Shri. Gopal Agarwal vs The Special Director
2023 Latest Caselaw 2719 Tel

         THE HON'BLE THE CHIEF JUSTICE ALOK ARADHE
                                      AND
             THE HON'BLE SRI JUSTICE T.VINOD KUMAR


                   WRIT APPEAL No.579 of 2023

JUDGMENT: (Per the Hon'ble the Chief Justice Alok Aradhe)


       Mr.      C.P.Ramaswami,             learned          counsel    for   the

appellants.

       Mr. V.Ram Krishna Reddy, learned Standing Counsel

for Enforcement Directorate.


2.     This intra court appeal is filed against the order

dated 10.04.2023 passed by the learned Single Judge by

which the writ petition, namely W.P.No.4176 of 2023,

preferred by the appellants has been dismissed on the

ground that the appellants have an alternative remedy of

appeal      under      Section      19     of   the     Foreign       Exchange

Management Act, 1999 (hereinafter referred to as 'the Act').

The learned Single Judge has also granted the liberty to

the appellants to raise all the contentions before the

Appellate Tribunal. In order to appreciate the grievance of
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the appellants, relevant facts need mention which are

stated hereinafter.


3.    A complaint was filed against the appellants for

violation of the provisions of the Act on 12.07.2017.         A

show cause notice dated 14.07.2017 was issued to the

appellants. The appellants submitted reply to the aforesaid

show cause notice on 24.08.2021 and 25.08.2021. An oral

hearing was conducted by the Special Director, Directorate

of   Enforcement.     The   appellants   participated   in   the

aforesaid hearing and submitted their written submissions.

During the pendency of the proceedings against the

appellants, Section 6(3)(b) of the Act was omitted with

effect from 15.10.2019.     However, subsequently an order

dated 04.01.2023 was passed against the appellants.


4.    The appellants challenged the validity of the aforesaid

order before the learned Single Judge inter alia on the

ground that the same is without jurisdiction, as Section

6(3)(b) of the Act was omitted with effect from 15.10.2019.

It was also averred that Section 6 of the General Clauses

Act, 1897, is not applicable to omission of a provision and
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it only applies to repeal of a provision. It was contended

before the learned Single Judge that existence of an

alternative remedy is not a bar to file a writ petition.


6.    The learned Single Judge, however, by an order dated

10.04.2023

, inter alia held that Section 6 of the General

Clauses Act is applicable to omission of a provision as well.

It was further held that when the proceedings were

initiated against the appellants, Section 6(3) of the Act was

in force and therefore, by virtue of Section 6(e) of the

General Clauses Act, the proceedings against the

appellants are saved and cannot be found fault with merely

because Section 6(3) of the Act was subsequently omitted.

The learned Single Judge further held that the appellants

have an alternative efficacious remedy of filing an appeal

under Section 19 of the Act and therefore, the appellants

were granted liberty to raise all the contentions before the

Appellate Tribunal. The writ petition preferred by the

appellants was dismissed. In the aforesaid factual

background, this writ appeal arises for our consideration.

7. Learned counsel for the appellants submitted that

Section 6(e) of the General Clauses Act does not apply to a

case of omission. It is further submitted that in the instant

case, Section 6(3) of the Act was omitted and there was no

substitution. Therefore, the decision of the Hon'ble

Supreme Court in the case of Fibre Boards (P) Ltd. v.

Commissioner of Income Tax 1 does not apply to the fact

situation, as the Hon'ble Supreme Court in the said case

was dealing with omission of a provision and substitution

thereof by a new provision. It is further submitted that in

the absence of any saving clause, the proceeding initiated

against the appellants cannot continue. In support of his

submissions, learned counsel for the appellants has placed

reliance on the decisions of the Hon'ble Supreme Court in

Mamleshwar Prasad v. Kanhaiya Lal 2, Bansidhar v.

State of Rajasthan 3 and General Finance Co. v.

Assistant Commissioner of Income Tax 4.

