F O RE I G N E X C H A N G E

RE G U L A T I O N A C T 1 9 7 3
 O B J E C T I V E S A N D I N T RO D U C T I O N T O
F E RA

The Foreign Exchange Regulation Act (FERA), 1973 was a legislation enacted by the Parliament of India with the objective of
regulating payments, foreign exchange, and securities transactions that had an impact on the foreign exchange reserves of Ind ia.

To conserve foreign exchange resources and ensure their proper utilization.

To regulate dealings in foreign excha nge and foreign securities.

To control imports and exports of currency and restrict payments outside India.

To restrict activities of foreign compa nies in India and regulate their operations.

To maintain the sovereignty of the Indian economy by reducing dependency on foreign exchange outflows.
 F E A T U RE S O F F E RA

It applied to all Required strict

citizens of India, Covered foreign permissions from
companies operating in RBI for dealings in
whether resident in India.
India or abroad. foreign exchange.

Violations under
FERA were treated Empowered the
as criminal offences, government to seize
assets and penalize
making the Act very
stringent. violators heavily.
 Consolidate and amend the law regulating certain
payments, dealing in foreign exchange and
securities,
&
transactions indirectly affecting foreign exchange
and the import and export of currency
For
the conservation of the foreign exchange
resources of the country
and
the proper utilisation thereof in the interest of the
economic development of the country.
P RE A M B L E
 W H O D OE S T H I S AC T A P P LY TO ?

• Citizens of India
Whether resident in India or abroad.
For example, an Indian citizen living in London but dealing in foreign securities would still fall under
FERA.
• Companies Registered in India
All Indian-incorporated companies, including subsidiaries.
• Branches of F oreign Compa nies in India
Any foreign company operating or having a branch/project office in India came under FERA’s
purview.
• Foreigners & Foreign Entities (in specific circumstances)
If they were involved in any transaction relating to foreign exchange, securities, or immovable
property in India.
• All Transactions in India involving foreign exchange
Imports, exports, remittances, payments to non-residents, acquisition of property abroad, etc.
 E XA MP L E S
• Ra vi, an Indian citizen, works in New York. He decides to invest USD 10,000 in shares of a
U.S. tech company. Under F ERA (1973), Ravi cannot freely invest this money abroad
without prior approval of the Reserve Ba nk of India (RBI), because he is still an Indian
citizen (FERA applied even if he lived outside India). If he does this without permission, it
is treated as a criminal offence under FERA.

• A British company sets up a branch office in Mumbai. The branch wants to purchase land in
India to build its office. Under F ERA, the company cannot acquire immovable property in
India without RBI approval. If it buys the property directly, it is a violation of F ERA.

• An Indian exporter, Meena Textiles P vt. Ltd., sells garments worth ₹1 crore to a buyer in
Singapore. The Singapore buyer wants to pay in Singapore Dollars into a Singapore bank
account instead of remitting the foreign exchange into India. Under FERA, this is illega l,
because all foreign exchange earnings must be repatriated to India through authorized
channels.
O V E RV I E W O F F O R E I G N E X C H A N G E
R E G U L AT IO N AC T 1 9 7 3
(SEC 6-7)- WHO ARE
(SEC 3-5) - DIRECTORS MONEY CHANGERS
(SEC 2)- DEFINITION
OF ENFORCEMENT AND AUTHORISED
DEALERS?

(SEC (SEC 30,33-40,

8,9,13,22,24,25,28,29,31)- (SEC 18,19)- CENTRAL 41,43,45,46,48.49)-
RESTRICTIONS GOVT POWERS ENFORCEMENT
UNDER FERA UNDER FERA

(SEC 50-60),70
ADJUDICATION
 I M P O RT A N T D E F I N I T I O N S
• (f) " currency" includes all coins, currency notes, bank notes, postal notes, postal orders, money orders, cheques, drafts,
traveller's cheques, letters of credit, bills of exchange and promissory notes.
• (g) "foreign currency" means any currency other than Indian currency;
• (h) "foreign exchange" means foreign currency and includes--
• all deposits, credits and balances payable in any foreign currency and any drafts, traveller's cheques, letters of credit and
bills of exchange, expressed or drawn in Indian currency but payable in any foreign currency;
• any instrument payable, at the option of the drawee or holder thereof or any other patty thereto, either in Indian currency
or in foreign currency or partly in one and partly in the other
• (i) " foreign security" means any security created or issued elsewhere than in India, and any security the principal of or
interest on which is payable in any foreign currency or elsewhere than in India;
• "Indian currency" means currency which is expressed or drawn in Indian rupees but does not include special bank notes
and special one rupee notes issued under section 28A of the Reserve Bank of India Act,1934 (20 of 1934);
• "money-changer" means a person for the time being authorised under section 7 to deal in foreign currency;
• (u) "security" means shares, stocks, bonds, debentures stock, Government securities as defined in the Public Debt Act, 1944
(18 of 1944), savings certificates to which the Government Savings Certificates Act, 1959 (46 of 1959), applies, deposit
receipts in respect of deposits of securities, and units or sub -units of Unit Trusts and includes certificates of title to
securities, but does not include bills of exchange or promissory notes other than Government promissory notes
 (Sec 3-5)of FERA 19 73

