Why Should We Not Stay Recovery Proceedings Till FEMA Appellate Tribunal Starts Functioning? Supreme Court Asks Centre

A Bench comprising Justices Sanjay Kishan Kaul and M.M. Sundresh noted that earlier it had posed the same query to Mr. Vikramjit Banerjee, Additional Solicitor General appearing in the matter. It asked the ASG to respond on the next date of hearing (2nd Aug, 2022).

In addition, it asked the ASG to also respond to the query - whether any hearing can take place before the FEMA Appellate Tribunal in the absence of its Chairperson, even when the core members are appointed.

"...whether any hearing can take place before the Tribunal qua the subject matter before it, even when the core members are appointed, in absence of the Chairperson?"

The FEMA Appellate Tribunal has been non-functional for the past three years. The Chairperson had demitted office on 21.9.2019 and thereafter a Single Member Tribunal was doing interim proceeding work. But, he had also demitted office sometime in March-April, 2021. In view of the same, the Bench observed that non-constitution of the Appellate Tribunal had caused serious impediments not only to the litigants but also the High Courts, which are burdened with the appeals to be originally filed before the Appellate Tribunal. It reckoned -

"The tribunal not being constituted for 3 years now…it is resulting in unnecessary expenses on litigants to approach the High Courts as well as burdening High Courts."

Justice Kaul added -

"Why should the high Court be burdened with hearing the matter?...If there is no tribunal can a person be without judicial remedy?"

Mr. Banerjee apprised the Bench that as per his oral instructions the appointment of the Chairperson is under way. He also submitted that the Appointment Committee has rolled out appointment letters for the members; the letters would be released; and they would join shortly.

On a previous occasion, the Bench had stated that in case the Tribunal is not constituted with urgency it would be compelled to direct automatic stay of all proceedings on appeal before the High Courts.

"We put to the learned counsel that the Court would have little option but to direct automatic stay of all proceedings on appeals being filed as the Tribunal is not functioning and we can not expect the High Court to keep hearing these matters unnecessarily, if the Government seems to be un-concerned about the consequences."

On the last date of hearing, the Bench was informed that the Search-cum-Selection Committee was appointed in terms of Order dated 26.10.2021. The process thereafter is taking place.

[Case Title: PC Financial Services Private Limited v. Union of India And Ors. SLP (C)No. 7551 of 2022]