1 (2015) 10 SCC 333

(1975) 2 SCC 232

(1989) 2 SCC 557

(2002) 257 ITR 338 (SC)

8. On the other hand, learned Standing Counsel for

Enforcement Directorate has supported the order passed

by the learned Single Judge.

9. We have considered the submissions made on both

sides and have perused the record.

10. The solitary issue which arises for consideration in

this writ appeal is whether after omission of Section 6(3) of

the Act with effect from 15.10.2019, the proceeding could

continue against the appellants and the impugned order

dated 04.01.2023 could have been passed against the

appellants?

11. Section 6(3) of the Act which was omitted by the

Finance Act 20 of 2015 with effect from 15.10.2019 reads

as under:

(3) Without prejudice to the generality of the provisions of sub-section (2), the Revenue Bank may, by regulations, prohibit, restrict or regulate the following:

(a) transfer or issue of any foreign security by a person resident in India;

(b) transfer or issue of any security by a person resident outside India;

(c) transfer or issue of any security or foreign security by any branch, office or agency in India of a person resident outside India;

(d) any borrowing or lending in foreign exchange in whatever form or by whatever name called;

(e) any borrowing or lending in rupees in whatever form or by whatever name called between a person resident of India and a person resident outside India;

(f) deposits between persons resident in India and persons resident outside India;

(g) export, import or holding of currency or currency notes;

(h) transfer of immovable property outside India, other than a lease not exceeding five years by a person resident in India;

(i) acquisition or transfer of immovable property in India, other than a lease not exceeding five years, by a person resident outside India;

(j) giving of a guarantee or surety in respect of any debt, obligation or other liability incurred, -

      (i)    by a person resident in India and
             owed to a person resident outside
             India; or
      (ii)   by a person resident outside of
             India.

12. Section 6 of the General Clauses Act deals with effect

of repeal and it reads as under:

6. Effect of repeal:- Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not--

(a) revive anything not in force or existing at the time at which the repeal takes effect; or

(b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or

(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or

(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or

(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid;

and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed.

13. A Constitution Bench of the Hon'ble Supreme Court

in Rayala Corporation (P) Ltd. v. Director of

Enforcement 5 dealt with the issue whether proceeding

would be validly continued on the complaint in respect of a

charge under Rule 132-A(4) of the Defence of India Rules,

1962, which cease to be in existence before the accused

were convicted in respect of the charge made under the

said Rules. It is pertinent to note that the said Rule

132-A(4) was also omitted by a notification with effect from

30.03.1966. The Constitution Bench of the Hon'ble

Supreme Court held that Section 6 of the General Clauses

Act applies only to "repeal" and not to omission of a

statutory provision.

14. Another Constitution Bench of the Hon'ble Supreme

Court in Kolhapur Canesugar Works Ltd. v. Union of

India 6 dealt with the effect of deletion of Rules 10 and 10-A

of the Central Excise Rules, 1944, and following the

decision of the provision Constitution Bench of the Hon'ble

Supreme Court in Rayala Corporation (P) Ltd. (supra),

1969 (2) SCC 412

(2000) 2 SCC 536

held and reiterated the view that Section 6 of the General

Clauses Act would apply only to a case of repeal and not to

a case of omission.

15. A two Judge Bench of the Hon'ble Supreme Court in

General Finance Co. (supra) followed the ratio laid down

in the cases of Rayala Corporation (P) Ltd. (supra) and

Kolhapur Canesugar Works Ltd. (supra).

16. Thereafter, another two Judge Bench of the Hon'ble

Supreme Court in Fibre Boards (P) Ltd. (supra) dealt with

the issue whether on omission of Section 280ZA of the

Income Tax Act, 1961, and its re-enactment with

modification in Section 54G of the said Act, the provisions

of Section 24 of the General Clauses Act would apply, and

the same was answered in the affirmative. The Hon'ble

Supreme Court considered the Constitution Bench decision

rendered in Rayala Corporation (P) Ltd. (supra) and

Kolhapur Canesugar Works Ltd. (supra) and specifically

took into consideration the said decisions. The two Judge

Bench of the Hon'ble Supreme Court in the said case had

also taken into account the decision rendered in General

Finance Co. (supra). Paragraphs 23 to 33 of the decision

of the Hon'ble Supreme Court in Fibre Boards (P) Ltd.

