Foreign Exchange Regulation Act, 1947

"The Old Bailey, Known Also as the Centra...

“Mens-rea” is a state of mind. Under the criminal law, means-rea is considered as the “guilty intention” and unless it is found that the “accused” had the guilty intention to commit the “crime” he cannot be held “guilty” of committing the crime. An “offence’ under Criminal procedure Code and the General clauses Act, 1897 is defined as any act or omission “made punishable by any law for the time being in force”. The proceedings Under Section 23(1)(a) FERA, 1947 are “adjudicator” in nature and character and are not “criminal proceedings’. The officers of the Enforcement Directorate and other administrative authorities are expressly empowered by the Act to “adjudicate’ only. Indeed they, have to act “judicially” and follow the rules of natural justice to the extent applicable but, they are not “Judges’ of the “Criminal Courts” trying an “accused’ for commission of an offence, as understood in the general context. They perform quasi-judicial functions and do not act as “Courts” but only as “administrators’ and “adjudicators’. In the proceedings before them, they do not try “an accused” for commission of “any crime” (not merely an offence) but determine the liability of the contravenor for the breach of his “obligations” imposed under the Act. They impose “penalty’ for the breach of the “civil obligations’ laid down under the Act and not impose any “sentence” for the commission of an offence. The expression “penalty’ is a word of wide significance. Sometime, it means recovery of an amount as a penal measure even in civil proceedings. An exaction which is not compensatory in character is also termed as a “penalty’. When penalty is imposed by an adjudicating officer, it is done so in “adjudicator proceedings’ and not by way of fine as a result of “prosecution” of an “accused’ for commission of an “offence” in a criminal Court. Therefore, merely because “penalty’ clause exists in Section 23(1)(a), the nature of the proceedings under that Section is not changed from “adjudicator’ to “criminal’ prosecution. An order made by an adjudicating authority under the Act is not that of conviction but of determination of the breach of the civil obligation by the offender.

It is thus the breach of a “civil obligation” which attracts “penalty” Under Section 23(1)(a) FHRA, 1947 and a finding that the delinquent has contravened the provisions of Section 10 FERA, 1947 would immediately attract the levy of “penalty’ Under Section 23, irrespective of the fact whether the contravention was made by the defaulter with any “guilty intention” or not. Therefore, unlike in a criminal case, where it is essential for the “prosecution” to establish that the “accused” had the necessary guilty intention or in other words the requisite “mens-rea’ to commit the alleged offence with which he is charged before recording his conviction, the obligation on the part of the Directorate of Enforcement, in cases of contravention of the provisions of Section 10 of FERA, would be discharged where it is shown that the “blameworthy conduct” of the delinquent had been established by wilful contravention by him of the provisions of Section 10, FERA, 1947. It is the delinquency of the defaulter itself which establishes his “blameworthy” conduct, attracting the provisions of Section 23(1)(a) of FERA, 1947 without any further proof of the existence of “mens-rea”.(See Director of Enforcement v. MCTM Corporation Pvt. Ltd., 1996 CrLJ 1623: AIR 1996 SC 1100: 1996 SCC (Cr) 344)

Note: The above provision is an example of principle of strict liability.

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