OFFICERS OF ENFORCEMENT
S E C T I O N 3 - O F F I C E RS O F
E N F O RC E M E N T

There shall be the following classes of officers of Enforcement, namely:-

(a) Directors of Enforcement;

(b) Additional Directors of Enforcement;

(c) Deputy Directors of Enforcement;

(d) Assistant Directors of Enforcement;

 S E C T I O N 4 - A P P O I N T M E N T A N D P OW E RS
O F O F F I C E RS O F E N F O RC E M E N T

the Central Government may authorise a Director of Enforcement or an Additional Director of

Enforcement or a Deputy Director of Enforcement or an Assistant Director of Enforcement to
appoint officers of Enforcement below the rank of an Assistant Director of Enforcement.

Section 5
• The Central Government shall authorise any officer of customs or any Central Excise Officer or
any police officer or any other officer of the Central Government or a State Government to
exercise such of the powers and discharge such of the duties of the Director of Enforcement or
any other officer of Enforcement under this Act as may be specified in the order.
MONEY CHANGERS AND
AUT HO R IS E D D E A L E R S
(SEC 6-7)
SECTION 7- MONEY CHANGERS
Money cha ngers under Sec 7 are restricted entities , permitted mainly for:
• Cur rency exchange for travel,
• Exchange of small foreign cur rency holdings,
• Facilitation of tour ists.

• Must comply with directions of RBI on:

• Rates of exchange,
• Record-keeping,
• Reporting of transactions,
• Limits on amounts transacted.
• Must not dea l in forex beyond their a uthorisation.
• Accounts and reg isters are subject to inspection by RBI.
• If a person acts as a money changer without RBI’s authorisation, it is an offence under F E RA, punishable with:
• Imprisonment, and/or Fine, and Confiscation of foreign exchange involved.
• only RBI-a uthorised money changers could legally exchange foreign currency in India. Street money changers
without RBI licence were illegal under FERA.
S E C 6 - AUT HO R IZ E D D E A L E R S
• Under Section 6(1) F E RA, the Res erve Ba nk of I ndia (RBI) may authorise:
• Any pers on, firm, or company to act as an a uthoris ed deal er in foreign excha nge.
• Typically, these were:
• Scheduled commercial banks (like SBI, ICICI, foreign banks operating in India),
• Certain financia l institutions ,
• Select money cha ngers / excha nge hous es (under specific categories).
• They are the only legal cha nnel through which foreign exchange transactions can be conducted.

They can:
• Buy and sell foreign exchange.
• Handle remittances, export-import payments, travel forex, investment transfers, etc.
• Report transactions to RBI.
Category I – Commercial banks (full forex transactions).
Category II – Financial institutions & select entities (limited forex facilities).
Category III – Exchange bureaus / money changers (restricted use, e.g., travel forex).
L E T S T E S T O U R S E LV E S !

An Indian diamond trader directly negotiates with a Dubai buyer and receives USD 1 million
in cash during his visit abroad. He does not route the funds through an RBI-authorised dealer
when bringing them into India.

A tech company in Bengaluru directly pays USD 50,000 to a U.S. consultant through a
foreign bank account maintained abroad, bypassing Indian authorised dealers.

A German tourist arrives in Delhi and converts €500 into INR through a local street money
changer who is not an authorised dealer. Is this alright?

