LexM/S. SEEMA SILK & SAREES & ANR. versus DIRECTORATE OF ENFORCEMENT & ORS.
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[2008] 8 S.C.R. 201 .... M/S. SEEMA SILK & SAREES & ANR. A I/ DIRECTORATE OF ENFORCEMENT & ORS. ,(Criminal Appeal No. 860 Of 2008) MAY 12, 2008 B [S.B. SINHA AND LOKESHWAR SINGH PANTA, JJ.] Foreign Exchange Regulation Act, 1973 - s.18(2) and (3) - Payment of exported goods - Exporter unable to repatriate the export proceeds - Constitutional validity .of s. 18(2) and (3) c - Challenge to - Held: Provisions are constitutionally valid - Act is protected under Article.31 B having been placed in Ninth Schedule of the Constitution - Domestic .trades and exporter stands on different footing - Discrimination on the ground of valid classification based on intelligible differentia is not ultra D vires Article 14 even though hardship may be caused - Re- verse burden of proof also does not render it unconstitutional - Further, the said provision not ultra vires being contrary to accounting practice - On facts, no case made out that the Act was confiscatory in nature - Neither foundational fact brought E on record nor pleaded - In absence thereof, provision cannot be rendered ultra vires - Since submissions whether export- ers committed any offence or not would remain open, order of ,_ High Court upholding constitutionality of s. 18(2) and (3) not .. to be interfered with - Constitution of India, 1950 - Article 14 . F Appellant no.1 is a partnership firm and appellant no.2 is its. partner. It is alleged that appellants-exporters could not repatriate the value of goods from the export proceeds. The Enforcement Directorate issued notice ul s. 18(2) and (3) of the Foreign Exchange Regulation Act, G "" 1973. The appellants furnished the details ofrepatriation they could bring about as also step taken by them. The .Bank did not grant the appellants extension of time for repatriation of export and filed suit against them before 201 H 202 SUPREME COURT REPORTS [2008] 8 S.C.R. A the tribunal. The Enforcement Directorate imposed pen- alty. Aggrieved, appellant filed appeal and the same was allowed. The Enforcement Directorate filed appeal. How- ever, High Court did not stay the order. A criminal case was also initiated. The appellants filed application for B quashing of the criminal proceedings pending against them. The application was disposed of as the appellants had already filed application for discharge. The applica- tion for discharge was dismissed later. The appellants filed writ petition questioning the constitutionality of s. 18(2) C and 18(3) of the Act as also constitutional validity of the Constitution 39th Amendment Act. The writ petition was dismissed. Hence the' present appeal. Dismissing the appeal, the Court D HELD: 1.1 The· Foreign Exchange Regulation Act, 1973 is protected under Article 31 B of the Constitution of India having been placed in the Ninth Schedule thereof, even otherwise, there is no reason to arrive at a conclu- sion that the Act is ultra vires Article 14 of the Constitu- tion. A discrimination on the ground of valid classifica- E tion which answers the test of intelligible differentia does not attract the wrath of Article 14 of the Constitution of India. Hardship, by itself, may not be a ground for holding the said provision to be unconstitutional. (Paras 11 and 12) [208-G; 209-A-B] F Ajoy Kumar Bane•rjee v. Union of India (1984) 3 SCC 127 - referred to. 1.2 No case has been made out that the Act is confis- catory in nature. No foundation fact has also been brought G on record. Appellants have not annexed even a copy of • the writ petition. The counsel has not been able to satisfy "' that there existed any factual foundation in support of his argument. In absence of such factual foundation having been pleaded, no case has been made out for declaring H the said provision ultra vires the Constitution of MIS. SEEMA & SAREES v. DIRECTORATE OF 203 ENFORCEMENT & ORS. "? .. lndia.(Paras 13 and 14) [209-F.G; 210-G] A Southern Petrochemical Industries Co. Ltd. v. Electricity Inspector & ETIO (2007) 5 SCC 447 - referred to. 1.3 A domestic trader and an exporter stand on differ- ent footings. The said provisions were made when the coun- B try was undergoing severe 'foreign exchange crunch'. The Parliament in its wisdom has inserted the said provisions so as to prevent fraud. Section 18(1) of the Act provides for filing of an application for grant of exemption by the Reserve Bank of India. Refusal to give such an exemption is req
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