to any sentence which may be imposed on him under this section, by order, direct that that person shall not carry on such business as the court may specify, being a business which is likely to facilitate the commission of such offence, for such period not exceeding three years, as may be specified by the court in the order.
(4) For the purposes of sub-sections (1) and (2), the following shall not be considered as adequate and special reasons for awarding a sentence of imprisonment for a term of less than six months, namely:-.(i) the fact that the accused has been convicted for the first time of an offence under this Act;
(ii) the fact that in any proceeding under this Act, other than a prosecution, the accused has been ordered to pay a penalty or the goods in relation to such proceedings have been ordered to be confiscated or any other penal action has been taken against him for the same offence;
(iii) the fact that the accused was not the principal offender and was acting merely as a carrier of goods or otherwise was a secondary party in the commission of the offence;
(iv) the age of the accused.
(5) For the purposes of sub-sections (1) and (2), the fact that an offence under this Act has caused no substantial harm to the general public or to any individual shall be an adequate and special reason for awarding a sentence of imprisonment for a term of less than six months.
(6) Nothing in the proviso to section 188 of the Code of Criminal Procedure, 1973, shall apply to any offence punishable under this section.
Penalty for contravention of order made by adjudicating officer, Appellate Board and High Court
57. If any person fails to pay the penalty imposed by the adjudicating officer or the Appellate Board or the High Court or fails to comply with any of his or its directions or orders, he shall, upon conviction by a court, be punishable with imprisonment for a term which may extend to two years or with fine or with both.
Vexatious search etc., by officers of Enforcement
58. (1) Any officer of Enforcement exercising powers under this Act or any rule made thereunder who, -
(a) without reasonable ground of suspicion, searches or causes to be searched any place, premises, aircraft, vehicle or vessel; or
(b) vexatiously detains or searches or arrests any person,.shall, for every such offence, upon conviction by a court, be punishable with imprisonment for a term which may extend to two years or with fine which may extend to ten thousand rupees or with both.
(2) Any person wilfully and maliciously giving false information and so causing an arrest or a search to be made under this Act shall, upon conviction by a court, be punishable with imprisonment for a term which may extend to two years or with fine which may extend to ten thousand rupees or with both.
Presumption of culpable mental state
59. (1) In any prosecution for any offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution.
Explanation - In this section, "culpable mental state" includes intention, motive, knowledge of a fact and belief in, or reason to believe, a fact.
(2) For the purposes of this section, a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability.
(3) The provisions of this section shall, so far as may be, apply in relation to any proceeding before an adjudicating officer as they apply in relation to any prosecution for an offence under this Act.
Power to tender immunity from prosecution
60. (1) The Central Government may, if it is of opinion (the reasons for such opinion being recorded in writing) that with a view to obtaining the evidence of any person appearing tohave been directly or indirectly concerned in or privy to the contravention of any of the provisions of this Act or of any rule, direction or order made thereunder, it is necessary or expedient so to do, tender to such person immunity from prosecution for any offence under this Act or under the Indian Penal Code, or under any other Central Act for the time being in force and also from the imposition of any penalty under this Act on condition of his making a full and true disclosure of the whole circumstances relating to such contravention.
(2) A tender of immunity made to, and accepted by, the person concerned, shall, to the extent to which the immunity extends, render him immune from prosecution for any offence in respect of which tender was made or from the imposition of any penalty under this Act..(3) If it appears to the Central Government that any person to whom immunity has been tendered under this section has not complied with the condition on which the tender was made or is wilfully concealing anything or is giving false evidence, the Central Government may record a finding to that effect, and thereupon the immunity shall be deemed to have been withdrawn and such person may be tried for the offence in respect of which the tender of immunity was made or for any other offence of which he appears to have been guilty in connection with the same matter and shall also become liable to the imposition of any penalty under this Act to which he would otherwise have been liable.
Cognizance of offences
61. (1) Notwithstanding anything contained in section 29 of the Code of Criminal Procedure, 1973, it shall be lawful for any metropolitan magistrate and for any magistrate of the first class to pass a sentence of imprisonment for a term exceeding three years or of fine exceeding five thousand rupees on any person convicted of an offence punishable under section 56.
(2) No court shall take cognizance -
(i) of any offence punishable under sub-section (2) of section 44 or sub-section (1) of section 58, -(a) where the offence is alleged to have been committed by an officer of Enforcement not lower in rank than an Assistant Director of Enforcement, except with the previous sanction of the Central Government; (b) where the offence is alleged to have been committed by an officer of Enforcement lower in rank than an Assistant Director of Enforcement, except with the previous sanction of the Director of Enforcement; or
(ii) of any offence punishable under sections 56 or section 57, except upon complaint in writing made by -(
a) the Director of Enforcement; or (b) any officer authorised in writing in this behalf by the Director of Enforcement or the Central Government; or (c) any officer of the Reserve Bank authorised by the Reserve Bank by a general.or special order:
Provided that where any such offence is the contravention of any of the provisions of this Act or of any rule, direction or order made thereunder which prohibits the doing of an act without permission, no such complaint shall be made unless the person accused of the offence has been given an opportunity of showing that he had such permission.
Certain offences to be non-cognizable
62. Subject to the provisions of section 45 and notwithstanding anything contained in the Code of Criminal Procedure, 1973, an offence punishable under section 56 shall be deemed to be non-cognizable within the meaning of that Code.
Confiscation of currency, security, etc.
63. Any court trying a contravention under section 56 and the adjudicating officer adjudging any contravention under section 51 may, if it or he thinks fit and in addition to any sentence or penalty which it or he may impose for such contravention, direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government and further direct that the foreign exchange holdings, if any, of the person committing the contravention or any part thereof, shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf.
Explanation - For the purposes of this section, property in respect of which contravention has taken place shall include -(a) deposits in a bank, where the said property is converted into such deposits; (b) Indian currency, where the said property is converted into that currency; (c) any other property which has resulted out of the conversion of that property.
Preparation, attempt, etc.
64. (1) Whoever makes preparation to contravene any of the provisions of this Act [other than section 13, clause (a) of sub-section (1) of section 18, section 18A, clause (a) of sub-section (1) of section 19, sub-section (2) of section 44 and sections 57 and 58] or of any rule, direction or order made thereunder and from the circumstances of the case it may be reasonably inferred that if not prevented by circumstances independent of his will, the contravention as aforesaid would have taken place, shall, for the purposes of section 56, be deemed to have contravened that provision, rule, direction or order, as the case may be..(2) Whoever attempts to contravene, or abets any contravention of, any of the provisions of this act [other than section 13, clause (a) of sub-section (1) of section 18, section 18A, clause (a) of sub-section (1) of section 19, sub-section (2) of section 44 and sections 57 and 58] or of any rule, direction or order made thereunder, shall, for the purposes of this Act, be deemed to have contravened that provision, rule, direction or order, as the case may be.
Correction of clerical errors, etc.
65. Clerical or arithmetical mistakes in any decision or order passed by the Appellate Board or the adjudicating officer under this Act, or errors arising therein from any accidental slip or omission may, at any time, be corrected by the Appellate Board or the adjudicating officer or his successor in office, as the case may be:
Provided that where any correction proposed to be made under this section will have the result of prejudicially affecting any person no such correction shall be made -(i) after the expiry of a period of two years from the date of such decision or order; and
(ii) unless the person affected thereby is given a reasonable opportunity for making a representation in the matter.
Application of section 360 of the Code of Criminal Procedure,1973 and of the Probation of Offenders Act, 1958
66. (1) Nothing contained in section 360 of the Code of Criminal Procedure, 1973, or in the Probation of Offenders Act, 1958 shall apply to a person convicted of an offence under this Act unless that person is under eighteen years of age.
(2) The provisions of sub-section (1) shall have effect notwithstanding anything contained in sub-section (4) of section 56.
Application of the Customs Act, 1962
67. The restrictions imposed by or under section 13, clause (a) of sub-section (1) of section 18, section 18A and clause (a) of sub-section (1) of section 19 shall be deemed to have been imposed under section 11 of the Customs Act, 1962, and all the provisions of that Act shall
have effect accordingly..Offences by companies
68. (1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.
(2) Notwithstanding anything contained in sub-section (1), where a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly.
Explanation - For the purposes of this section -(i) "company" means any body corporate and includes a firm or other association of individuals; and (ii) "director", in relation to a firm, means a partner in the firm.
Power of court to publish name, place of business, etc., of companies convicted under the Act
69. (1) Where any company is convicted under this Act for contravention of any of the provisions thereof or of any rule, direction or order made thereunder, it shall be competent for the court convicting the company to cause the name and place of business of the company, nature of the contravention, the fact that the company has been so convicted and such other particulars as the court may consider to be appropriate in the circumstances of the case, to be published at the expenses of the company in such newspapers or in such other manner as the court may direct.
(2) No publication under sub-section (1) shall be made until the period for preferring an appeal against the orders of the court has expired without any appeal having been preferred, or such an appeal, having been preferred, has been disposed of.
(3) The expenses of any publication under sub-section (1) shall be recoverable from the company as if it were a fine imposed by the court.
Explanation - For the purposes of this section, "company" has the same meaning as in clause (i) of the Explanation to section 68.
Recovery of sums due to Government
70. (1) Where any penalty imposed on any person under this Act is not paid, -(i) the adjudicating officer may deduct the amount so payable from any money owing to such person which may be under the control of any officer of Enforcement; or
(ii) the adjudicating officer may recover the amount so payable by detaining or selling any goods belonging to such person which are under the control of any officer of Enforcement; or
(iii) if the amount cannot be recovered from such person in the manner provided in clause (i) or clause (ii), the adjudicating officer may prepare a certificate signed by him specifying the amount due from such person and send it to the Collector of the district in which such person owns any property or resides or carries on his business and the said Collector on receipt of such certificate shall proceed to recover from the said person the amount specified thereunder as if it were an arrear of land revenue.
(2) Where the terms of any bond or other instrument executed under this Act or any rule made thereunder provide that any amount due under such instrument may be recovered in the manner laid down in sub-section (1), the amount may, without prejudice to any other mode of recovery, be recovered in accordance with the provisions of that sub-section.
(3) The several modes of recovery specified in this section shall not affect in any way -.(i) any other law for the time being in force relating to the recovery of debts due to the Government; or
(ii) the right of the Government to institute a suit for the recovery of the penalty due to the Government,and it shall be lawful for the Central Government to have recourse to any such law or suit notwithstanding that the amount is to be recovered by any mode specified in this section.
Burden of proof in certain cases
71. (1) Where any person is prosecuted or proceeded against for contravening any of the provisions of this Act or of any rule, direction or order made thereunder which prohibits him from doing an act without permission, the burden of proving that he had the requisite permission shall be on him.
(2) Where any person is prosecuted or proceeded against for contravening the provisions of sub-section (3) of section 8, the burden of proving that the foreign exchange acquired by such person has been used for the purpose for which permission to acquire it was granted shall be on him.
(3) If any person is found or is proved to have been in possession of any foreign exchange exceeding in value fifteen thousand rupees, the burden of proving that the foreign exchange came into his possession lawfully shall be on him.
Presumption as to documents in certain cases
72. Where any document -(i) is produced or furnished by any person or has been seized from the custody or control of any person, in either case, under this Act or under any other law, or
(ii) has been received from any place outside India (duly authenticated by such authority or person and in such manner as may be prescribed) in the course of investigation of any offence under this Act alleged to have been committed by any person, and such document is tendered in any proceedings under this Act in evidence against him, or against him and any other person who is proceeded against jointly with him, the court or the adjudicating officer, as the case may be, shall -.(a) presume, unless the contrary is proved, that the signature and every other part of such document which purports to be in the handwriting of any particular person or which the court may reasonably assume to have been signed by, or to be in the handwriting of, any particular person, is in that person's handwriting, and in the case of a document executed or attested, that it was executed or attested by the person by whom it purports to have been so executed or attested;
(b) admit the document in evidence notwithstanding that it is not duly stamped, if such document is otherwise admissible in evidence;
(c) in a case falling under clause (i), also presume, unless the contrary is proved, the truth of the contents of such document.
Supplemental provisions
73. (1) For the purposes of this Act and of any rules, directions or orders made thereunder -(a) in the case of any person who, having been resident in India, ceases to be such, the Reserve Bank may, by order, declare the territory in which such person shall be treated as being resident;
(b) in the case of any person resident in India who leaves India, the Reserve Bank may give a direction to any bank that until the direction is revoked, any sum, from time to time, standing to the credit of that person and any security held on his behalf at any office or branch of that bank in India specified in the direction shall not be dealt with except with the permission of the Reserve Bank;
(c) a firm or the branch of a firm shall be treated in all respects as if such firm or branch were a body corporate resident where it is situated;
(d) subject to the provisions of clause (c), a branch of any business, whether carried on by a body corporate or otherwise, shall be treated in all respects as if the branch were a body corporate resident where the branch is situated;
(e) the making of any book entry or other statement regarding a debit against a branch of any business in favour of the head office or any other branch of that business shall be treated as the acknowledgement of a debt whereby a right is created in favour of a person resident where the head office or other branch is situated.
(2) Nothing in this Act relating to the payment of any price or sum by the Central Government shall be construed as requiring the Central Government to pay that price or sum otherwise than in Indian currency or otherwise than in India..(3) The Reserve Bank may give directions in regard to the making of payment and the doing of other acts by bankers, authorised dealers, money-changers, stock brokers, or other persons, who are authorised by the Reserve Bank to do anything in pursuance of this Act in the course of their business, as appear to it to be necessary or expedient for the purpose of securing compliance with the provisions of this Act and of any rules, directions or orders made thereunder.