(supra) are extracted below for the reference:

23. But then Shri Arijit Prasad put before us two roadblocks in the form of two Constitution Bench decisions. He cited Rayala Corpn. (P) Ltd. v. Director of Enforcement [(1969) 2 SCC 412] which was followed in Kolhapur Canesugar Works Ltd. v. Union of India [(2000) 2 SCC 536] . He argued based upon these two judgments that an "omission" would not amount to "repeal" and that since the present case was concerned with the omission of Section 280-ZA, Section 24 would have no application.

24. Shri Prasad is correct in relying upon these two Constitution Bench judgments [(1969) 2 SCC 412], [(2000) 2 SCC 536] for they do indeed say that in Section 6 of the General Clauses Act, the word "repeal" would not take within its ken an "omission".

25. In Rayala Corpn. (P) Ltd. [(1969) 2 SCC 412], what fell for decision was whether proceedings could be validly continued on a complaint in respect of a charge made under Rule 132-A of the Defence of India Rules, which ceased to be in existence before the accused were convicted in respect of the charge made under the said Rule. The said Rule 132-A was omitted by a Notification dated 30-3-1966. What was decided in that case is set out by para 17 of the said judgment, which is as follows:

(SCC p. 424)

"17. Reference was next made to a decision of the Madhya Pradesh High Court in State of M.P. v. Hiralal Sutwala [1958 SCC OnLine MP 149 : AIR 1959 MP 93] but, there again, the accused was sought to be prosecuted for an offence punishable under an Act on the repeal of which Section 6 of the General Clauses Act had been made applicable. In the case before us, Section 6 of the General Clauses Act cannot obviously apply on the omission of Rule 132-A of the DIRs for the two obvious reasons that Section 6 only applies to repeals and not to omissions, and applies when the repeal is of a Central Act or Regulation and not of a Rule. If Section 6 of the General Clauses Act had been applied, no doubt this complaint against the two accused for the offence punishable under Rule 132-A of the DIRs could have been instituted even after the repeal of that Rule."

26. It will be clear from a reading of this paragraph that the Madhya Pradesh High Court judgment was distinguished by the Constitution Bench on two grounds. One being that Section 6 of the General Clauses Act does not apply to a rule but only applies to a Central Act or Regulation, and secondly, that Section 6 itself would apply only to a "repeal" not to "an omission". This statement of law was followed by another Constitution Bench in Kolhapur Canesugar

Works Ltd. case [(2000) 2 SCC 536] . After setting out para 17 of the earlier judgment, the second Constitution Bench judgment states as follows: (SCC p. 550, para 33) "33. In para 21 of the judgment the Full Bench [Saurashtra Cement and Chemical Industries Ltd. v. Union of India, (1993) 1 Guj LR 5 : (1995) 79 ELT 367] has noted the decision of a Constitution Bench of this Court in Chief Inspector of Mines v. Karam Chand Thapar [AIR 1961 SC 838 : (1961) 2 Cri LJ 1] and has relied upon the principles laid down therein. The Full Bench overlooked the position that that was a case under Section 24 of the General Clauses Act which makes provision for continuation of orders, notification, scheme, rule, form or bye- law, issued under the repealed Act or regulation under an Act after its repeal and re-enactment. In that case Section 6 did not come up for consideration.

Therefore the ratio of that case is not applicable to the present case. With respect we agree with the principles laid down by the Constitution Bench in Rayala Corpn. case [(1969) 2 SCC 412] . In our considered view the ratio of the said decision squarely applies to the case on hand."

27. Kolhapur Canesugar Works Ltd. [(2000) 2 SCC 536] judgment also concerned itself with the

applicability of Section 6 of the General Clauses Act to the deletion of Rules 10 and 10-A of the Central Excise Rules on 6-8-1977.