State Bank of India’s London branch issues USD 10,000 to an Indian exporter as advance
payment for export. The exporter claims it is not under FERA since it happened outside
India.
RESTRICTIONS UNDER FERA 1973
Sec -8,9, 13,22,24 ,25,28, 29,31
 • Section 8 - Restrictions on dealing in foreign exchange
• Section 9 - Restrictions on payments
• Section 13 - Restrictions on import and export of certain
currency and bullion
• Section 22 - Restrictions on issue of bearer securities
• Section 24 - Restriction on settlement, etc.
• Section 25 - Restriction on holding of immovable property
outside India
• Section 28 - Restrictions on the appointment of certain
persons and companies as agents or technical or
management advisers in India
• Section 29 - Restrictions on establishment of place of
business in India
O V E RV I E W • Section 31 - Restriction on acquisition, holding, etc., of
immovable property in India
SEC (8-9)- RESTRICTIONS ON DEALING
I N F O R E I G N E X C H A N G E A N D PAY M E N T S
• No person could deal in foreign exchange (buy/sell/transfer) except through an RBI-
authorised dealer or money changer.
• Residents needed RBI permission for:
Sending forex abroad,
Holding foreign currency,
Transferring securities to non-residents.
• shall enter into any transaction which provides for the conversion of Indian currency
into foreign currency or foreign currency into Indian currency at rates of exchange
other than the rates for the time being authorised by the Reserve Bank.
• Make any payments in foreign currency without the authority of RBI or to any
unauthorised dealers.
 • no person shall, except with the general or special
permission of the Reserve Bank and on payment of
the fee, if any, prescribed, bring or send into India
any foreign exchange or any Indian currency.
• No person shall except with the general or special
permission of the Reserve Bank or the written
permission of a person authorised in this behalf by
the Reserve Bank, take or send out of India any
SEC 13- Indian currency or foreign exchange other than
foreign exchange obtained by him from an
RESTRICTION authorised dealer or from a money-changer.
Example:
ON • A US tourist enters India carrying $15, 000 in cash.
CURRENCY The prescribed RBI limit for tourists is $10,000 in
currency and $5,000 in notes/coins. He declares
only $5,000 at customs and hides the rest in his
luggage.
• An Indian businessman flying to Dubai hides ₹10
lakh in ca sh in his bag without RBI permission.
 SECTION 22 - RESTRICTIONS ON ISSUE OF
BEARER SECURITIES

• Except with the general or special permission of the Reserve Bank no person shall, in India and no
person resident in India shall, outside India, create or issue any bearer certificate or coupon or so
alter any document that it becomes a bearer certificate or coupon.
• No person resident outside India could, without prior permission of the RBI:
• Issue any security in India,
• Transfer any security,
• Acquire or hold securities in India.
This covered:
• Shares, bonds, debentures of Indian companies,
• Government securities,
• Any other notified financial instruments.
 SECTION 24 - RESTRICTION ON
SETTLEMENT

No person resident in India shall except with the general or special permission of the Reserve Bank,
settle, or make a gift of, any property so that a person who at the time of the settlement or the making
of the gift is resident outside India, elsewhere than in the territories notified in this behalf by the
Reserve Bank, will have an interest in the property, or exercise any power for payment in favour of a
person who at the time of the exercise of the power is resident outside India elsewhere than in such
notified territories
 No person resident in India shall, except with the1[general or special
permission of the Reserve] Bank, acquire or hold or transfer or dispose of by
sale, mortgage, lease, gift, settlement or otherwise, any immovable property
situate outside India:

SECTION 25 -
RESTRICTION Provided that nothing in this sub-section shall apply to the acquisition or
transfer of any such immovable property by way of lease for a period not
ON HOLDING OF exceeding five years.

I M M O VA B L E Any person resident in India and holding any immovable property outside
P RO P E RT Y India at the commencement of this Act shall before the expiry of a period of
three months from such commencement or such further period as the Reserve
Bank may allow in this behalf, declare such holding to the Reserve Bank in
OUTSIDE INDIA such form and containing such particulars as may be specified by the
Reserve Bank.

Nothing in this section shall apply to a national of a foreign State.

