FERA Complaint Cognisance Vitiated If There Was No Notice To Accused : Supreme Court

The Supreme Court on Tuesday held that a Magistrate cannot validly take cognizance of a criminal complaint under the repealed Foreign Exchange Regulation Act, 1973 (FERA) if the mandatory "opportunity notice" required under Section 61(2) of the Act was not served upon the proposed accused.

“…the service of an opportunity notice under the proviso to Section 61(2) of FERA is a mandatory requirement, without compliance of which no complaint under Section 56 or 57 of FERA respectively, can validly be instituted, and no Magistrate can validly take cognizance of the offence alleged therein.”, observed a bench of Justice JB Pardiwala and Justice Manoj Misra, while quashing the complaints and summoning orders against the Standard Chartered Bank and its officer in charge in an alleged FERA violation case for unlawfully depositing about Rs. 30 lakhs for the benefit of a person resident outside India.

The Court set aside the Bombay High Court decision which refused to entertain the Appellant's quashing petition under Section 482 of Cr.P.C. merely because of the existence of an alternative remedy under Section 397 Cr.P.C. i.e., filing of a revision application.

Reiterating the law laid down in Dhariwal Tobacco Products Ltd. v. The State of Maharashtra, (2009) 2 SCC 370, that a mere existence of an alternative remedy in form of filing a revision application would not curtail or take away the High Court's inherent jurisdiction under Section 482 Cr.P.C., the Court said that the High Court committed an egregious error while dismissing the Appellant's quashing plea merely because they have not invoked the revisionary jurisdiction.

Moreover, the Court said that the magistrate committed an error in taking a cognizance based on the Respondent's complaint against the Appellants, without following the mandate of proviso to Section 61(2) of FERA, which requires a mandatory notice to the accused persons, before taking a cognizance of an offence based on a complaint.

“This opportunity must be meaningful and adequate, and not a mere technical or notional compliance, given the drastic penal consequences that follow from proceedings under FERA. The burden lies upon the prosecution to establish, at the threshold, that such notice was issued and served in the prescribed manner. The Magistrate shall satisfy himself, before taking cognizance, that such opportunity was in fact given, or otherwise it may render the order taking cognizance unsustainable and liable to be quashed.”, the Court said.

The Court also found that the prosecution was almost entirely responsible for the extraordinary delay in the proceedings.

It noted that after filing the complaints in 2002, the complainant itself failed to collect summons for nearly two years. Even thereafter, summons remained unserved for several years. Despite directions issued by the High Court in 2012 to conclude the trial within one month, the prosecution again failed to act diligently, including refusing to collect fresh notices for service upon the accused.

“The respondent – complainant have, till date, not been able to produce the same or even date it with any precision. It is pertinent to mention that 23-years have now elapsed since the institution of the complaint, and over three decades since the transaction it concerns, without the trial having progressed beyond the stage of service of summons.”, the Court said, relying on Kailash Chandra Kapri v. State of Uttar Pradesh, 2026 LiveLaw (SC) 487.

In light of the aforesaid, the appeal was allowed.

Headnote

Code of Criminal Procedure, 1973 — Section 482 vs Section 397 — Maintainability of Quashing Petition vis-à-vis Revisional Remedy — The availability of an alternative remedy of criminal revision under Section 397 of the CrPC does not operate as a threshold bar to the exercise of the inherent jurisdiction of the High Court under Section 482 of the CrPC - The two provisions operate in distinct spheres - The nomenclature under which a petition is filed is wholly immaterial; to do substantive justice, the High Court can always treat and convert a petition filed under Section 482 CrPC into a revision under Section 397 CrPC, and vice versa, rather than non-suiting a party on a hyper-technical ground of maintainability. [Relied On Dhariwal Tobacco Products Ltd. v. State of Maharashtra (2009) 2 SCC 370; Prabhu Chawla v. State of Rajasthan (2016) 16 SCC 30; Akanksha Arora v. Tanay Maben 2024 SCC OnLine SC 3688; Madhu Limaye v. State of Maharashtra (1977) 4 SCC 551; Paras 22 – 24]

Foreign Exchange Regulation Act, 1973 (FERA) — Section 61(2) Proviso & Section 56 — Mandatory Pre-condition of Opportunity Notice — The service of a meaningful and adequate opportunity notice under the proviso to Section 61(2) of FERA is a mandatory statutory pre-condition - Without complying with this requirement, no complaint under Section 56 or 57 of FERA can validly be instituted, and no Magistrate can validly take cognizance of the offence - The burden lies entirely upon the prosecution to establish at the threshold that such a notice was issued and served in the prescribed manner - Where the prosecution fails to produce the opportunity notice or its proof of service before the Magistrate, taking cognizance in a mechanical manner constitutes a manifest error and violates the principles of natural justice, rendering the summoning order unsustainable. [Relied On Devashis Bhattacharya v. Union of India 2009 SCC OnLine Del 1018; Sanjay Malviya v. R.K. Rawal, CEO, Enforcement Directorate 2015 SCC OnLine Del 7686; United India Airways Ltd. v. Chief Enforcement Officer, Enforcement Directorate 2018 SCC OnLine Del 8233; Shilpi Modes v. Directorate of Enforcement 2023 SCC OnLine Del 6816; Paras 16, 21 -25]

Constitution of India — Article 21 — Right to a Speedy Trial — Quashing of Delayed Prosecution — The right to a speedy trial is an implicit fundamental right guaranteed under the fair, just, and reasonable procedure of Article 21 of the Constitution, extending to all stages of criminal proceedings including investigation, inquiry, and trial - While systemic delays must be analyzed using a balancing test, a chronicle of persistent, unexplained inaction and lack of ordinary diligence solely attributable to the prosecution violates this right - Keeping an accused in a state of "suspended animation" indefinitely, where 23 years have elapsed since the institution of the complaint and over three decades since the transaction without the trial progressing beyond the stage of service of summons is wholly incompatible with Article 21, warranting the quashing of the criminal proceedings. [Relied On Abdul Rehman Antulay v. R.S. Nayak (1992) 1 SCC 225; P. Ramachandra Rao v. State of Karnataka (2002) 4 SCC 578; Kailash Chandra Kapri v. State of Uttar Pradesh 2026 SCC OnLine SC 858; Paras 25 - 27, 29, 30 – 34]

Cause Title : STANDARD CHARTERED BANK & ANR. VERSUS ENFORCEMENT OFFICER MINISTRY OF HOME AFFAIRS & ANR.

Citation : 2026 LiveLaw (SC) 701

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Appearance:

For Appellant(s) Mr. Shyam Divan, Sr. Adv. Mr. Gagan Gupta, AOR Mr. Ateev Mathur, Adv. Mr. Ajay Monga, Adv. Mr. Sanjay Gupta, Adv. Mr. Ananta Prasad Mishra, AOR

For Respondent(s) Ms. Ruchi Kohli, Sr. Adv. Ms. Srishti Mishra, Adv. Mr. A.K. Sharma, Adv. Mr. Vatsal Singh, Adv. Mr. Anuj Srinivas Udupa, Adv. Mr. Sarthak Karol, Adv. Mr. Arvind Kumar Sharma, Adv. Mr. B. Krishna Prasad, AOR Mr. Aaditya Aniruddha Pande, AOR Mr. Siddharth Dharmadhikari, Adv. Mr. Shrirang B. Varma, Adv. Mr. Bharat Bagla, Adv. Mr. Sourav Singh, Adv. Mr. Aditya Krishna, Adv. Ms. Preet S. Phanse, Adv. Mr. Adarsh Dubey, Adv.