(4) Subject to any other express provision in this behalf contained in this Act, where any provision of this Act requires the permission of the Reserve Bank for doing anything under such provision, the Reserve Bank may specify the form in which an application for such permission shall be made and the particulars which such application shall contain:
Provided that different forms and different particulars may be specified in respect of applications for permission under different provisions of this Act.
Penalty for contravention of direction of Reserve Bank or for failure to file returns
73.A. Without prejudice to the provisions of sections 50 and 51 where any authorised dealer contravenes any direction given by the Reserve Bank under this Act or fails to file any return as directed by the Reserve Bank, the Reserve Bank may, after giving a reasonable opportunity of being heard impose on the authorised dealer a penalty which may extend to ten thousand rupees and in the case of continuing contravention with an additional penalty which, may extend to two thousand rupees for every day during which such contravention continues.
Delegation
74. The Reserve Bank may, with the previous approval of the Central Government, by order, delegate any of its powers or functions -(i) under section 8,9 or 10 or sub-clause (b) of clause (A) of sub-section (2) of section 18 or sub-section (7) of section 18 to any authorised dealer; or
(ii) under section 8 or 9 to any money-changer, subject to such restrictions, conditions and limitations as may be specified in the order.
Power of Central Government to give directions
75. For the purposes of this Act, the Central Government may, from time to time, give to the Reserve Bank such general or special directions as it thinks fit, and the Reserve Bank shall, in the discharge of its functions under this Act, comply with any such directions.
Factors to be taken into account by the Central Government and the Reserve Bank while giving or granting permissions or licences under the Act
76. Save as otherwise expressly provided in this Act, the Central Government or the Reserve Bank, as the case may be, shall, while giving or granting any permission or licence under this Act, have regard to all or any of the following factors, namely:-
(i) conservation of the foreign exchange resources of the country;
(ii) all foreign exchange accruing to the country is properly accounted for;
(iii) the foreign exchange resources of the country are utilised as best to subserve the common good;and
(iv) such other relevant factors as the circumstances of the case may require.
Certain officers to assist officers of Enforcement
77. The following officers are hereby empowered and required to assist the officers of Enforcement in the enforcement of this Act, namely:-
(a) officers of the Customs Department;
(b) officers of the Central Excise Department;
(c) officers of Police;
(d) officers of the Central or State Government employed at any port or airport;
(e) such other officers of the Central or State Government or a local authority as are specified by the Central Government in this behalf by notification in the Official Gazette.
Bar of legal proceedings
78. No suit, prosecution or other legal proceeding shall lie against the Central Government or the Reserve Bank or any officer of Government or of the Reserve Bank or any other person exercising any powers or discharging any functions or performing any duties under this Act, for anything in good faith done or intended to be done under this Act or any rule, direction or order made thereunder.
Power to make rules
79. (1) The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Act.
(2) Without prejudice to the generality of the foregoing power, such rules may -(a) prescribe the forms and the circumstances of their use for the purposes of this Act; (b) prescribe the procedure to be followed by the authorised dealers and money-changers and by persons applying for permission to do anything for the doing of which permission is necessary under this Act; (c) prescribe the manner in which inquiries may be held, and orders may be served, under this Act and the procedure to be followed in respect of the proceedings before the adjudicating officer or the Appellate Board; (d) provide, subject to such conditions as may be specified therein, for the publication of names and other particulars of persons who have been found guilty of any contravention of the provisions of this Act, or of any rule, direction or order made thereunder; (dd) prescribe the fee payable by a person preferring appeal to the Appellate Board under sub-section (2) of section 52; (e) provide for any other matter which is to be or may be prescribed under this Act.
(3) Every rule made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if before the expiry of the session immediately following the session or the successive sessions aforesaid both Houses agree in making any modification in the rule, or both Houses agree that the rule should not be made, the rule shall, thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.
Power to remove difficulties
80. If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, do anything not inconsistent with such provisions for the purpose of removing the difficulty:
Provided that no such order shall be made after the expiration of two years from the commencement of this Act.
Repeal and saving
81. (1) The Foreign Exchange Regulation Act, 1947 is hereby repealed
(2) Notwithstanding such repeal -
(a) anything done or any action taken or purported to have been done or taken (including any rule, notification, inspection, order or notice made or issued, or any appointment, confirmation or declaration made or any licence, permission, authorisation or exemption granted or any document or instrument executed or any direction given or any proceedings taken or any confiscation adjudged or any penalty or fine imposed) under the Act hereby repealed shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act;
(b) the provisions of section 60 of this Act shall apply in relation to the contravention of any of the provisions of the Act hereby repealed or of any rule, direction or order made thereunder;
(c) any appeal preferred to the Foreign Exchange Regulation Appellate Board under sub-section (2) of section 23E of the Act hereby repealed but not disposed of before the commencement of this Act and any appeal that may be preferred to the said Board against any order made or to be made under section 23 of the Act hereby repealed may be disposed of by any member of the Appellate Board constituted under this Act in accordance with the provisions of sub-section (6) of section 52 of this Act:
(d) every appeal from any decision or order of the Foreign Exchange Regulation Appellate Board under sub-section (3) or sub-section (4) of Section 23E of the Act hereby repealed shall, if not filed before the commencement of this Act, be filed before the High Court within a period of sixty days of such commencement;
Provided that the High Court may entertain any such appeal after the expiry of the said period of sixty days if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period..(3) The mention of particular matters in sub-section (2) shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 with regard to the effect of repeal.
FERA Regulations
Foreign Exchange Regulation Act, (FERA), 1973 controls India’s foreign exchange control regime. Comprehensive amendments have been made to FERA, especially with respect to foreign investment, to add strength to the liberalizations announced in the economic policies. FERA provisions that imposed restrictions on locally incorporated companies with foreign equity holding in excess of 40 per cent (known as "FERA companies") have been removed. Such companies are now permitted to operate in India without any special restrictions, effectively placing them on par with wholly Indian owned companies.
Foreign exchange controls have been substantially relaxed. Effective from August 20, 1994, India announced its movement to Article VII status in the IMF: the Indian Rupee is now fully convertible on the current account. For authorized foreign investors, the Indian Rupee is already convertible on the capital account. Full capital account convertibility is expected in the coming years.
Although the Indian foreign exchange market is not yet fully developed, a variety of instruments have been introduced in the recent past. The dollar rupee forward market is very active, and firms have access to cross-currency options.
(Act 46 of 1973)
[As amended by the Foreign Exchange Regulation
(Amendment) Act, 1993]
(Act 29 of 1993)
An Act to consolidate and amend the law regulating certain payments, dealings in foreign exchange and securities, transactions indirectly affecting foreign exchange and the import and export of currency, for the conservation of the foreign exchange resources of the country and the proper utilisation thereof in the interests of the economic development of the country.
BE it enacted by Parliament in the Twenty-fourth Year of the Republic of India as follows :
Short title, extent, application and commencement
1. (1) This Act may be called the Foreign Exchange Regulation Act, 1973.
(2) It extends to the whole of India.
(3) It applies also to all citizens of India outside India and to branches and agencies outside India of companies or bodies corporate, registered or incorporated in India.
(4) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint in this behalf:
Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.
Definitions
2. In this Act, unless the context otherwise requires, -
(a) "Appellate Board" means the Foreign Exchange Regulation Appellate Board constituted by the Central Government under sub-section(1)of section 52;
(b) "authorised dealer" means a person for the time being authorised under section 6 to deal in foreign exchange;
(c) "bearer certificate" means a certificate of title to securities by the delivery of which (with or without endorsement) the title to the securities is transferable;
(d) "certificate of title to a security" means any document used in the ordinary course of business as proof of the possession or control of the security, or authorising or purporting to authorise, either by an endorsement or by delivery, the possessor of the document to transfer or receive the security thereby represented;
(e) "coupon" means a coupon representing dividends or interest on a security;
The provisions of F.E.R. (Amendment) Act, 1993 (hereafter referred to as Act 29 of 1993) came into force on the 8th day of January 1993.
(f) "currency" includes all coins, currency notes, banks notes, postal notes, postal orders, money orders, cheques, drafts, traveller's cheques, letters of credit, bills of exchange and promissory notes;
(g) "foreign currency" means any currency other than Indian currency;
(h) "foreign exchange" means foreign currency and includes -
(i) all deposits, credits and balances payable in any foreign currency, and any drafts, traveller's cheques, letters of credit and bills of exchange, expressed or drawn in Indian currency but payable in any foreign currency;
(ii) any instrument payable, at the option of the drawee or holder thereof or any other party thereto, either in Indian currency or in foreign currency or partly in one and partly in the other;
(i) "foreign security" means any security created or issued elsewhere than in India, and any security the principal of or interest on which is payable in any foreign currency or elsewhere than in India;
(j) Deleted by Act 29 of 1993
(k) "Indian currency" means currency which is expressed or drawn in Indian rupees but does not include special bank notes and special one-rupee notes issued under section 28A of the Reserve Bank of India Act, 1934;
(l) "Indian custom waters" means the waters extending into the sea to a distance of twelve nautical miles measured from the appropriate base line on the coast of India and includes any bay, gulf, harbour, creek or tidal river;.(m) "money-changer" means a person for the time being authorised under section 7 to deal in foreign currency;
(n) "overseas market", in relation to any goods, means the market in the country outside India and in which such goods are intended to be sold;
(o) "owner", in relation to any security, includes any person who has power to sell or transfer the security, or who has the custody thereof or who receives, whether on his own behalf or on behalf of any other person, dividends or interest thereon, and who has any interest therein, and in a case where any security is held on any trust or dividends or interest thereon are paid into a trust fund, also includes any trustee or any person entitled to enforce the performance of the trust or to revoke or vary, with or without the consent of any other person, the trust or any terms thereof, or to control the investment of the trust moneys;
(p) "person resident in India" means -
(i) a citizen of India, who has, at any time after the 25th day of March, 1947, been staying in India but does not include a citizen of India who has gone out of, or stays outside, India, in either case-- (a) for or on taking up employment outside India, or (b) for carrying on outside India a business or vocation outside India, or (c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;
(ii) a citizen of India, who having ceased by virtue of paragraph (a) or paragraph (b) or paragraph (c) of sub-clause (I) to be resident in India, returns to, or stays in, India, in either case -(a) for or on taking up employment in India, or (b) for carrying on in India a business or vocation in India, or.(c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;
(iii) a person, not being a citizen of India, who has come to, or stays in, India, in either case -(a) for or on taking up employment in India, or (b) for carrying on in India a business or vocation in India, or (c) for staying with his or her spouse, such spouse being a person resident in India, or (d) for any other purposes, in such circumstances as would indicate his intention to stay in India for an uncertain period;
(iv) a citizen of India, who, not having stayed in India at any time after the 25th day of March, 1947, comes to India for any of the purposes referred to in paragraphs (a), (b) and (c) of sub-clause (iii) or for the purpose and in the circumstances referred to in paragraph (d) of that sub-clause or having come to India stays in India for any such purpose and in such circumstances.
Explanation - A person, who has, by reason only of paragraph (a) or paragraph (b) or paragraph (d) of sub-clause (iii) been resident in India, shall, during any period in which he is outside India, be deemed to be not resident in India;
(q) "person resident outside India" means a person who is not resident in India;
(r) "precious stone" includes pearl and semi-precious stone and such other stone or gem as the Central Government may for the purposes of this Act, notify in this behalf in the Official Gazette;
(s) "prescribed" means prescribed by rules made under this Act;
(t) "Reserve Bank" means the Reserve Bank of India;.(u) "security" means shares, stocks, bonds, debentures, debenture stock, Government securities as defined in the Public Debt Act, 1944, savings certificates to which the Government Savings Certificates Act, 1959 applies, deposit receipts in respect of deposits of securities, and units or sub-units of unit trusts and includes certificates of title to securities, but does not include bills of exchange or promissory notes other than Government promissory notes;
(v) Deleted by Act 29 of 1993
(w) "transfer", in relation to any security, includes transfer by way of loan or security.
Classes of officers of Enforcement
3. There shall be the following classes of officers of Enforcement, namely:-
(a) Directors of Enforcement;
(b) Additional Directors of Enforcement;
(c) Deputy Directors of Enforcement;
(d) Assistant Directors of Enforcement; and
(e) such other class of officers of Enforcement as may be appointed for the purposes of this Act.
Appointment and powers of officers of Enforcement
4. (1) The Central Government may appoint such persons as it thinks fit to be officers of Enforcement.
(2) Without prejudice to the provisions of sub-section (1), the Central Government may authorise a Director of Enforcement or an Additional Director of Enforcement or a Deputy Director of Enforcement or an Assistant Director of Enforcement to appoint officers of Enforcement below the rank of an Assistant Director of Enforcement.
(3) Subject to such conditions and limitations as the Central Government may impose, an officer of Enforcement may exercise the powers and discharge the duties conferred or imposed on him under this Act.
Entrustment of functions of Director
5. The Central Government may, by order and subject to such conditions and limitations as it thinks fit to impose, authorise any officer of customs or any Central Excise Officer or any police officer or any other officer of the Central Government or a State Government to exercise such of the powers and discharge such of the duties of the Director of Enforcement or any other officer of Enforcement under this Act as may be specified in the order.