28. An attempt was made in General Finance Co. v. CIT [(2002) 7 SCC 1] to refer these two judgments [(1969) 2 SCC 412] , [(2000) 2 SCC 536] to a larger Bench on the point that an omission would not amount to a repeal for the purpose of Section 6 of the General Clauses Act. Though the Court found substance in the argument favouring the reference to a larger Bench, ultimately it decided that the prosecution in cases of non-compliance with the provision therein contained was only transitional and cases covered by it were few and far between, and hence found on facts that it was not an appropriate case for reference to a larger Bench.

29. We may also point out that in G.P.

Singh's Principles of Statutory Interpretation, 12th Edn., the learned author has criticised the aforesaid judgments in the following terms:

"Section 6 of the General Clauses Act applies to all types of repeals. The section applies whether the repeal be express or implied, entire or partial or whether it be repeal simpliciter or repeal accompanied by fresh legislation. The section also applies when a temporary statute is repealed before its expiry, but it has no application when such a statute is not repealed but comes to an end by expiry. The section on its own terms is limited to a

repeal brought about by a Central Act or Regulation. A rule made under an Act is not a Central Act or Regulation and if a rule be repealed by another rule, Section 6 of the General Clauses Act will not be attracted. It has been so held in two Constitution Bench decisions. The passing observation in these cases that 'Section 6 only applies to repeals and not to omissions' needs reconsideration for omission of a provision results in abrogation or obliteration of that provision in the same way as it happens in repeal. The stress in these cases was on the question that a 'rule' not being a Central Act or Regulation, as defined in the General Clauses Act, omission or repeal of a 'rule' by another 'rule' does not attract Section 6 of the Act and proceedings initiated under the omitted rule cannot continue unless the new rule contains a saving clause to that effect."(at pp. 697-

98.)

30. In view of what has been stated hereinabove, perhaps the appropriate course in the present case would have been to refer the aforesaid judgment to a larger Bench. But we do not find the need to do so in view of what is stated by us hereinbelow.

31. First and foremost, it will be noticed that two reasons were given in Rayala Corpn. (P) Ltd. [(1969) 2

SCC 412] for distinguishing the Madhya Pradesh High Court judgment [1958 SCC OnLine MP 149 : AIR 1959 MP 93] . Ordinarily, both reasons would form the ratio decidendi for the said decision and both reasons would be binding upon us. But we find that once it is held that Section 6 of the General Clauses Act would itself not apply to a rule which is subordinate legislation as it applies only to a Central Act or Regulation, it would be wholly unnecessary to state that on a construction of the word "repeal" in Section 6 of the General Clauses Act, "omissions" made by the legislature would not be included. Assume, on the other hand, that the Constitution Bench had given two reasons for the non- applicability of Section 6 of the General Clauses Act. In such a situation, obviously both reasons would be ratio decidendi and would be binding upon a subsequent Bench. However, once it is found that Section 6 itself would not apply, it would be wholly superfluous to further state that on an interpretation of the word "repeal", an "omission" would not be included. We are, therefore, of the view that the second so-called ratio of the Constitution Bench in Rayala Corpn. (P) Ltd. [(1969) 2 SCC 412] cannot be said to be a ratio decidendi at all and is really in the nature of obiter dicta.

32. Secondly, we find no reference to Section 6-A of the General Clauses Act in either of these Constitution Bench judgments. Section 6-A reads as follows:

"6-A.Repeal of Act making textual amendment in Act or Regulation.-- Where any Central Act or Regulation made after the commencement of this Act repeals

any enactment by which the text of any Central Act or Regulation was amended by the express omission, insertion or substitution of any matter, then, unless a different intention appears, the repeal shall not affect the continuance of any such amendment made by the enactment so repealed and in operation at the time of such repeal."

