Case Note & Summary
The case involved an appeal against the constitutionality of Sub-sections (2) and (3) of Section 18 of the Foreign Exchange Regulation Act, 1973, which placed a burden of proof on exporters regarding the repatriation of export proceeds. The appellants, a partnership firm and its partner, faced penalties for failing to repatriate export proceeds amounting to 16.5 crores. They contended that the provisions were unconstitutional as they discriminated against exporters and imposed a reverse burden of proof. The Enforcement Directorate had issued a notice alleging non-compliance with repatriation requirements, leading to penalties and subsequent legal proceedings. The High Court dismissed the appellants' writ petition challenging the provisions. The Supreme Court upheld the High Court's decision, stating that the Act is protected under Article 31B of the Constitution and does not violate Article 14, as there is a valid classification between domestic traders and exporters. The court emphasized that the burden of proof is procedural and that the presumption against traders is rebuttable. It also noted that the appellants had not demonstrated that they had taken all necessary steps for repatriation. The appeal was dismissed without costs, allowing the criminal proceedings to continue.
Headnote
A) Constitutional Law - Constitutionality of Statutory Provisions - Challenge to Sections 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973 - The provisions impose a reverse burden of proof on exporters, which the appellants claimed was unconstitutional. The court held that the Act is protected under Article 31B and does not violate Article 14, as valid classification exists between domestic traders and exporters (Paras 11-12). B) Criminal Law - Burden of Proof - The court addressed the procedural nature of the burden of proof and the rebuttable presumption against traders under Sections 18(2) and 18(3). It concluded that such provisions are not unconstitutional merely for placing a reverse burden on the accused (Paras 16-18). C) Criminal Procedure - Discharge Application - The court noted that the burden was on the appellants to demonstrate compliance with legal requirements for repatriation of export proceeds. It ruled that the appeal against the discharge order was not maintainable at that stage (Paras 19-20).
Issue of Consideration
Whether Sub-sections (2) and (3) of Section 18 of the Foreign Exchange Regulation Act, 1973 are unconstitutional.
Final Decision
The Supreme Court dismissed the appeal, upholding the constitutionality of Sections 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973, and allowing the criminal proceedings to continue.
Law Points
- Constitutionality
- burden of proof
- discrimination
- reverse burden
- statutory presumptions