Authorised dealers in foreign exchange
6. (1) The Reserve Bank may, on an application made to it in this behalf, authorise any person to deal in foreign exchange.
(2) An authorisation under this section shall be in writing and -
(i) may authorise transactions of all descriptions in foreign currencies or may be restricted to authorising dealings in specified foreign currencies only;
(ii) may authorise dealings in all foreign currencies or may be restricted to authorising specified transactions only;
(iii) may be granted to be effective for a specified period, or within specified amounts;
(iv) may be granted subject to such conditions as may be specified therein.
(3) Any authorisation granted under sub-section (1) may be revoked by the Reserve Bank at any time if the Reserve Bank is satisfied that, - (i) it is in the public interest to do so;or (ii) the authorised dealer has not complied with the conditions subject to which the authorisation was granted or has contravened any of the provisions of this Act or of any rule, notification, direction or order made thereunder:
Provided that no such authorisation shall be revoked on the ground specified in clause (ii) unless the authorised dealer has been given a reasonable opportunity for making a representation in the matter.
(4) Any authorised dealer shall, in all his dealings in foreign exchange and in the exercise and discharge of the powers and of the functions delegated to him under section 74, comply with such general or special directions or instructions as the Reserve Bank may, from time to time, think fit to give, and, except with the previous permission of the Reserve Bank, an authorised dealer shall not engage in any transaction involving any foreign exchange which is not in conformity with the terms of his authorisation under this section.
(5) An authorised dealer shall, before undertaking any transaction in foreign exchange on behalf of any person, require that person to make such declarations and to give such information as will reasonably satisfy him that the transaction will not involve, and is not designed for the purpose of, any contravention or evasion of the provisions of this Act or of any rule, notification, direction or order made thereunder, and where the said person refuses to comply with any such requirement or makes only unsatisfactory compliance therewith, the authorised dealer shall refuse to undertake the transaction and shall, if he has reason to believe that any such contravention or evasion as aforesaid is contemplated by the person, report the matter to the Reserve Bank.
Money-changers
7. (1) The Reserve Bank may, on an application made to it in this behalf, authorise any person to deal in foreign currency.
(2) An authorisation under this section shall be in writing and -(i) may authorise dealings in all foreign currencies or may be restricted to authorising dealings in specified foreign currencies only; (ii) may authorise transactions of all descriptions in foreign currencies or may be restricted to authorising specified transactions only; (iii) may be granted with respect to a particular place where alone the money changer shall carry on his business; (iv) may be granted to be effective for a specified period, or within specified amounts; (v) may be granted subject to such conditions as may be specified therein.
(3) Any authorisation granted under sub-section (1) may be revoked by the Reserve Bank at any time if the Reserve Bank is satisfied that -( i) it is in the public interest to do so; or (ii) the money-changer has not complied with the conditions subject to which the.authorisation was granted or has contravened any of the provisions of this Act or of any rule, notification, direction or order made thereunder:
Provided that no such authorisation shall be revoked on the ground specified in clause (ii) unless the money-changer has been given a reasonable opportunity for making a representation in the matter.
(4) The provisions of sub-sections (4) and (5) of section 6 shall, in so far as they are applicable, apply in relation to a money-changer as they apply in relation to an authorised dealer.
Explanation - In this section, "foreign currency" means foreign currency in the form of notes, coins or traveller's cheques and "dealing" means purchasing foreign currency in the form of notes, coins or traveller's cheques or selling foreign currency in the form of notes or coins.
Restrictions on dealing in foreign exchange
8. (1) Except with the previous general or special permission of the Reserve Bank, no person other than an authorised dealer shall in India, and no person resident in India other than an authorised dealer shall outside India, purchase or otherwise acquire or borrow from, or sell, or otherwise transfer or lend to or exchange with, any person not being an authorised dealer, any foreign exchange:
Provided that nothing in this sub-section shall apply to any purchase or sale of foreign currency effected in India between any person and a money-changer.
Explanation - For the purposes of this sub-section, a person, who deposits foreign exchange with another persons or opens an account in foreign exchange with another person, shall be deemed to lend foreign exchange to such other person.
(2) Except with the previous general or special permission of the Reserve Bank, no person, whether an authorised dealer or a money-changer or otherwise, shall enter into any transaction which provides for the conversion of Indian currency into foreign currency or foreign currency into Indian currency at rates of exchange other than the rates for the time being authorised by the Reserve Bank.
(3) Where any foreign exchange is acquired by any person, other than an authorised dealer or a money-changer, for any particular purpose, or where any person has been permitted conditionally to aquire foreign exchange, the said person shall not use the foreign exchange so acquired otherwise than for that purpose or, as the case may be, fail to comply with any condition to which the permission granted to him is subject, and where any foreign exchange so acquired cannot be so used or the conditions cannot be complied with, the said person shall,within a period of thirty days from the date on which he comes to know that such foreign exchange cannot be so used or the conditions cannot be complied with, sell the foreign exchange to an authorised dealer or to a money-changer.
(4) For the avoidance of doubt, it is hereby declared that where a person acquires foreign exchange for sending or bringing into India any goods but sends or brings no such goods or does not send or bring goods of a value representing the foreign exchange acquired, within a reasonable time or sends or brings any goods of a kind, quality or quantity different from that specified by him at the time of acquisition of the foreign exchange, such person shall, unless the contrary is proved, be presumed not to have been able to use the foreign exchange for the purpose for which he acquired it or, as the case may be, to have used the foreign exchange so acquired otherwise than for the purposes for which it was acquired.
(5) Nothing in this section shall be deemed to prevent a person from buying from any post office, in accordance with any law or rules made thereunder for the time being in force, any foreign exchange in the form of postal orders or money orders.
Restrictions on payments
9. (1) Save as may be provided in and in accordance with any general or special exemption from the provisions of this sub-section which may be granted conditionally or unconditionally \by the Reserve Bank, no person in, or resident in, India shall -(a) make any payment to or for the credit of any person resident outside India;
(b) receive, otherwise than through an authorised dealer, any payment by order or on behalf of any person resident outside in India.
Explanation - For the purposes of this clause, where any person in, or resident in, India receives any payment by order or on behalf of any person resident outside India through any other person (including an authorised dealer) without a corresponding inward remittance from any place outside India, then, such person shall be deemed to have received such payment otherwise than through an authorised dealer;
(c) draw, issue or negotiate any bill of exchange or promissory note or acknowledge any debt, so that a right (whether actual or contingent) to receive a payment is created or transferred in favour of any person resident outside India;
(d) make any payment to, or for the credit of, any person by order or on behalf of any person resident outside India;
(e) place any sum to the credit of any person resident outside India;
(f) make any payment to, or for the credit of, any person or receive any payment for, or by order or on behalf of, any person as consideration for or in association with -(i) the receipt by any person of a payment or the acquisition by any person of property outside India, (ii) the creation or transfer in favour of any person of a right (whether actual or contingent) to receive payment or acquire property outside India;
(g) draw, issue or negotiate any bill of exchange or promissory note, transfer any security or acknowledge any debt, so that a right (whether actual or contingent) to receive a payment is created or transferred in favour of any person as consideration for or in association with any matter referred to in clause (f).
(2) Nothing in sub-section (1) shall render unlawful -(a) the making of any payment already authorised either with foreign exchange obtained from an authorised dealer or a money-changer under section 8 or with foreign exchange retained by a person in pursuance of an authorisation granted by the Reserve Bank; (b) the making of any payment with foreign exchange received by way of salary or payment for services not arising from any business in, or anything done while in, India.
(3) Save as may be provided in, and in accordance with, any general or special exemption from the provisions of this sub-section, which may be granted conditionally or unconditionally by the reserve Bank, no person shall remit or cause to be remitted any amount from any foreign country into India except in such a way that the remittance is received in India only through an authorised dealer.
(4) Nothing in this section shall restrict the doing by any person of anything within the scope of any authorisation or exemption granted under this Act.
(5) For the purposes of this section and section 19, "security" includes coupons or warrants representing dividends or interest and life or endownment insurance policies.
Blocked accounts
10. (1) Where an exemption from the provisions of section 9 is granted by the Reserve Bank in respect of payment of any sum to any person resident outside India and the exemption is made subject to the condition that the payment is made to a blocked account -(a) the payment shall be made to a blocked account in the name of that person in such manner as the Reserve Bank may, by general or special order, direct; (b) the crediting of that sum to that account shall, to the extent of the sum credited, be a good discharge to the person making the payment.
(2) No sum standing at the credit of a blocked account shall be drawn on except in accordance with any general or special permission which may be granted conditionally or otherwise by the Reserve Bank.
(3) In this section, "blocked account" means an account opened, whether before or after the commencement of this Act, as a blocked account at any office or branch in India of a bank authorised in this behalf by the Reserve Bank, or an account blocked, whether before or after such commencement, by order of the Reserve Bank.
11. Deleted by Act 29 of 1983
12. Deleted by Act 29 of 1993
Restrictions on import and export of certain currency
13. (1) The Central Government may, by notification in the Official Gazette, order that, subject to such exemption, if any, as may be specified in the notification, no person shall, except with the general or special permission of the Reserve Bank and on payment of the fee, if any, prescribed, bring or send into India any foreign exchange or any Indian currency.
Explanation - For the purposes of this sub-section, the bringing or sending into any port or place in India of any such article as aforesaid intended to be taken out of India without being removed from the ship or conveyance in which it is being carried shall nonetheless be deemed to be a bringing, or, as the case may be, sending, into India of that article.
(2) No person shall, except with the general or special permission of the Reserve Bank or the written permission of a person authorised in this behalf by the Reserve Bank, take or send out of India any Indian currency or foreign exchange other than foreign exchange obtained by him from an authorised dealer or from a money-changer.
Acquisition by Central Government of foreign exchange
14. The Central Government may, by notification in the Official Gazette, order every person in, or resident in, India -(a) who owns or holds such foreign exchange as may be specified in the notification, to offer it, or cause it to be offered, for sale to the Reserve Bank on behalf of the Central Government or to such person, as the Reserve Bank may authorise for the purpose, at such price as the Central Government may fix, being a price which is not less than the price calculated at the rate of exchange for the time being authorised by the Reserve Bank; (b) who is entitled to assign any right to receive such foreign exchange as may be specified in the notification, to transfer that right to the Reserve Bank on behalf of the Central Government on payment of such consideration therefor as the Central Government may fix having regard to the rate for the time being authorised by the Reserve Bank in pursuance of sub-section
(2) of section 8 for conversion into Indian currency of the foreign currency in which such foreign exchange is expressed:
Provided that the Central Government may, by the said notification or by a separate order, except any person or class of persons from the operation of the order made in the said notification:
Provided further that nothing in this section shall apply to any foreign exchange acquired by a person from an authorised dealer or from a money-changer and retained by him with the permission of the Reserve Bank for any purpose.
15. Deleted by Act 29 of 1993
Duty of persons entitled to receive foreign exchange
16. (1) No person who has a right to receive any foreign exchange or to receive from a person resident outside India a payment in rupees shall, except with the general or special permission of the Reserve Bank, do or refrain from doing anything, or take or refrain from taking any action, which has the effect of securing -(a) that the receipt by him of the whole or part of that foreign exchange or payment is delayed, or (b) that the foreign exchange or payment ceases in whole or in part to be receivable by him.
(2) Where a person has failed to comply with the requirements of sub-section (1) in relation to any foreign exchange or payment in rupees, the Reserve Bank may give to him such directions as appear to be expedient for the purposes of securing the receipt of the foreign exchange or payment, as the case may be.
17. Deleted by Act 29 of 1993.
Payment for exported goods
18. (1) (a) The Central Government may, by notification in the Official Gazette, prohibit the taking or sending out by land, sea or air (hereafter in this section referred to as export) of all goods or of any goods or class of goods specified in the notification from India directly or indirectly to any place so specified unless the exporter furnishes to the prescribed authority a declaration in the prescribed form supported by such evidence as may be prescribed or so specified and true in all material particulars which, among others, shall include the amount representing -(i) the full export value of the goods; or (ii) if the full export value of the goods is not ascertainable at the time of export, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in the overseas market, and affirms in the said declaration that the full export value of the goods (whether ascertainable at the time of export or not) has been, or will within the prescribed period be, paid in the prescribed manner.
(b) If the Central Government is of opinion that it is necessary or expedient in the public interest so to do, it may, by notification in the Official Gazette, specify any goods, from among those goods to which a notification under clause (a) applies, and direct that in respect of the goods so specified, where an exporter makes a declaration under sub-clause (ii) of clause (a) of the value which he, having regard to the prevailing market conditions expects to receive on the sale of such goods in the overseas market, he shall not, except with the permission of the Reserve Bank on an application made to the Reserve Bank by the exporter in this behalf, authorise or permit or allow or in any manner be a party to, the sale of such goods for a value less than that declared:
Provided that no permission shall be refused by the Reserve Bank under this clause unless the exporter has been given a reasonable opportunity for making a representation in the matter:
Provided further that where the exporter makes an application to the Reserve Bank for permission under this clause and the Reserve Bank does not, within a period of twenty days from the date of receipt of the application, communicate to the exporter that permission applied for has been refused, it shall be presumed that Reserve Bank has granted such permission.