33. [Ed.: Para 33 corrected vide Official Corrigendum No. F.3/Ed.B.J./51/2015 dated 5-11-2015.]. A reading of this Section would show that a repeal by an amending Act can be by way of an express omission. This being the case, obviously the word "repeal" in both Section 6 and Section 24 would, therefore, include repeals by express omission. The absence of any reference to Section 6-A, therefore, again undoes the binding effect of these two judgments on an application of the per incuriam principle. [In Mamleshwar Prasad v. Kanhaiya Lal, (1975) 2 SCC 232 : (1975) 3 SCR p. 834, Krishna Iyer, J., succinctly laid down what is meant by the "per incuriam" principle. He stated: (SCC p. 235, para 7 : SCR p. 837)"7. ... We do not intend to detract from the rule that, in exceptional instances, where by obvious inadvertence or oversight a judgment fails to notice a plain statutory provision or obligatory authority running counter to the reasoning and result reached, it may not have sway of binding precedents. It should be a glaring case, an obtrusive omission. No such situation presents itself here and we do not embark on the principle of judgment per

incuriam."(emphasis supplied)An interesting application of the said principle is contained in State of U.P. v. Synthetics and Chemicals Ltd., (1991) 4 SCC 139 : (1991) 3 SCR 64, where a Division Bench of this Court held that one particular conclusion of a Bench of seven Judges [Synthetics and Chemicals Ltd. v. State of U.P., (1990) 1 SCC 109] was per incuriam -- see: the discussion at SCR pp. 80, 81 and 91: SCC pp. 151, 152 and pp. 161-162, paras 36 to 42 of the said judgment.]

17. Thus, it is evident that a two Judge Bench of the

Hon'ble Supreme Court in Fibre Boards (P) Ltd. (supra)

held that that ratio of the Constitution Bench decision in

Rayala Corporation (P) Ltd. (supra) that Section 6 of the

General Clauses Act applies only to repeals and not to the

omission is not a ratio decidendi at all and it is in the

nature of obiter dicta. It was further held that Section 6 of

the General Clauses Act not only applies to repeal of a

provision but would apply to a case of omission of a

provision itself.

18. The aforesaid decision in Fibre Boards (P) Ltd.

(supra) which explains the ratio of the Constitution Bench

decision of the Hon'ble Supreme Court in Rayala

Corporation (P) Ltd. (supra) and holds that the provisions

of the Section 6 of the General Clauses Act would apply to

a case of omission of a statutory provision as well, binds

this Court. The same cannot be distinguished on the

ground that the Hon'ble Supreme Court in the case of

Fibre Boards (P) Ltd. (supra) was dealing with a case of

omission with substitution of a provision.

19. Admittedly, the proceedings were initiated against the

appellants for alleged violation of the Act on 12.07.2017

which could have continued even after omission section

6(3)(b) of the Act with effect from 15.10.2019, in view of

Section 6 of the General Clauses Act. Therefore, the order

dated 04.01.2023 cannot be treated as per se without

jurisdiction.

20. The case of the appellants does not fall in the

exceptions carved out by the Hon'ble Supreme Court in

Whirlpool Corporation v. Registrar of Trade Marks7.

(1998) 8 SCC 1

21. Even otherwise, it has not been shown to us as to

how the remedy of appeal provided to the appellants under

Section 19 of the Act is not efficacious. It is noteworthy

that second proviso to Section 19(1) of the Act confers the

power on the Appellate Tribunal to dispense with the

requirement of pre-deposit in totality. Therefore, the

learned Single Judge, has rightly relegated the appellants

to avail of the alternative remedy under Section 19 of the

Act.

22. For the aforementioned reasons, we concur with the

view taken by the learned Single Judge. However, it is

directed that in case the appellants file an appeal within a

period of thirty days from today before the Appellate

Tribunal, they shall be entitled to the benefit of Section 14

of the Limitation Act, 1963.

23. To the aforesaid extent, the order passed by the

learned Single Judge is modified.

24. Accordingly, the writ appeal is disposed of.

Miscellaneous applications pending, if any, shall

stand closed. However, there shall be no order as to costs.

______________________________________ ALOK ARADHE, CJ

______________________________________ T.VINOD KUMAR, J

26.09.2023 vs