 SECTION 28 - RESTRICTIONS ON THE
APPOINTMENT OF PERSONS
A N D C O M PA N I E S A S AG E N T S O R
T EC H N I C A L O R M AN AG E M E N T ADV I S E R S I N
INDIA
• per son resident outside India (whether a citizen of India or not) or
• a person who is not a citizen of India, but is resident in India, or a company (other than a banking company) which is not in corporated under any law in force in
India or any branch of such company, shall not, except with the general or special permission of
• the Reserve Bank, act, or accept appointment, as agent in India of any person or company, in the trading or commercial transa ctions of such per son or company.
• Where any such per son or company (including its branch)as is refer red to in subsection ( 1 ) acts or accepts appointment as s uch agent without the per mission of the
Reser ve Bank, such acting or appointment shall be void.
To prevent

• foreign res idents from indirectly controlling Indian companies through “front” appointments,
• To ensure that Indian forex policy was not bypassed via dummy di rectors, a gents, or employees working for foreign interests,
• Par t of FERA’s larger aim of conservi ng forei gn excha nge and controlling foreign influence in Indian business.
EXAMPLE
• A U.K. citizen is appointed as the Ma na gi ng D irector of an Indian subsidiary of a Br itish company → requires RBI permiss ion.
• An Indian resident agrees to act as buyi ng a gent for a Singapore trading company → cannot do so without RBI approva l.
• A foreign company wants to appoint a local Indian fir m as their repres entative office → again, RBI must clea r it.
SECTION 29 - RESTRICTIONS ON
E S TA B L I S H M E N T O F P L AC E O F B U S I N E S S I N
INDIA
• No person resident outside India or company incorporated outside India could:
• Carry on in India, or establish a branch, office, or other place of business,
• Acquire the whole or part of any undertaking in India,
• Carry on any activity of trading, commercial, or industr ial nature in India,
• without the prior permission of the Reserve Bank of India (RBI).
• Companies that had already been in India prior to FERA’s coming into force were usually
allowed to continue, but they often needed to regularise their operations with RBI approval .
• EXAMPLES:
• A US-based bank wants to open a branch in Mumbai → must apply for RBI permission
under Sec 29.
• A Ger man automobile company wants to set up a factory in Pune → requires RBI approval.
• A foreign law firm seeks to open a representative office in Delhi → covered by Sec 29
restrictions.
• A resident Indian businessman cannot act as “front” to open a business for a foreign partner
without RBI clearance.
SECTION 31 - RESTRICTION ON
AC QU I S I T I O N, H O L D I N G, O F I M M OVA B L E
P RO P E RT Y I N I N D I A
• No person who is:
• Not a citizen of India, or
• A company (other than an Indian company),
• could acquire, hold, transfer, or dispose of by sale, mortgage, lease, gift, settlement, or otherwise any immovable property in
India without prior permission of the Reserve Bank of India (RBI).
• Applies to foreigners & foreign companies :
• Foreign citizens (residing in or outside India),
• Foreign-incorporated companies.
• India n citiz ens res ident a broa d (NRIs ):
• They were treated differently — certain relaxations were provided, but still needed RBI permission for many transactions.
• Scope of res triction:
• Acquisition of land, buildings, flats, commercial property, agricultural land, etc.
• Even transfer or disposal of such property required RBI’s nod.
• P rohibition without RBI clea ra nce:
• Any property acquired in contravention could be declared null a nd void.
• RBI could order confiscation or prohibit further dealings.
 EXAMPLES
• A US citizen wants to buy a flat in Mumbai → must obtain RBI permission.
• A UK company wants to purchase land in Bengaluru for an IT park → covered by Sec 31 restrictions.
• An NRI businessman (Indian passport holder, resident in Dubai) wants to buy agricultural land in India →
requires RBI’s prior approval.
• A Canadian resident inherits property in India from relatives → cannot transfer or sell without RBI’s consent.
Lets test:
• John, a U.S. citizen working in Bengaluru, wants to buy a flat in Whitefield with his own income earned in
India. Can he acquire it directly?
• Raj, an Indian citizen living in Dubai for the past 15 years (NRI), wants to buy agricultural land in Punjab.
Can he do so?

• Bibi Ahmed v. Assistant Director, Enforcement Directorate

• Court: Supreme Court of India
• Facts: A foreign national had acquired immovable property in India without obtaining RBI permission.
• Held:The Court ruled that Sec 31 makes RBI’s prior permission mandatory, and any transaction in violation
is illegal and unenforceable.
ENFORCEMENT UNDER FERA 1973