Explanation - In computing the period of twenty days for the purposes of the second proviso, the period, if any, taken by the Reserve Bank for giving an opportunity to the exporter for making a representation under the first proviso shall be excluded..(2) Where any export of goods, to which a notification under clause (a) of sub-section (1) applies, has been made, no person shall, except with the permission of the Reserve Bank, do or refrain from doing anything, or take or refrain from taking any action, which has the effect of securing -(A) in a case falling under sub-clause (i) or sub-clause (ii) of clause (a) of sub-section(1), -(a) that payment for the goods -(i) is made otherwise than in the prescribed manner, or (ii) is delayed beyond the period prescribed under clause (a) of sub-section (1), or (b) that the proceeds of sale of the goods exported do not represent the full export value of the goods subject to such deductions, if any, as may be allowed by the Reserve Bank; and (B) in a case falling under sub-clause (ii) of clause (a) of sub-section (1), also that the sale of the goods is delayed to an extent which is unreasonable having regard to the ordinary course of trade:
Provided that no proceedings in respect of any contravention of the provisions of this sub-section shall be instituted unless the prescribed period has expired and payment for the goods representing the full export value has not been made in the prescribed manner within the prescribed period.
(3) Where in relation to any goods to which a notification under clause (a) of sub-section (1) applies the prescribed period has expired and payment therefor has not been made as aforesaid, it shall be presumed, unless the contrary is proved by the person who has sold or is entitled to sell the goods or to procure the sale thereof, that such person has not taken all reasonable steps to receive or recover the payment for the goods as aforesaid and he shall accordingly be presumed to have contravened the provisions of sub-section (2)..(4) Where in relation to any goods to which a notification under clause (a) of sub-section (1) applies the prescribed period has expired and payment therefor has not been made as aforesaid, the Reserve Bank may give to any person who has sold the goods or who is entitled to sell the goods or procure the sale thereof, such directions as appear to it to be expedient for the purpose of securing -(i) if the goods have been sold, the payment therefor, or (ii) if the goods have not been sold, either the sale of the goods and payment therefor as aforesaid, or the re-import of the goods into India as the circumstances permit, within such period as the Reserve Bank may specify in this behalf and without prejudice to the generality of the foregoing provision, may direct that the goods, the right to receive the payment therefor or any other right to enforce such payment shall be transferred or assigned to the Central Government or to a person specified in the directions.
(5) Where any goods or a right to receive payment or any other right to enforce such payment, are or is transferred or assigned in accordance with sub-section (4), the Central Government shall pay to the person transferring or assigning the same, the amount recovered by or on behalf of the Central Government in respect of the goods, after deducting all costs, charges and expenses incurred by the Central Government in selling the goods or in recovering or realising the amount in respect of such goods.
(6) Without prejudice to the provisions of sub-section(1), where the value of the goods specified in the declaration furnished under that sub-section is less than the amount which in the opinion of the Reserve Bank, in a case falling under sub-clause (i) of clause (a) of that sub-section, represents the full export value of those goods, or in a case falling under sub-clause (ii) of that clause, the value which the exporter can, having regard to the prevailing market conditions, expect to receive on the sale of the goods in the overseas market, the Reserve Bank may issue an order requiring the person holding the shipping documents to retain possession thereof until such time as the exporter of the goods has made arrangements for the Reserve Bank or a person authorised by the Reserve Bank to receive on behalf of the exporter payment in the prescribed manner of an amount which in the opinion of the Reserve Bank represents the full export value of such goods or the value which the exporter, having regard to the prevailing market conditions, can be expected to receive on the sale of the goods in the overseas market..(7) For the purpose of ensuring compliance with provisions of this section and any order or direction made thereunder, the Reserve Bank or the prescribed authority referred to in sub-section (1) may require any person making any export of goods to which a notification under clause (a) of that sub-section applies to exhibit contracts with his foreign buyer or other evidence to show that the full export value of the goods, or, as the case may be, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in the overseas market, has been, or will within the prescribed period be, paid in the prescribed manner.
(8) Without prejudice to the provisions of sub-section (1), where the Reserve Bank has permitted any authorised dealer to accept for negotiation or collection of shipping documents covering exports from his constituent [not being a person who has signed the declaration in terms of sub-section (1)], such authorised dealer shall, before accepting such documents for negotiation or collection, require the constituent concerned also to sign such declaration and thereupon such constituent shall be bound to comply with such requisition and the original declarant and such constituent signing the declaration shall each be considered to be the exporter for the purposes of this section, and shall be governed by the provisions thereof accordingly.
(9) Without prejudice to the provisions of sub-section (1), in relation to export of goods to which a notification under clause (a) of that sub-section applies, the Reserve Bank may, for the purpose of ensuring that the full export value of the goods or, as the case may be, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in the overseas market, is received in proper time or without delay, by general or special order, direct from time to time, that in respect of export of goods to any destination or any class of export transactions or any class of goods or class of exporters, the exporter shall, prior to the export of the goods, comply with any or all of the following conditions as may be specified in the order, namely:-(a) that any contract or other arrangement for the sale of the goods shall be registered in such manner and with such authority or organisation as may be specified in the order; (b) that the payment for the goods is covered by an irrevocable letter of credit or by such other arrangement or document as may be specified in the order; (c) that a copy of the declaration to be furnished to the prescribed authority under sub-section(1) shall be submitted to such authority or organisation as may be specified in the order for certifying that the value of the goods specified in such declaration represents the proper value thereof; (d) that any declaration to be furnished to the prescribed authority under sub-section (1) shall be submitted to the Reserve Bank for its prior approval, which may, having regard to the circumstances, be given or withheld or may be given subject to such conditions as the Reserve Bank may deem fit to impose:.Provided that no approval shall be withheld by the Reserve Bank under this clause unless the exporter has been given a reasonable opportunity for making a representation in the matter.
(10) Where the Central Government is of opinion that, in respect of any goods or class of goods or class of exporters, or in respect of export to any destination, the practice of exporting goods in accordance with any term to the effect that the goods will be sold on account of the exporter and the account of such sales rendered to the exporter has resulted or is likely to result in the full export value of the goods not being brought into India in the prescribed manner or within the prescribed period, it may, by general or special order, prohibit the export, in accordance with such term, of such goods or class of goods or by such exporters or to such destination.
Payment for lease, hire or other arrangement
18A. No person shall, except with the general or special permission of the Reserve Bank, take or send out by land, sea or air any goods from India to any place on lease or hire or under any arrangement other than sale or disposal in any other manner of such goods.
Regulation of export and transfer of securities
19. (1) Notwithstanding anything contained in section 81 of the Companies Act, 1956, no person shall, except with the general or special permission of the Reserve Bank, --
(a) take or send any security to any place outside India;
(b) transfer any security, or create or transfer any interest in a security, to or in favour of a person resident outside India;
(c) Deleted by Act 29 of 1993;
(d) issue, whether in India or elsewhere, any security which is registered or to be registered in India, to a person resident outside India;
(e) acquire, hold or dispose of any foreign security.
(2) Where the holder of a security is a nominee, neither he nor any person through whose agency the exercise of all or any of the holder's rights in respect of the security is controlled shall, except with the general or special permission of the Reserve Bank, do any act, whereby he recognises or gives effect to the substitution of another person as the person from whom he directly receives instructions, unless both the person previously instructing and the person substituted for that person were, immediately before the substitution, resident in India..(3) The Reserve Bank may, for the purpose of securing that the provisions of this section are not evaded, require that the person transferring any security and the person to whom such security is transferred shall subscribe to a declaration that the transferee is not resident outside India.
(4) Notwithstanding anything contained in any other law, no person shall, except with the permission of the Reserve Bank, -
(a) enter any transfer of securities in any register or book in which securities are registered or inscribed if he has any ground for suspecting that the transfer involves any contravention of the provisions of this section, or
(b) enter in any such register or book, in respect of any security whether in connection with the issue or transfer of the security or otherwise, an address outside India except by way of substitution for any such address in the same country or for the purpose of any transaction for which permission has been granted under this section with knowledge that it involves entry of the said address.
(c) Deleted by Act 29 of 1993
(5) Notwithstanding anything contained in any other law, no transfer of any share, bond or debenture of a company registered in India made by a person resident outside India or by a national of a foreign State to another person resident in India shall be valid unless such transfer is confirmed by the Reserve Bank on an application made to it in this behalf by the transferor or the transferee.
(6) If the Reserve Bank is of opinion that it is necessary or expedient in the public interest so to do, it may, by general or special permission exempt any transfer referred to in sub-section (5) or any class of such transfers from the operation of the provisions of that sub-section, subject to such conditions, if any, as may be specified in such permission.
(7) For the purposes of this section -
(a) "holder", in relation to a bearer security, means the person having physical custody of the security; provided that, where a bearer security is deposited with any person in a locked or sealed receptacle from which the person with whom it is deposited is not entitled to remove it without the authority of some other person, that other person shall be deemed to be the holder of the security;.(b) "nominee" means a holder of any security (including a bearer security) or any coupon representing dividends or interest who, as respects the exercise of any rights in respect of the security or coupon, is not entitled to exercise those rights except in accordance with the instructions given by some other person, and a person holding a security or coupon as a nominee shall be deemed to act as nominee for the person who is entitled to give instructions either directly or through the agency of one or more persons, as to the exercise by the holder of the security or coupon of any rights in respect thereof and is not, in so doing, himself under a duty to comply with instructions given by some other person.
20. Deleted by Act 29 of 1993
21. Deleted by Act 29 of 1993
Restrictions on issue of bearer securities
22. Except with the general or special permission of the Reserve Bank, no person shall, in India, and no person resident in India shall, outside India, create or issue any bearer certificate or coupon or so alter any document that it becomes a bearer certificate or coupon.
23. Deleted by Act 29 of 1993
Restriction on settlement etc.
24. No person resident in India shall, except with the general or special permission of the Reserve Bank, settle, or make a gift of, any property so that a person who at the time of the settlement or the making of the gift is resident outside India, elsewhere than in the territories notified in this behalf by the Reserve Bank, will have an interest in the property, or exercise any power for payment in favour of a person who at the time of the exercise of the power is resident outside India elsewhere than in such notified territories:
Provided that any settlement or gift made or any power exercised as aforesaid without the permission of the Reserve Bank shall not be invalid merely on the ground that such permission has not been obtained.
Restriction on holding of immovable property outside India
25. (1) No person resident in India shall, except with the general or special permission of the Reserve Bank, acquire or hold or transfer or dispose of by sale, mortgage, lease, gift, settlement or otherwise, any immovable property situate outside India:
Provided that nothing in this sub-section shall apply to the acquisition or transfer of any such immovable property by way of lease for a period not exceeding five years.
(2) Any person resident in India and holding any immovable property outside India at the commencement of this Act shall, before the expiry of a period of three months from such commencement or such further period as the Reserve Bank may allow in this behalf, declare such holding to the Reserve Bank in such form and containing such particulars as may be specified by the Reserve Bank.
(3) Deleted by Act 29 of 1993
(4) Nothing in this section shall apply to a national of a foreign State.
Certain provisions as to guarantee in respect of debt or other obligation
26. Except with the general or special permission of the Central Government, or the Reserve Bank, no person resident in India shall give a guarantee in respect of any debt or other obligation or liability-(i) of a person resident in India, and due or owing to a person resident outside India, or (ii) of a person resident outside India.
27. Deleted by Act 29 of 1993
Restrictions on the appointment of certain persons and companies as agents
28. (1) Without prejudice to the provisions of section 47 and notwithstanding anything contained in any of other provision of this Act or the Companies Act, 1956, a person resident outside India (whether a citizen of India or not) or a person who is not a citizen of India but is resident in India, or a company (other than a banking company) which is not incorporated under any law in force in India or any branch of such company, shall not, except with the general or special permission of the Reserve Bank act, or accept appointment, as agent in India of any person or company, in the trading or commercial transactions of such person or company, or
(2) Where any such person or company (including its branch) as is referred to in sub-section (1) acts or accepts appointment as such agent, without the permission of the Reserve Bank, such acting or appointment shall be void.
(3) Where any such person or company (including its branch) as is referred to in sub-section (1) acts as, or holds the appointment of, any such agent as is referred to in that sub-section at the commencement of this Act, such person or company (including its branch) shall, within a period of six months from such commencement or such further period as the Reserve Bank may allow in this behalf, make an application to the Reserve Bank in such form and containing such particulars as may be specified by the Reserve Bank for permission to continue to act, as such agent.
(4) On receipt of an application under sub-section (3), the Reserve Bank may, after making such inquiry as it deems fit, either allow the application subject to such conditions, if any, as the Reserve Bank may think fit to impose, or reject the application:
Provided that no application shall be rejected under this sub-section unless the parties who may be affected by such rejection have been given a reasonable opportunity for making a representation in the matter.
(5) Where any application has been rejected under sub-section (4), the acting, appointment or permission, as the case may be, shall be void on the expiry of a period of ninety days, or such other later date as may be specified by the Reserve Bank, from the date of receipt by the person or company (including its branch) concerned of the communication conveying such rejection.
(6) Where no application has been made under sub-section (3) by any such person or company (including its branch) as is referred to in sub-section (1), the Reserve Bank may, by order, direct such person or company (including its branch) to desist from such acting on the expiry of such period as may be specified in the direction:
Provided that no direction shall be made under this sub-section unless the parties who may be affected by such direction have been given a reasonable opportunity for making a representation in the matter.
(7) Where any direction made under sub-section (6) has not been complied with by any person or company (including its branch), then, without prejudice to any action that may be taken under this Act, the acting, shall be with effect from the expiry of the period specified in the direction.
