Accused cleared by Enforcement Directorate can’t face action under FEMA: Supreme Court

A person can’t be subjected to criminal proceedings for violating the foreign exchange law after a clean chit by the enforcement directorate (ED), the Supreme Court has ruled.

Once ED says there is no contravention of the act’s provisions, it would be “unjust and an abuse of the process of the court” to permit continuation of criminal prosecution of the person concerned, Supreme Court said.

The judgment, however, was fractured, with Justice HS Bedi and Justice CK Prasad for it and justice P Sathasivam against it. The latter said the findings of departmental proceedings were not binding on the court.

“Legislature intended to treat the two proceedings as independent of each other. There is nothing in the present act to indicate that a finding in adjudication is binding on the court in a prosecution,” he said.

The ruling came on an appeal filed by Kolkata businessman Radheshyam Kejriwal challenging proceedings initiated against him by ED under Foreign Exchange Regulation Act (FERA). The act has now been replaced by FEMA (foreign exchange management act).