(SEC 30,33-41,43,45,46,48)
 S E C 3 0 - P R I O R P E R M I S S I O N O F R E S E RV E B A N K
RE Q U I RE D F O R TA K IN G
U P EM P L OY M EN T I N I N D I A B Y N AT I O N A LS O F
F O R EI G N S TAT E S
• Section 30 – Restrictions on appointment of certain persons
• Central Government approval required:
No person resident outside India or a foreign national could be appointed as:
• Director of a company,
• Managing agent/manager/secretary,
• Any office of profit under a company,
without prior permission of the Reserve Bank of India (RBI).
• Concern with companies having non-resident interest:
The restriction particularly applied to companies in which non -resident interest was significant (e.g., foreign shareholding
or control).
• Objective:
To regulate foreign participation and control in Indian companies.
To ensure Indian companies were not indirectly controlled or managed by foreign nationals or entities without RBI’s
oversight.
• Exceptions/relaxations:
RBI could grant general or special permission.
Sometimes automatic approvals were allowed for certain categor ies of directors.
S E C 3 3 - P OW E R T O C A L L
I N F O R M AT I O N

• The Central Government may, at any time by notification in the

Official Gazette, direct the owners, as per the notification, of such
foreign exchange or foreign securities or immovable properties held
outside India as may be so specified to submit a return, or from time to
time returns, thereof to the Reserve Bank within such period, and
giving such particulars, as may be so specified.
• the CG or the RBI or any officer of Enforcement, not below the rank
of a Chief Enforcement Officer, considers it necessary to obtain and
examine any information, book or other document in the possession of
any person or which in the opinion of the Central Government or the
Reserve Bank or such officer it is possible for such person to obtain and
furnish,
• They may, by order in writing, require any such person (whose name
shall be specified in the order) to furnish, or to obtain and furnish,with
such information, book or other document and thereupon such person
shall be bound to comply with such requisition.
S E C 3 4 - P OW E R T O S E A R C H
SUSPECTED PERSONS AND TO SEIZE
DOCUMENTS

• If the Director of E nforcement or any other officer of Enforcement authorised

by him:
has reason to believe that any person has committed a contravention of FERA,
or
that a ny books, documents, or records useful for investigation of such
contravention are kept at a particular place,
• then such officer may enter a nd search that place and seiz e such documents,
books, or things.
• The seized materials could be:
Inspected,
Copied,
Reta ined for use in adjudication or prosecution.
• Sa feguard: A receipt had to be given to the person from whose custody the
documents were seized.
 S E C 3 5 A N D 3 6 - P OW E R O F A R R E S T
S T O P A N D S E A R C H C O N V E YA N C E S

• If the Di rector of E nforcement or any other officer of Enforcement a uthoris ed by the C entra l Government ha d rea s on to believe tha t a ny
pers on ha s committ ed a cont ra vent ion punis ha ble under F ERA ,

• such officer could a rres t tha t pers on.

• Obliga tion a ft er a rres t:

The arrested pers on must be informed of the grounds of a rres t a s soon a s possible.
The officer mus t ta ke the a rres ted person to a ma gis tra te wit hout unneces sa ry dela y (g enera lly within 24 hours, in line wit h Article
22(2) of t he Constitut ion) .
Sec 36:

• If any officer of Enforcement authorised in this behalf by the Central Gov ernm ent, by general or s pecial order has rea son to believe
tha t any document which will be useful for, or releva nt to, any investig ation or proceeding under this Act is s ecreted in any a ircra ft or
vehicle or on a ny a nim al in India or in any v essel in India or wit hin t he Indian cust oms waters, he ma y a t any time stop any such
vehicle or a nimal or v essel or, in the ca se of a n aircra ft, com pel it to stop or la nd, a nd -

• (a ) rumma ge a nd s earch any pa rt of t he aircra ft, vehicle or vess el;

• (b) exam ine a nd search any goods in the a ircraft, vehicle or v essel or on t he anima l;

• (c) seize a ny such document a s is referred to above;

• (d) break open the lock of any door or pa cka ge for exercising the powers conferred by clauses (a ), (b) a nd ( c) , if t he key s a re wit hheld.
S E C 3 7 - P OW E R T O
SEARCH PREMISES

• If any officer of Enforcement, not below the rank of an

Assistant Director of Enforcement, has reason to believe
that any documents which, in his opinion, will be useful
for, or relevant to any investigation or proceeding under
this Act, are secreted in any place, he may authorise
• any officer of Enforcement to search for and seize or may
himself search
• for and seize such documents.
• The provisions of the1[Code of Criminal Procedure,
1973 ( 2 of 1974)] relating to searches, shall, so far as may
be, apply to searches under the section where magistrate
will be replaced with director of enforcement.
SECTION 38 - • Without prejudice to the provisions
of section 34 or section 36 or section
P OW E R T O S E I Z E 37, if any officer of Enforcement
authorised in this behalf by the
DOCUMENT S, ETC. Central Government, by general or
special order, has reason to believe
that any document or thing will be
useful for, or relevant to, any
investigation or proceeding under this
Act or in respect of which a
contravention of any of the provisions
of this Act or of any rule, direction or
order thereunder has taken place, he
may seize such document or thing.
 S E C T I O N 3 9 - P OW E R T O E X A M I N E
PERSONS