Explanation - For the purposes of this section, -(a) "agent" includes any person or company (including its branch) who or which buys any goods with a view to sell such goods before any processing thereof; (b) "company" means any body corporate and includes a firm or other association of individuals; (c) "processing" means any art or process for producing, preparing or making an article by subjecting any material to a manual, mechanical, chemical, electrical or any other like operation but does not include any process incidental or ancillary to the completion of a manufactured product such as dividing, pressing, compressing, packing, re-packing, labeling, re-labeling, branding or the adoption of any such treatment as is necessary to render such product marketable to the consumer.
(d) Deleted by Act 29 of 1993
Restrictions on establishment of place of business in India
29. (1) Without prejudice to the provisions of section 28 and section 47 and notwithstanding anything contained in any other provisions of this Act or the provisions of the Companies Act, 1956, a person resident outside India (whether a citizen of India or not) or a person who is not a citizen of India but is resident in India or a company (other than a banking company) which is not incorporated under any law in force in India or any branch of such company, shall not, except with the general or special permission of the Reserve Bank, -(a) carry on in India, or establish in India a branch, office or other place of business for carrying on any activity of a trading, commercial or industrial nature, other than an activity for the carrying on of which permission of the Reserve Bank has been obtained under Section 28; or (b) acquire the whole or any part of any undertaking in India of any person or company carrying on any trade, commerce or industry or purchase the shares in India of any such company.
(1A)A company (other than a banking company) in which the non-resident interest is more than forty per cent, shall not, except with the general or special permission of the Reserve Bank, carry on in India any activity relating to agriculture or plantation or acquire the whole or any part of any undertaking in India of any person or company carrying on any activity relating to agriculture or plantation or purchase the shares in such company..(2) (a) Where any person or company (including its branch) referred to in sub-section (1) carries on any activity referred to in clause (a) of that sub-section at the commencement of this Act or has established a branch, office or other place of business for the carrying on of such activity at such commencement, then, such person or company (including its branch) may make an application to the Reserve Bank within a period of six months from such commencement or such further period as the Reserve Bank may allow in this behalf for permission to continue to carry on such activity or to continue the establishment of the branch, office or other place of business for the carrying on of such activity, as the case may be.
(b) Every application made under clause (a) shall be in such form and contain such particulars as may be specified by the reserve Bank.
(c) Where any application has been made under clause (a), the Reserve Bank may, after making such inquiry as it may deem fit, either allow the application subject to such conditions, if any, as the Reserve Bank may think fit to impose or reject the application:
Provided that no application shall be rejected under this clause unless the parties who may be affected by such rejection have been given a reasonable opportunity for making a representation in the matter.
(d) Where an application is rejected by the Reserve Bank under clause (c), the person or company (including its branch) concerned shall discontinue such activity or close down the branch, office or other place of business established for the carrying on of such activity, as the case may be, on the expiry of a period of ninety days or such other later date as may be specified by the Reserve Bank from the date of receipt by such person or company (including its branch) of the communication conveying such rejection.
(e) Where no application has been made under clause (a) by any person or company (including its branch), the Reserve Bank may, by order, direct such person or company (including its branch) to discontinue such activity or to close down the branch, office or other place of business established for the carrying on of such activity, as the case may be, on the expiry of such period as may be specified in the direction:
Provided that no direction shall be made under this clause unless the parties who may be effected by such direction have been given a reasonable opportunity for making a representation in the matter.
(3) Notwithstanding anything contained in sub-section (2), the Reserve Bank may, having regard to -
(i) the fact that any person or company (including its branch), referred to in sub-section (1), is carrying on any activity referred to in clause (a) of that sub-section at the commencement of this Act or has established a branch, office or other place of business for the carrying on of such activity at such commencement, in either case, in pursuance of any permission or licence granted by the Central Government;
and
(ii) the nature of the activity which is being, or intended to be, carried on by such person or company (including its branch), by order, exempt -(a) such person or company (including its branch); or (b) any class of such persons or companies (including their branches), in relation to such activity as may be specified in the order, from the operation of the provisions of sub-section (2) subject to such conditions as may be specified in the order:
Provided that the Reserve Bank shall not make any order under this sub-section in a case where the activity which is being, or intended to be, carried on is solely of a trading nature.
(4) (a) Where at the commencement of this Act any person or company (including its branch) referred to in sub-section (1) holds any shares in India of any company referred to in clause (b) of that sub-section, then, such person or company (including its branch) shall not be entitled to continue to hold such shares unless before the expiry of a period of six months from such commencement or such further period as the Reserve Bank may allow in this behalf such person or company (including its branch) has made an application to the Reserve Bank in such form and containing such particulars as may be specified by the Reserve Bank for permission to continue to hold such shares.
(b) Where an application has been made under clause (a), the Reserve Bank may, after making such inquiry as it may deem fit, either allow the application subject to such conditions, if any, as the Reserve Bank may think fit to impose or reject the application:
Provided that no application shall be rejected under this clause unless the parties who may be affected by such rejection have been given a reasonable opportunity for making a representation in the matter.
(c) Where an application has been rejected under clause (b) or where no application has been made under clause (a), the Reserve Bank may, if it is of opinion that it is expedient so to do for the purpose of conserving the foreign exchange, direct such person or company (including its branch) to sell or procure the sale of such shares:
Provided that no direction shall be made under this clause unless notice of such direction for a period of not less than ninety days has been given to the person or company (including its branch) to be affected by such direction.
Explanation - For the purposes of this section, -(i) "company" has the same meaning as in clause (b) of the Explanation to section 28:
(ii) "non-resident interest" means participation in the share capital by, or entitlement to the distributable profits of any individual or company resident outside India, or any company not incorporated under any law in force in India, or any branch of such company whether resident outside India or not.
Prior permission of Reserve Bank required for practising profession, etc. in India by nationals of foreign States
30. (1) No national of a foreign State shall, without the previous permission of the Reserve Bank practise any profession or carry on any occupation, trade or business in India in a case where such national desires to acquire any foreign exchange (such foreign exchange being intended for remittance outside India) out of any moneys received by him in India by reason of the practising of such profession or the carrying on of such occupation, trade or business, as the case may be.
(2) Where any national of a foreign State desires to obtain the permission of the Reserve Bank under sub-section (1), he may make an application to the Reserve Bank in such form, in such manner and containing such particulars as may be prescribed.
(3) On receipt of an application under sub-section (2), the Reserve Bank may, after making such inquiry as it deems fit, allow the application subject to such conditions, if any, as it may think fit to impose or reject the application:
Provided that no application shall be rejected under this sub-section unless the applicant has been given a reasonable opportunity for making a representation in the matter.
Restriction on acquisition, holding, etc., of immovable property in India
31. (1) No person who is not a citizen of India and no company (other than a banking company) which is not incorporated under any law in force in India shall, except with the previous general or special permission of the Reserve Bank, acquire or hold or transfer or dispose of by sale, mortgage, lease, gift, settlement or otherwise any immovable property situate in India:
Provided that nothing in this sub-section shall apply to the acquisition or transfer of any such immovable property by way of lease for a period not exceeding five years.
(2) Any person or company referred to in sub-section (1) and requiring a special permissionunder that sub-section for acquiring, or holding, or transferring, or disposing of, by sale, mortgage, lease, gift, settlement or otherwise any immovable property situate in India may make an application to the Reserve Bank in such form and containing such particulars as may be specified by the Reserve Bank.
(3) On receipt of an application under sub-section (2), the Reserve Bank may, after making such inquiry as it deems fit, either grant or refuse to grant the permission applied for:
Provided that no permission shall be refused unless the applicant has been given a reasonable opportunity for making a representation in the matter:
Provided further that if before the expiry of a period of ninety days from the date on which the application was received by the Reserve Bank, the Reserve Bank does not communicate to the applicant that the permission applied for has been refused, it shall be presumed that the Reserve Bank has granted such permission.
Explanation - In computing the period of ninety days for the purposes of the second proviso, the period, if any, taken by the Reserve Bank for giving an opportunity to the applicant for making a representation under the first proviso shall be excluded.
(4) Every person and company referred to in sub-section (1) holding at the commencement of this Act any immovable property situate in India shall, before the expiry of a period of ninety days from such commencement or such further period as the Reserve Bank may allow in this behalf, make a declaration in such form as may be specified by the Reserve Bank regarding the immovable property or properties held by such person or company.
32. Deleted by Act 29 of 1993.
Power to call for information
33. (1) The Central Government may, at any time by notification in the Official Gazette, direct the owners, subject to such exceptions, if any, as may be specified in the notification, of such foreign exchange or foreign securities or immovable properties held outside India as may be so specified, to submit a return, or from time to time returns, thereof to the Reserve Bank within such period, and giving such particulars, as may be so specified.
(2) Where for the purposes of this Act the Central Government or the Reserve Bank or any officer of Enforcement, not below the rank of a Chief Enforcement Officer, considers it necessary or expedient to obtain and examine any information, book or other document in the possession of any person or which in the opinion of the Central Government or the Reserve Bank or such officer it is possible for such person to obtain and furnish, the Central Government or the Reserve Bank or, as the case may be, such officer may, by order in writing, require any such person (whose name shall be specified in the order) to furnish, or to obtain and furnish, to the Central Government or the Reserve Bank or such officer or any person specified in the order with such information, book or other document and thereupon such person shall be bound to comply with such requisition.
Explanation - For the purposes of this section, section 34 and sections 36 to 41 (both inclusive), "document" includes Indian currency, foreign exchange and books of account.
APPENDIX I (Part 2 Of 2)
Power to search suspected persons and to seize documents
34. (1) If any officer of Enforcement authorised in this behalf by the Central Government, by general or special order, has reason to believe that any person has secreted about his person or in anything under his possession, ownership or control any documents which will be useful for, or relevant to, any investigation or proceeding under this Act, he may search that person or such thing and seize such documents.
(2) When any officer of Enforcement is about to search any person under the provisions of this section, the officer of Enforcement shall, if such person so requires, take such person without unnecessary delay to the nearest gazetted officer of Enforcement superior in rank to him or a magistrate.
(3) If such requisition is made, the officer of Enforcement may detain the person making it until he can bring him before the gazetted officer of Enforcement or the magistrate referred to in sub-section (2).
(4) The gazetted officer of Enforcement or the magistrate before whom any such person is brought shall, if he sees no reasonable ground for search, forthwith discharge the person but otherwise shall direct that search be made.
(5) Before making a search under the provisions of this section, the officer of Enforcement shall call upon two or more persons to attend and witness the search and may issue an order in writing to them or any of them so to do; and the search shall be made in the presence of such persons and a list of all documents seized in the course of such search shall be prepared by such officer and signed by such witnesses.
(6) No female shall be searched by any one excepting a female.
Power to arrest
35. (1) If any officer of Enforcement authorised in this behalf by the Central Government, by general or special order, has reason to believe that any person in India or within the Indian customs waters has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.
(2) Every person arrested under sub-section (1) shall, without unnecessary delay, be taken to a magistrate.
(3) Where any officer of Enforcement has arrested any person under sub-section (1), he shall, for the purpose of releasing such person on bail or otherwise, have the same powers and be subject to the same provisions as the officer-in-charge of a police station has, and is subject to, under the Code of Criminal Procedure, 1973.
Power to stop and search conveyances
36. If any officer of Enforcement authorised in this behalf by the Central Government, by general or special order, has reason to believe that any document which will be useful for, or relevant to, any investigation or proceeding under this Act is secreted in any aircraft or vehicle or on any animal in India or in any vessel in India or within the Indian customs waters, he may at any time stop any such vehicle or animal or vessel or, in the case of an aircraft, compel it to stop or land, and -
(a) rummage and search any part of the aircraft, vehicle or vessel;
(b) examine and search any goods in the aircraft, vehicle or vessel or on the animal;
(c) seize any such document as is referred to above;
(d) break open the lock of any door or package for exercising the powers conferred by clauses (a), (b) and (c), if the keys are withheld.
Power to search premises
37. (1) If any officer of Enforcement, not below the rank of an Assistant Director of Enforcement, has reason to believe that any documents which, in his opinion, will be useful for, or relevant to, any investigation or proceeding under this Act, are secreted in any place, he may authorise any officer of Enforcement to search for and seize or may himself search for and seize such documents.
(2) The provisions of the Code of Criminal Procedure, 1973, relating to searches, shall, so far as may be, apply to searches under this section subject to the modification that sub-section (5) of section 165 of the said Code shall have effect as if for the word "Magistrate", wherever it occurs, the words "Director of Enforcement or other officer exercising his powers" were substituted.
Power to seize documents, etc.
38. Without prejudice to the provisions of section 34 or section 36 or section 37, if any officer of Enforcement authorised in this behalf by the Central Government, by general or special order, has reason to believe that any document or thing will be useful for, or relevant to, any investigation or proceeding under this Act or in respect of which a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder has taken place, he may seize such document or thing.
Power to examine persons
39. The Director of Enforcement or any other officer of Enforcement authorised in this behalf by the Central Government, by general or special order, may, during the course of any investigation or proceeding under this Act,-
(a) require any person to produce or deliver any document relevant to the investigation or proceeding;
(b) examine any person acquainted with the facts and circumstances of the case.
Power to summon persons to give evidence and produce documents
40. (1) Any gazetted officer of Enforcement shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document during the course of any investigation or proceeding under this Act.
