FEMA Does Not Grant Immunity For Offences Under IPC, Both Statutes Address Different Infractions: Delhi High Court

The Delhi High Court has observed that Foreign Exchange Management Act, 1999, does not grants to a person immunity for offences committed under the Indian Penal Code, 1860.Justice Anup Jairam Bhambhani observed that both the statutes address different and distinct infractions of law, with FEMA addressing infractions relating to foreign exchange transactions and the IPC dealing with conventional crimes.“To be absolutely clear, the offences of criminal conspiracy, cheating, forgery and related offences of which the petitioners are accused under the IPC, do not get obliterated or subsumed or cease to be penal offences, merely because they were the underlying actions for the infractions of foreign exchange regulations. Pertinently, the penal offences were complete in themselves before the infraction of the provisions of FEMA took place,” the Court said.Justice Bhambhani was dealing with the pleas filed by Manideep Mago and Sanjay Sethi challenging their arrests by Enforcement Directorate (ED) and their remand to judicial custody. It was their case that the search and seizure operation carried out by ED at their residential premises and office premises of their companies under the powers conferred upon them under section 37 of FEMA and under section 132 of the Income Tax Act, could not have led to the registration of the FIR or the ECIR.It was argued that all actions taken by the police pursuant to the FIR and by the ED in the ECIR, including their arrest, were illegal and deserved to be set aside.The Court said that the complaint received by the police from the ED did disclose the commission of cognizable offences; and therefore the law mandated that the police must register an FIR and the same cannot be faulted for having done so.Justice Bhambhani also reiterated the decision of a coordinate bench that the condition of supplying the “reasons to believe” by ED to a person arrested under PMLA as a separate document as per Supreme Court's ruling in Arvind Kejriwal case ought to be applied prospectively.The Court said that the petitioners were arrested on June and July last year and the ED could not possibly have foreseen that it would become mandatory for them to serve reasons to believe upon an arrestee by a subsequent judgment of July 12, 2014.“A perusal of the grounds of arrest in respect of both petitioners would show however, that certain allegations specific to the petitioners have been set-out in them, which sufficiently convey the essential case against them which has made it necessary to arrest them; and non- cooperation with the investigating agency is only one of those grounds and not the sole reason for their arrest,” the Court said. It added that what the Supreme Court said in Pankaj Bansal case held that mere non- cooperation or failure to respond to a question put by the ED is not in itself sufficient to arrest a person; but that cannot be construed to mean that if there are other grounds to arrest a person, those should be ignored. “In view thereof, the argument that the petitioners were arrested merely for non-cooperation in investigation, is misconceived and must be rejected,” the Court said. However, the Court held that the petitioners‟ arrest by the Delhi Police was not in compliance with the mandate of the Supreme Court in Prabir Purkayastha case. It noted that what was recorded in Delhi Police arrest memos were not grounds of arrest since they did not spell-out the specific roles alleged against the petitioners nor did they refer to the specific incriminating circumstances that could be attributed to a particular petitioner in relation to the offences alleged. The Court thus quashed petitioners' arrest in the FIR registered by the Delhi Police and ordered their release in it.Title: MANIDEEP MAGO v. UNION OF INDIA & ORS and other connected matterCitation: 2025 LiveLaw (Del) 562Click here to read order

FEMA Does Not Grant Immunity For Offences Under IPC, Both Statutes Address Different Infractions: Delhi High Court

Nupur Thapliyal

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