Enforcement Directorate plea in currency scam rejected

Mumbai: The Bombay high court has rejected the appeal of the Enforcement Directorate (ED) against the order of an appellate court favouring numerous businessmen from Mumbai and other parts of the country who were involved in a currency scam in 2000. The ED had registered cases of scams running into a few hundred crore against the businessmen, under the Foreign Exchange Regulation Act (FERA) Act. The businessmen had allegedly taken advantage by floating fictitious companies in India, Dubai and Russia for exporting goods to Russia and had dumped goods meant for Russia in Dubai and claimed benefits from the Indian government. The high court rejected the appeal of the ED on the grounds that the Foreign Exchange Management Act (FEMA) Act, which had replaced the FERA Act, did not have provisions for revision of orders. The appellate court order was on similar lines.

A division bench of justices A.S. Oka and A.K. Menon was hearing a bunch of appeals filed by the ED through the Union of India in the matter pertaining to the alleged currency scam.

In 2000, the Russian government wanted to overcome a currency deficit and so invited people to do business. Some businessmen had floated companies to export goods to Russia but the goods never made it to Russia as they were offloaded in Dubai. When the ED got wind of it, cases were registered against the businessmen under the FERA Act. However, in 2010, the Special Direc-torate of Enforcement (SDE) dropped charges against the businessmen, which was challenged by the ED in the FEMA appellate tribunal. The tribunal had rejected the appeal on the grounds that there was no provision for revision of the order and hence could not override the SDE order.

In the hearing, the counsel for the Union referred to section 49 of the FEMA Act, which allowed appeal of cases to be registered under FERA with the FEMA tribunal and also prayed for the court to apply the Mimansa interpretation. However, the court upheld the tribunal decision and dismissed the appeal.

The businessmen were represented by advocate B. Sheshagopalan, advocate Arun Mehta, advocate Sujay Kantawala, advocate Shradha Achilya among others.