(2) A summons to produce documents may be for the production of certain specified documents or for the production of all documents of a certain description in the possession or under the control of the person summoned.
(3) All persons so summoned shall be bound to attend either in person or by authorised agents, as such officer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents as may be required:
Provided that the exemption under section 132 of the Code of Civil Procedure, 1908, shall be applicable to any requisition for attendance under this section.
(4) Every such investigation or proceeding as aforesaid shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the Indian Penal Code
Custody of documents, etc.
41. Where in pursuance of an order made under sub-section (2) of section 33 or of the provisions of section 34 or section 36 or section 37 or of a requisition or summons under section 39 or section 40, any document is furnished or seized and any officer of Enforcement has reason to believe that the said document would be evidence of the contravention of any of the provisions of this Act or of any rule, direction or order made thereunder, and that it would be necessary to retain the document in his custody, he may so retain the said document for a period not exceeding six months or if, before the expiry of the said period of six months, any proceedings -.(i) under section 51 have been commenced, until the disposal of those proceedings, including the proceedings, if any, before the Appellate Board and the High Court: or (ii) under section 56 have been commenced before a court, until the document has been filed in the court:
Provided that the aforesaid period of six months may, for reasons to be recorded in writing, be extended by the Director of Enforcement for a further period not exceeding six months.
Explanation - In computing the period during which a document (hereafter in this Explanation referred to as the said document) may be retained under this section, in any case where by reason of an injunction or order of any court (whether such injunction or order is in relation to the said document or is in relation to any other document reference to which would be necessary for examining or using the said document), -(a) the said document could not be examined fully for the purpose of determining whether it would be evidence of the contravention of any of the provisions of this Act or of any rule, direction or order made thereunder, or (b) the said document could not be used for commencing any proceedings under section 51 or section 56, or (c) the proceedings under section 51 or section 56 could not be commenced, the time of the continuance of the injunction or order, the day on which it was issued or made and the day on which it was withdrawn, shall be excluded.
Encashment of cheque, draft, etc.
42. (1) Where -(i) an investigation is being made into any alleged contravention of the provisions of section 13 or clause (a) of sub-section (1) of section 18 or section 18A or clause (a) of sub-section (1) of section 19, read with section 67;
or
(ii) an investigation is being made into any alleged contravention of any other provision of this Act or of any rule, direction or order made thereunder; or
(iii) any proceeding in respect of any such contravention as is referred to in clause (i) or clause (ii) is pending before an officer of Customs or an officer of Enforcement or a court, and any draft, cheque (including traveller's cheque) or other instrument being the subject matter of such investigation or proceeding is in the custody of an officer of Customs or of an officer of Enforcement or of a court, then, -(a) where such draft, cheque (including traveller's cheque) or other instrument is in the custody of an officer of Customs, the Collector of Customs; or
(b) where such draft, cheque (including traveller's cheque) or other instrument is in the custody of an officer of Enforcement, the Director of Enforcement;or
(c) where such draft, cheque (including traveller's cheque) or other instrument is in the custody of a court, the court, on an application made to it in this behalf by the Collector of Customs or, as the case may be, by the Director of Enforcement, may, by order, direct that the sum due under such draft, cheque (including traveller's cheque) or other instrument be encashed either through the Reserve Bank or such other agency as the Collector of Customs or the Director of Enforcement or the court, as the case may be, deems fit.
(2) Any proceeds realised in pursuance of a direction under sub-section (1) shall be kept in a separate account to be maintained by the prescribed authority in the prescribed manner.
(3) Where a direction is made under section 63, or an order has been made under the Customs Act, 1962 to confiscate any draft, cheque (including traveller's cheque) or other instrument the proceeds of which have been realised under sub-section (1), such proceeds shall vest in the Central Government and in all other cases such proceeds shall be paid to such person as may appear to the officer or the court, who or which made the direction under sub-section (1), to be entitled thereto in such currency and in such manner as he or it deems just together with interest at the rate of six per cent per annum from the date on which such draft, cheque (including traveller's cheque) or other instrument came into his or its custody till the date of payment:.Provided that nothing in this sub-section shall affect the liability of any person, who may receive the whole or any part of the proceeds, to pay the same to the person lawfully entitled thereto.
(4) Where any foreign currency, being the subject matter of any investigation or proceeding referred to in sub-section (1), is in the custody of an officer of Customs or of an officer of Enforcement or of a court, the Collector of Customs, the Director of Enforcement or, as the case may be, the court may, having regard to the security-risk involved in such custody, direct that the foreign currency be deposited in a bank in such manner as he or it may deem fit.
(5) Where any draft, cheque (including traveller's cheque) or other instrument is to be encashed under sub-section (1) or any foreign currency is to be deposited in a bank under sub-section (4), the Collector of Customs, the Director of Enforcement or, as the case may be, the court, may prepare or cause to be prepared an inventory of such draft, cheque or other instrument or foreign currency containing such details relating to its description, mark, numbers, country of origin and other particulars as may appear to be relevant to its identity in any proceeding under this Act and where the inventory is prepared or caused to be prepared by the Collector or the Director, the Collector or, as the case may be, the Director shall make an application to a Magistrate for the purpose of -(a) certifying the correctness of the inventory so prepared; or (b) taking, in the presence of the Magistrate photographs of such draft, cheque, other instrument or foreign currency, and certifying such photographs as true.
(6) Where an application is made under sub-section (5), the Magistrate shall, as soon as may be, allow the application.
Inspection
43. (1) Any officer of Enforcement not below the rank of an Assistant Director of Enforcement specially authorised in writing by the Director of Enforcement in this behalf, or any officer of the Reserve Bank specially authorised in writing by the Reserve Bank in this behalf, may inspect the books and accounts and other documents of any authorised dealer.
(2) It shall be the duty of every authorised dealer and, where the authorised dealer is a company or a firm, of every director, partner or other officer of the authorised dealer to produce to any officer making an inspection under sub-section (1) all such books, accounts and other documents in his custody or power and to furnish him with any statement or information relating to the affairs of the authorised dealer as the said officer may require of him within such time as the said officer may specify.
(3) Any officer making an inspection under sub-section (1) may examine on oath any authorised dealer or his agent or, where the authorised dealer is a company or a firm, any director, partner or other officer of the authorised dealer in relation to its business.
(4) If any person fails to produce any book, account or other document or to furnish any statement or information relating to the authorised dealer which, under sub-section (2), it is his duty to produce or furnish, or to answer any question relating to the business of the authorised dealer which he is asked by an officer making an inspection under this section, he shall be deemed to have contravened the provisions of this Act.
(5) The provisions of this section shall, so far as may be, apply in relation to a money-changer as they apply in relation to an authorised dealer.
Prohibition of disclosure of documents or information except in certain cases
44. (1) If the Director of Enforcement or any other officer of Enforcement not below the rank of an Assistant Director of Enforcement is of opinion that the contents of any documents which have come into his possession or control during the course of any investigation or proceeding under this Act would be useful for, or relevant to, any proceeding which is in progress or may be started under any other law for the time being in force, he may disclose such document or any information contained therein as he thinks fit to an officer duly authorised by or under such other law.
(2) If any officer of Enforcement, except in the discharge in good faith of his duty as such officer in accordance with sub-section (1), or in compliance with any requisition made under any law for the time being in force, discloses any document or information obtained by him in his official capacity, he shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.
Power of police officers and other officers to enter, search, etc.
45. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, any police officer not below the rank of a Deputy Superintendent of Police, or any other officer of the Central Government or a State Government authorised by the Central Government in this behalf may enter any public place and search and arrest without warrant any person found therein who is reasonably suspected of having committed or of committing or of being about to commit a contravention of the provisions of sub-section (1) of section 8.
Explanation - For the purposes of this sub-section, the expression "public place" includes any public conveyance, any hotel, any shop or any other place intended for use by, or accessible to, the public.
(2) Where any person is arrested under sub-section (1) by an officer other than a police officer, such officer shall, without unnecessary delay, take or send the person arrested before a magistrate having jurisdiction in the case or before the officer-in-charge of a police station.
(3) The provisions of the Code of Criminal Procedure, 1973, shall, subject to the provisions of this section, apply, so far as may be, in relation to any entry, search or arrest, made under this section.
(4) The provisions of this section shall have effect notwithstanding anything inconsistent therewith contained in any other provision of this Act.
Procedure in respect of foreign exchange or any other goods seized by police officers
46. (1) Where any police officer seizes any foreign exchange or any other goods which is alleged or suspected to have been stolen, or which is found, in either case, under circumstances which create suspicion of the commission of an offence under this Act, such police officer shall forthwith report the seizure of -
(i) such foreign exchange to the nearest officer of Enforcement, not below the rank of an Assistant Director of Enforcement; and
(ii) such other goods to the nearest officer of Customs, not below the rank of an Assistant Collector of Customs..(2) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, in every case referred to in sub-section (1), the police officer shall, immediately after the dismissal of the complaint or the conclusion of the inquiry or trial, as the case may be, cause -
(i) such foreign exchange to be delivered to an officer of Enforcement, not below the rank of an Assistant Director of Enforcement; and
(ii) such other goods to be conveyed to an officer of Customs, not below the rank of an Assistant Collector of Customs.
Contracts in evasion of the Act
47. (1) No person shall enter into any contract or agreement which would directly or indirectly evade or avoid in any way the operation of any provision of this Act or of any rule, direction or order made thereunder.
(2) Any provision of, or having effect under, this Act that a thing shall not be done without the permission of the Central Government or the Reserve Bank, shall not render invalid any agreement by any person to do that thing, if it is a term of the agreement that that thing shall not be done unless permission is granted by the Central Government or the Reserve Bank, as the case may be; and it shall be an implied term of every contract governed by the law of any part of India that anything agreed to be done by any term of that contract which is prohibited to be done by or under any of the provisions of this Act except with the permission of the Central Government or the Reserve Bank, shall not be done unless such permission is granted.
(3) Neither the provisions of this Act nor any term (whether express or implied) contained in any contract that anything for which the permission of the Central Government or the Reserve Bank is required by the said provisions shall not be done without that permission, shall prevent legal proceedings being brought in India to recover any sum which, apart from the said provisions and any such term, would be due, whether as debt, damages or otherwise, but -
(a) the said provisions shall apply to sums required to be paid by any judgement or order of any court as they apply in relation to other sums;
(b) no steps shall be taken for the purpose of enforcing any judgement or order for the payment of any sum to which the said provisions apply except as respects so much thereof as the Central Government or the Reserve Bank, as the case may be, may permit to be paid; and
(c) for the purpose of considering whether or not to grant such permission, the Central Government or the Reserve Bank, as the case may be, may require the person entitled to the benefit of the judgement or order and the debtor under the judgement or order, to produce such documents and to give such information as may be specified in the requisition.
(4) Notwithstanding anything contained in the Negotiable Instruments Act, 1881, neither the provisions of this Act or of any rule, direction or order made thereunder, nor any condition, whether expressed or to be implied having regard to those provisions, that any payment shall not be made without permission under this Act, shall be deemed to prevent any instrument being a bill of exchange or promissory note.
False statements
48. No person shall, when complying with any direction or order under section 33 or with any requirement under section 43 or when making any application or declaration to any authority or person for any purpose under this Act, give any information or make any statement which he knows or has reasonable cause to believe to be false, or not true, in any material particular.
Failure to comply with conditions subject to which permissions or licences have been given or granted under the Act to be contravention of the provisions of the Act
49. Where under any provision of this Act any permission or licence has been givenor granted to any person subject to any conditions and-
(i) such person fails to comply with all or any of such conditions;
or
(ii) any other person abets such person in not complying with all or any of such conditions, then, for the purposes of this Act, -
(a) in a case referred to in clause (i), such person shall be deemed to have contravened such provision;
and
(b) in a case referred to in clause (ii), such other person shall be deemed to have abetted the contravention of such provision.
Penalty
50. If any person contravenes any of the provisions of this Act [other than section 13, clause (a) of sub-section (1) of section 18, section 18A and clause (a) of sub-section (1) of section 19] or of any rule, direction or order made thereunder, he shall be liable to such penalty not exceeding five times the amount or value involved in any such contravention or five thousand rupees, whichever is more, as may be adjudged by the Director of Enforcement or any other officer of Enforcement not below the rank of an Assistant Director of Enforcement specially empowered in this behalf by order of the Central Government (in either case hereinafter referred to as the adjudicating officer).
Power to adjudicate
51. For the purpose of adjudging under section 50 whether any person has committed a contravention of any of the provisions of this Act (other than those referred to in that section) or of any rule, direction or order made thereunder, the adjudicating officer shall hold an inquiry in the prescribed manner after giving that person a reasonable opportunity for making a representation in the matter and if, on such inquiry, he is satisfied that the person has committed the contravention, he may impose such penalty as he thinks fit in accordance with the provisions of that section.
Appeal to Appellate Board
52. (1) The Central Government may, by notification in the Official Gazette, constitute an Appellate Board to be called the Foreign Exchange Regulation Appellate Board consisting of a Chairman [being a person who has for at least ten years held a civil judicial post or who has been a member of the Central Legal Service (not below Grade I) for at least three years or who has been in practice as an advocate for at least ten years] and such number of other members, not exceeding four, to be appointed by the Central Government for hearing appeals against the orders of the adjudicating officer made under section 51.
(2) Any person aggrieved by such order may, on payment of such fee as may be prescribed and after depositing the sum imposed by way of penalty under section 50 and within forty-five days from the date on which the order is served on the person committing the contravention, prefer an appeal to the Appellate Board:
Provided that the Appellate Board may entertain any appeal after the expiry of the said period of forty-five days, but not after ninety days, from the date aforesaid if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time:
Provided further that where the Appellate Board is of opinion that the deposit to be made will cause undue hardship to the appellant, it may, in its own discretion, dispense with such a deposit either unconditionally or subject to such conditions as it may deem fit..(3) On receipt of an appeal under sub-section (2), the Appellate Board may, after making such further inquiry as it deems fit, confirm, modify or set aside the order appealed against and the decision of the Appellate Board shall, subject to the provisions of section 54, be final and if the sum deposited by way of penalty under sub-section (2) exceeds the amount directed to be paid by the Appellate Board, the excess amount shall be refunded.
(4) The Appellate Board may, for the purpose of examining the legality, propriety or correctness of any order made by the adjudicating officer under section 50 read with section 51 in relation to any proceeding, on its own motion or otherwise, call for the records of such proceeding and make such order in the case as it thinks fit.
(5) No order of the adjudicating officer made under section 50 read with section 51 shall be varied by the Appellate Board so as to prejudicially affect any person without giving such person a reasonable opportunity for making a representation in the matter; and subject thereto, the Appellate Board shall follow such procedure, in respect of the proceedings before it,as may be prescribed.
(6) The powers and functions of the Appellate Board may be exercised and discharged by Benches consisting of two members and constituted by the Chairman of the Appellate Board:
Provided that if the members of the Bench differ on any point or points, they shall state the point or points on which they differ and refer the same to a third member (to be specified by the Chairman) for hearing on such point or points and such point or points shall be decided according to the opinion of that member:
Provided further that it shall be competent for the Chairman or any other member of the Appellate Board authorised by the Chairman in this behalf to exercise the powers and discharge the functions of the Appellate Board in respect of any appeal against an order imposing a penalty of an amount not exceeding Rupees two lakhs and fifty thousand.
Powers of the adjudicating officer and the Appellate Board to summon witnesses, etc.
53. (1) Without prejudice to any other provision contained in this Act, the adjudicating officer and the Appellate Board shall have all the powers of a civil court under the Code of Civil Procedure, 1908 while trying a suit, in respect of the following matters, namely:-(a) summoning and enforcing the attendance of witnesses;
(b) requiring the discovery and production of any document;
(c) requisitioning any public record or copy thereof from any court or office;
(d) receiving evidence on affidavits; and
(e) issuing commissions for the examination of witnesses or documents.
(2) The adjudicating officer or the Appellate Board while exercising any powers under this Act shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure,1973.
Appeal to High Court
54. An appeal shall lie to the High Court only on questions of law from any decision or order of the Appellate Board under sub-section (3) or sub-section (4) of section 52:
Provided that the High Court shall not entertain any appeal under this section if it is filed after the expiry of sixty days of the date of communication of the decision or order of the Appellate Board, unless the High Court is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time.
Explanation - In this section and in section 55, "High Court" means -(i) the High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain; and (ii) where the Central Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one respondent, any of the respondents, ordinarily resides or carries on business or personally works for gain.
Continuance of proceeding in the event of death or insolvency
55. (1) Where -(i) a penalty has been imposed under section 50 read with section 51 by the adjudicating officer on any person and no appeal against the order imposing such penalty has been preferred to the Appellate Board;or
(ii) any such appeal has been preferred to the Appellate Board, and -(a) in a case referred to in clause (i), such person dies or is adjudicated an.insolvent before preferring an appeal to the Appellate Board; or
(b) in a case referred to in clause (ii), such person dies or is adjudicated an insolvent during the pendency of the appeal, then, it shall be lawful for the legal representatives of such person, or the official assignee or the official receiver, as the case may be, to prefer an appeal to the Appellate Board, or as the case may be, to continue the appeal before the Appellate Board, in place of such person and the provisions of section 52 shall, so far as may be, apply or continue to apply to such appeal.
(2) Where -(i) after the passing of a decision or order by the Appellate Board, no appeal has been preferred to the High Court under section 54; or
(ii) any such appeal has been preferred to the High Court, and -(a) in a case referred to in clause (i), the person entitled to file the appeal dies or is adjudicated an insolvent before preferring an appeal to the High Court; or (b) in a case referred to in clause (ii), the person who had filed the appeal dies or is adjudicated an insolvent during the pendency of the appeal before the High Court, then, it shall be lawful for the legal representatives of such person, or the official assignee or the official receiver, as the case may be, to prefer an appeal to the High Court or to continue the appeal before the High Court in place of such person and the provisions of section 54 shall, so far as may be, apply or continue to apply to such appeal.
(3) The powers of the official assignee or the official receiver under sub-section (1) or sub-section (2) shall be exercised by him subject to the provisions of the Presidency-towns Insolvency Act, 1909, or the Provincial Insolvency Act, 1920, as the case may be.
Offences and prosecutions
56. (1) Without prejudice to any award of penalty by the adjudicating officer under this Act, if any person contravenes any of the provisions of this Act [other than section 13, clause (a) of sub-section (1) of section 18, section 18A clause (a) of sub-section (1) of section 19, sub-section (2) of section 44 and sections 57 and 58], or of any rule, direction or order made thereunder, he shall, upon conviction by a court, be punishable, -(i) in the case of an offence the amount or value involved in which exceeds one lakh of rupees, with imprisonment for a term which shall not be less than six months, but which may extend to seven years and with fine:
Provided that the court may, for any adequate and special reasons to be mentioned in the judgement, impose a sentence of imprisonment for a term of less than six months; (ii) in any other case, with imprisonment for a term which may extend to three years or with fine or with both.
(2) If any person convicted of an offence under this Act [not being an offence under section 13 or clause (a) of sub-section (1) of section 18 or section 18A or clause (a) of sub-section (1) of section 19 or sub/section (2) of section 44 or section 57 or section 58] is again convicted of an offence under this Act [not being an offence under section 13 or clause (a) of sub-section (1) of section 18 or section 18A or clause (a) of sub-section (1) of section 19 or sub-section (2) of section 44 or section 57 or section 58], he shall be punishable for the second and for every subsequent offence with imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine:
Provided that the court may, for any adequate and special reasons to be mentioned in the judgement, impose a sentence of imprisonment for a term of less than six months.
(3) Where a person having been convicted of an offence under this Act [not being an offence under section 13 or clause (a) of sub-section (1) of section 18 or section 18A or clause
(a) of sub-section (1) of section 19 or sub-section (2) of section 44 or section 57 or section 58] is again convicted of an offence under this Act [not being an offence under section 13 or clause (a) of sub-section (1) of section 18 or section 18A or clause (a) of sub-section (1) of section 19 or sub-section (2) of section 44 or section 57 or section 58], the court by which such person is convicted may, in addition to any sentence which may be imposed on him under this section, by order, direct that that person shall not carry on such business as the court may specify, being a business which is likely to facilitate the commission of such offence, for such period not exceeding three years, as may be specified by the court in the order.
(4) For the purposes of sub-sections (1) and (2), the following shall not be considered as adequate and special reasons for awarding a sentence of imprisonment for a term of less than six months, namely:-.(i) the fact that the accused has been convicted for the first time of an offence under this Act;
(ii) the fact that in any proceeding under this Act, other than a prosecution, the accused has been ordered to pay a penalty or the goods in relation to such proceedings have been ordered to be confiscated or any other penal action has been taken against him for the same offence;
(iii) the fact that the accused was not the principal offender and was acting merely as a carrier of goods or otherwise was a secondary party in the commission of the offence;
(iv) the age of the accused.
(5) For the purposes of sub-sections (1) and (2), the fact that an offence under this Act has caused no substantial harm to the general public or to any individual shall be an adequate and special reason for awarding a sentence of imprisonment for a term of less than six months.
(6) Nothing in the proviso to section 188 of the Code of Criminal Procedure, 1973, shall apply to any offence punishable under this section.
Penalty for contravention of order made by adjudicating officer, Appellate Board and High Court
57. If any person fails to pay the penalty imposed by the adjudicating officer or the Appellate Board or the High Court or fails to comply with any of his or its directions or orders, he shall, upon conviction by a court, be punishable with imprisonment for a term which may extend to two years or with fine or with both.
Vexatious search etc., by officers of Enforcement
58. (1) Any officer of Enforcement exercising powers under this Act or any rule made thereunder who, -
(a) without reasonable ground of suspicion, searches or causes to be searched any place, premises, aircraft, vehicle or vessel; or
(b) vexatiously detains or searches or arrests any person,.shall, for every such offence, upon conviction by a court, be punishable with imprisonment for a term which may extend to two years or with fine which may extend to ten thousand rupees or with both.
(2) Any person wilfully and maliciously giving false information and so causing an arrest or a search to be made under this Act shall, upon conviction by a court, be punishable with imprisonment for a term which may extend to two years or with fine which may extend to ten thousand rupees or with both.
Presumption of culpable mental state
59. (1) In any prosecution for any offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution.
Explanation - In this section, "culpable mental state" includes intention, motive, knowledge of a fact and belief in, or reason to believe, a fact.
(2) For the purposes of this section, a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability.
(3) The provisions of this section shall, so far as may be, apply in relation to any proceeding before an adjudicating officer as they apply in relation to any prosecution for an offence under this Act.
Power to tender immunity from prosecution
60. (1) The Central Government may, if it is of opinion (the reasons for such opinion being recorded in writing) that with a view to obtaining the evidence of any person appearing tohave been directly or indirectly concerned in or privy to the contravention of any of the provisions of this Act or of any rule, direction or order made thereunder, it is necessary or expedient so to do, tender to such person immunity from prosecution for any offence under this Act or under the Indian Penal Code, or under any other Central Act for the time being in force and also from the imposition of any penalty under this Act on condition of his making a full and true disclosure of the whole circumstances relating to such contravention.
(2) A tender of immunity made to, and accepted by, the person concerned, shall, to the extent to which the immunity extends, render him immune from prosecution for any offence in respect of which tender was made or from the imposition of any penalty under this Act..(3) If it appears to the Central Government that any person to whom immunity has been tendered under this section has not complied with the condition on which the tender was made or is wilfully concealing anything or is giving false evidence, the Central Government may record a finding to that effect, and thereupon the immunity shall be deemed to have been withdrawn and such person may be tried for the offence in respect of which the tender of immunity was made or for any other offence of which he appears to have been guilty in connection with the same matter and shall also become liable to the imposition of any penalty under this Act to which he would otherwise have been liable.
Cognizance of offences
61. (1) Notwithstanding anything contained in section 29 of the Code of Criminal Procedure, 1973, it shall be lawful for any metropolitan magistrate and for any magistrate of the first class to pass a sentence of imprisonment for a term exceeding three years or of fine exceeding five thousand rupees on any person convicted of an offence punishable under section 56.
(2) No court shall take cognizance -
(i) of any offence punishable under sub-section (2) of section 44 or sub-section (1) of section 58, -(a) where the offence is alleged to have been committed by an officer of Enforcement not lower in rank than an Assistant Director of Enforcement, except with the previous sanction of the Central Government; (b) where the offence is alleged to have been committed by an officer of Enforcement lower in rank than an Assistant Director of Enforcement, except with the previous sanction of the Director of Enforcement; or
(ii) of any offence punishable under sections 56 or section 57, except upon complaint in writing made by -(
a) the Director of Enforcement; or (b) any officer authorised in writing in this behalf by the Director of Enforcement or the Central Government; or (c) any officer of the Reserve Bank authorised by the Reserve Bank by a general.or special order:
Provided that where any such offence is the contravention of any of the provisions of this Act or of any rule, direction or order made thereunder which prohibits the doing of an act without permission, no such complaint shall be made unless the person accused of the offence has been given an opportunity of showing that he had such permission.
Certain offences to be non-cognizable
62. Subject to the provisions of section 45 and notwithstanding anything contained in the Code of Criminal Procedure, 1973, an offence punishable under section 56 shall be deemed to be non-cognizable within the meaning of that Code.
Confiscation of currency, security, etc.
63. Any court trying a contravention under section 56 and the adjudicating officer adjudging any contravention under section 51 may, if it or he thinks fit and in addition to any sentence or penalty which it or he may impose for such contravention, direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government and further direct that the foreign exchange holdings, if any, of the person committing the contravention or any part thereof, shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf.
Explanation - For the purposes of this section, property in respect of which contravention has taken place shall include -(a) deposits in a bank, where the said property is converted into such deposits; (b) Indian currency, where the said property is converted into that currency; (c) any other property which has resulted out of the conversion of that property.
Preparation, attempt, etc.
64. (1) Whoever makes preparation to contravene any of the provisions of this Act [other than section 13, clause (a) of sub-section (1) of section 18, section 18A, clause (a) of sub-section (1) of section 19, sub-section (2) of section 44 and sections 57 and 58] or of any rule, direction or order made thereunder and from the circumstances of the case it may be reasonably inferred that if not prevented by circumstances independent of his will, the contravention as aforesaid would have taken place, shall, for the purposes of section 56, be deemed to have contravened that provision, rule, direction or order, as the case may be..(2) Whoever attempts to contravene, or abets any contravention of, any of the provisions of this act [other than section 13, clause (a) of sub-section (1) of section 18, section 18A, clause (a) of sub-section (1) of section 19, sub-section (2) of section 44 and sections 57 and 58] or of any rule, direction or order made thereunder, shall, for the purposes of this Act, be deemed to have contravened that provision, rule, direction or order, as the case may be.
Correction of clerical errors, etc.
65. Clerical or arithmetical mistakes in any decision or order passed by the Appellate Board or the adjudicating officer under this Act, or errors arising therein from any accidental slip or omission may, at any time, be corrected by the Appellate Board or the adjudicating officer or his successor in office, as the case may be:
Provided that where any correction proposed to be made under this section will have the result of prejudicially affecting any person no such correction shall be made -(i) after the expiry of a period of two years from the date of such decision or order; and
(ii) unless the person affected thereby is given a reasonable opportunity for making a representation in the matter.
Application of section 360 of the Code of Criminal Procedure,1973 and of the Probation of Offenders Act, 1958
66. (1) Nothing contained in section 360 of the Code of Criminal Procedure, 1973, or in the Probation of Offenders Act, 1958 shall apply to a person convicted of an offence under this Act unless that person is under eighteen years of age.
(2) The provisions of sub-section (1) shall have effect notwithstanding anything contained in sub-section (4) of section 56.
Application of the Customs Act, 1962
67. The restrictions imposed by or under section 13, clause (a) of sub-section (1) of section 18, section 18A and clause (a) of sub-section (1) of section 19 shall be deemed to have been imposed under section 11 of the Customs Act, 1962, and all the provisions of that Act shall
have effect accordingly..Offences by companies
68. (1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.
(2) Notwithstanding anything contained in sub-section (1), where a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly.
Explanation - For the purposes of this section -(i) "company" means any body corporate and includes a firm or other association of individuals; and (ii) "director", in relation to a firm, means a partner in the firm.
Power of court to publish name, place of business, etc., of companies convicted under the Act
69. (1) Where any company is convicted under this Act for contravention of any of the provisions thereof or of any rule, direction or order made thereunder, it shall be competent for the court convicting the company to cause the name and place of business of the company, nature of the contravention, the fact that the company has been so convicted and such other particulars as the court may consider to be appropriate in the circumstances of the case, to be published at the expenses of the company in such newspapers or in such other manner as the court may direct.
(2) No publication under sub-section (1) shall be made until the period for preferring an appeal against the orders of the court has expired without any appeal having been preferred, or such an appeal, having been preferred, has been disposed of.
(3) The expenses of any publication under sub-section (1) shall be recoverable from the company as if it were a fine imposed by the court.
Explanation - For the purposes of this section, "company" has the same meaning as in clause (i) of the Explanation to section 68.
Recovery of sums due to Government
70. (1) Where any penalty imposed on any person under this Act is not paid, -(i) the adjudicating officer may deduct the amount so payable from any money owing to such person which may be under the control of any officer of Enforcement; or
(ii) the adjudicating officer may recover the amount so payable by detaining or selling any goods belonging to such person which are under the control of any officer of Enforcement; or
(iii) if the amount cannot be recovered from such person in the manner provided in clause (i) or clause (ii), the adjudicating officer may prepare a certificate signed by him specifying the amount due from such person and send it to the Collector of the district in which such person owns any property or resides or carries on his business and the said Collector on receipt of such certificate shall proceed to recover from the said person the amount specified thereunder as if it were an arrear of land revenue.
(2) Where the terms of any bond or other instrument executed under this Act or any rule made thereunder provide that any amount due under such instrument may be recovered in the manner laid down in sub-section (1), the amount may, without prejudice to any other mode of recovery, be recovered in accordance with the provisions of that sub-section.
(3) The several modes of recovery specified in this section shall not affect in any way -.(i) any other law for the time being in force relating to the recovery of debts due to the Government; or
(ii) the right of the Government to institute a suit for the recovery of the penalty due to the Government,and it shall be lawful for the Central Government to have recourse to any such law or suit notwithstanding that the amount is to be recovered by any mode specified in this section.
Burden of proof in certain cases
71. (1) Where any person is prosecuted or proceeded against for contravening any of the provisions of this Act or of any rule, direction or order made thereunder which prohibits him from doing an act without permission, the burden of proving that he had the requisite permission shall be on him.
(2) Where any person is prosecuted or proceeded against for contravening the provisions of sub-section (3) of section 8, the burden of proving that the foreign exchange acquired by such person has been used for the purpose for which permission to acquire it was granted shall be on him.
(3) If any person is found or is proved to have been in possession of any foreign exchange exceeding in value fifteen thousand rupees, the burden of proving that the foreign exchange came into his possession lawfully shall be on him.
Presumption as to documents in certain cases
72. Where any document -(i) is produced or furnished by any person or has been seized from the custody or control of any person, in either case, under this Act or under any other law, or
(ii) has been received from any place outside India (duly authenticated by such authority or person and in such manner as may be prescribed) in the course of investigation of any offence under this Act alleged to have been committed by any person, and such document is tendered in any proceedings under this Act in evidence against him, or against him and any other person who is proceeded against jointly with him, the court or the adjudicating officer, as the case may be, shall -.(a) presume, unless the contrary is proved, that the signature and every other part of such document which purports to be in the handwriting of any particular person or which the court may reasonably assume to have been signed by, or to be in the handwriting of, any particular person, is in that person's handwriting, and in the case of a document executed or attested, that it was executed or attested by the person by whom it purports to have been so executed or attested;
(b) admit the document in evidence notwithstanding that it is not duly stamped, if such document is otherwise admissible in evidence;
(c) in a case falling under clause (i), also presume, unless the contrary is proved, the truth of the contents of such document.
Supplemental provisions
73. (1) For the purposes of this Act and of any rules, directions or orders made thereunder -(a) in the case of any person who, having been resident in India, ceases to be such, the Reserve Bank may, by order, declare the territory in which such person shall be treated as being resident;
(b) in the case of any person resident in India who leaves India, the Reserve Bank may give a direction to any bank that until the direction is revoked, any sum, from time to time, standing to the credit of that person and any security held on his behalf at any office or branch of that bank in India specified in the direction shall not be dealt with except with the permission of the Reserve Bank;
(c) a firm or the branch of a firm shall be treated in all respects as if such firm or branch were a body corporate resident where it is situated;
(d) subject to the provisions of clause (c), a branch of any business, whether carried on by a body corporate or otherwise, shall be treated in all respects as if the branch were a body corporate resident where the branch is situated;
(e) the making of any book entry or other statement regarding a debit against a branch of any business in favour of the head office or any other branch of that business shall be treated as the acknowledgement of a debt whereby a right is created in favour of a person resident where the head office or other branch is situated.
(2) Nothing in this Act relating to the payment of any price or sum by the Central Government shall be construed as requiring the Central Government to pay that price or sum otherwise than in Indian currency or otherwise than in India..(3) The Reserve Bank may give directions in regard to the making of payment and the doing of other acts by bankers, authorised dealers, money-changers, stock brokers, or other persons, who are authorised by the Reserve Bank to do anything in pursuance of this Act in the course of their business, as appear to it to be necessary or expedient for the purpose of securing compliance with the provisions of this Act and of any rules, directions or orders made thereunder.
(4) Subject to any other express provision in this behalf contained in this Act, where any provision of this Act requires the permission of the Reserve Bank for doing anything under such provision, the Reserve Bank may specify the form in which an application for such permission shall be made and the particulars which such application shall contain:
Provided that different forms and different particulars may be specified in respect of applications for permission under different provisions of this Act.
Penalty for contravention of direction of Reserve Bank or for failure to file returns
73.A. Without prejudice to the provisions of sections 50 and 51 where any authorised dealer contravenes any direction given by the Reserve Bank under this Act or fails to file any return as directed by the Reserve Bank, the Reserve Bank may, after giving a reasonable opportunity of being heard impose on the authorised dealer a penalty which may extend to ten thousand rupees and in the case of continuing contravention with an additional penalty which, may extend to two thousand rupees for every day during which such contravention continues.
Delegation
74. The Reserve Bank may, with the previous approval of the Central Government, by order, delegate any of its powers or functions -(i) under section 8,9 or 10 or sub-clause (b) of clause (A) of sub-section (2) of section 18 or sub-section (7) of section 18 to any authorised dealer; or
(ii) under section 8 or 9 to any money-changer, subject to such restrictions, conditions and limitations as may be specified in the order.
Power of Central Government to give directions
75. For the purposes of this Act, the Central Government may, from time to time, give to the Reserve Bank such general or special directions as it thinks fit, and the Reserve Bank shall, in the discharge of its functions under this Act, comply with any such directions.
Factors to be taken into account by the Central Government and the Reserve Bank while giving or granting permissions or licences under the Act
76. Save as otherwise expressly provided in this Act, the Central Government or the Reserve Bank, as the case may be, shall, while giving or granting any permission or licence under this Act, have regard to all or any of the following factors, namely:-
(i) conservation of the foreign exchange resources of the country;
(ii) all foreign exchange accruing to the country is properly accounted for;
(iii) the foreign exchange resources of the country are utilised as best to subserve the common good;and
(iv) such other relevant factors as the circumstances of the case may require.
Certain officers to assist officers of Enforcement
77. The following officers are hereby empowered and required to assist the officers of Enforcement in the enforcement of this Act, namely:-
(a) officers of the Customs Department;
(b) officers of the Central Excise Department;
(c) officers of Police;
(d) officers of the Central or State Government employed at any port or airport;
(e) such other officers of the Central or State Government or a local authority as are specified by the Central Government in this behalf by notification in the Official Gazette.
Bar of legal proceedings
78. No suit, prosecution or other legal proceeding shall lie against the Central Government or the Reserve Bank or any officer of Government or of the Reserve Bank or any other person exercising any powers or discharging any functions or performing any duties under this Act, for anything in good faith done or intended to be done under this Act or any rule, direction or order made thereunder.
Power to make rules
79. (1) The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Act.
(2) Without prejudice to the generality of the foregoing power, such rules may -(a) prescribe the forms and the circumstances of their use for the purposes of this Act; (b) prescribe the procedure to be followed by the authorised dealers and money-changers and by persons applying for permission to do anything for the doing of which permission is necessary under this Act; (c) prescribe the manner in which inquiries may be held, and orders may be served, under this Act and the procedure to be followed in respect of the proceedings before the adjudicating officer or the Appellate Board; (d) provide, subject to such conditions as may be specified therein, for the publication of names and other particulars of persons who have been found guilty of any contravention of the provisions of this Act, or of any rule, direction or order made thereunder; (dd) prescribe the fee payable by a person preferring appeal to the Appellate Board under sub-section (2) of section 52; (e) provide for any other matter which is to be or may be prescribed under this Act.
(3) Every rule made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if before the expiry of the session immediately following the session or the successive sessions aforesaid both Houses agree in making any modification in the rule, or both Houses agree that the rule should not be made, the rule shall, thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.
Power to remove difficulties
80. If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, do anything not inconsistent with such provisions for the purpose of removing the difficulty:
Provided that no such order shall be made after the expiration of two years from the commencement of this Act.
Repeal and saving
81. (1) The Foreign Exchange Regulation Act, 1947 is hereby repealed
(2) Notwithstanding such repeal -
(a) anything done or any action taken or purported to have been done or taken (including any rule, notification, inspection, order or notice made or issued, or any appointment, confirmation or declaration made or any licence, permission, authorisation or exemption granted or any document or instrument executed or any direction given or any proceedings taken or any confiscation adjudged or any penalty or fine imposed) under the Act hereby repealed shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act;
(b) the provisions of section 60 of this Act shall apply in relation to the contravention of any of the provisions of the Act hereby repealed or of any rule, direction or order made thereunder;
(c) any appeal preferred to the Foreign Exchange Regulation Appellate Board under sub-section (2) of section 23E of the Act hereby repealed but not disposed of before the commencement of this Act and any appeal that may be preferred to the said Board against any order made or to be made under section 23 of the Act hereby repealed may be disposed of by any member of the Appellate Board constituted under this Act in accordance with the provisions of sub-section (6) of section 52 of this Act:
(d) every appeal from any decision or order of the Foreign Exchange Regulation Appellate Board under sub-section (3) or sub-section (4) of Section 23E of the Act hereby repealed shall, if not filed before the commencement of this Act, be filed before the High Court within a period of sixty days of such commencement;
Provided that the High Court may entertain any such appeal after the expiry of the said period of sixty days if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period..(3) The mention of particular matters in sub-section (2) shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 with regard to the effect of repeal.
FERA Regulations
Foreign Exchange Regulation Act, (FERA), 1973 controls India’s foreign exchange control regime. Comprehensive amendments have been made to FERA, especially with respect to foreign investment, to add strength to the liberalizations announced in the economic policies. FERA provisions that imposed restrictions on locally incorporated companies with foreign equity holding in excess of 40 per cent (known as "FERA companies") have been removed. Such companies are now permitted to operate in India without any special restrictions, effectively placing them on par with wholly Indian owned companies.
Foreign exchange controls have been substantially relaxed. Effective from August 20, 1994, India announced its movement to Article VII status in the IMF: the Indian Rupee is now fully convertible on the current account. For authorized foreign investors, the Indian Rupee is already convertible on the capital account. Full capital account convertibility is expected in the coming years.
Although the Indian foreign exchange market is not yet fully developed, a variety of instruments have been introduced in the recent past. The dollar rupee forward market is very active, and firms have access to cross-currency options.
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