• The Director of Enforcement or any other officer of Enforcement authorised in this

behalf by the Central Government, by general or special order may, during the course
of any investigation or proceeding under this Act,-
• (a) require any person to produce or deliver any document relevant to the investigation
or proceeding;
• (b) examine any person acquainted with the facts and circumstances of the case.
 S E C T I O N 4 0 - P OW E R T O S U M M O N
PERS ONS TO GIVE EVID EN CE A ND
P RO D U C E D O C U M E N T S
• Any Gazetted Officer of Enforcement shall have power to summon any person whose
attendance he considers necessary either to give evidence or to produce a document during
the course of any investigation or proceeding under this Act.

• A summon to produce documents may be for the production of certain specified documents
or for the production of all documents of a certain description in the possession or under the
control of the person summoned.
• (3) All persons so summoned shall be bound to attend either in person or by authorised
agents, as such officer may direct; and all persons so summoned shall be bound to state the
truth upon any subject respecting which they are examined or make statements and produce
such documents as may be required
 • When documents are seized under the
Act (for example, under Section 34 –
power to seize documents), they must be:
• Placed in safe custody, and
• Dealt with in accordance with the
procedure prescribed.
• The section ensured that:
• Rights of the person from whom the
documents were seized are protected,
• Authenticity and integrity of the
documents are maintained,
• They remain available for adjudication or
S E C 4 1 - C U S T O DY prosecution.
OF DOCUMENTS
SEC 43-INSPECTION

• Any officer of Enforcement not below the rank of an Assistant Director of Enforcement
or
• The Reserve Bank of India (RBI), or any officer of RBI authorised in writing, had the
power to inspect:
• The books of account, records, and documents of authorised dealers, money changers, or
any other person authorised to deal in foreign exchange or securities.
• RBI could also call for information or returns during such inspection.
• The inspected entity was legally bound to:
• Produce all books, accounts, and documents when required,
• Provide necessary facilities for the inspection,
• Answer questions truthfully.
 S E C 4 5 - P OW E R O F P O L I C E O F F I C E R A N D
OTHER O FFIC ERS TO ENTER,
SEARCH, ETC.
• any police officer not below the rank of a Deputy Superintendent of Police, or any
other officer of the Central Government or a State Government authorised by the
Central Government in this behalf may enter any public place and search and arrest
without warrant any person found therein who is reasonably:
• suspected or having committed or of committing or of being about to commit a
contravention of the provisions of sub-section (1) of section 8.
• Where any person is arrested under sub-section (1) by an officer other than a police
officer, such officer shall, without unnecessary delay, take or send the person arrested
before a magistrate having jurisdiction in the case or before the officer-in-charge of a
police station.
 • Where any police officer seizes any
foreign exchange or any other goods
which is alleged or suspected to have
been stolen, or which is found, in either
case, under circumstances which create
suspicion of the commission of an
offence under this Act, such police
officer shall forthwith
• report the seizure of-

SECTION 46 - • (i) such foreign exchange to the nearest

P RO C E D U R E I N officer of Enforcement, not below the
RESPECT OF rank of an Assistant Director of
FOREIGN EXCHANGE Enforcement; and
OR ANY OTHER • (ii) such other goods to the nearest
GOODS SEIZED BY officer of Customs, not below the rank
POLICE OFFICERS of an Assistant Collector of Customs.
 • No person shall, when complying with
any direction or order under section 33
or with any requirement under section 43
or when making any application or
declaration to any authority or person for
SECTION 48 - any purpose under this Act, give any
FA LS E information or make any statement which
he knows or has reasonable cause to
S TAT E M E N T S believe to be false, or not true, in any
material particular.
C E N T R A L G O V T P OW E R S

(SEC18,19 ,24)
 S E C T I O N 1 8 - PAY M E N T F O R E X P O RT E D
GOODS
• Ma nda tory decla ra tion by exporter
• Every exporter of goods (other than those exempted) had to furnis h a decl aration to the prescribed authority (usually customs), stating:
The full export va lue of the goods,
Or, if not ascertainable, the expected value.
• This was to ensure that the correct foreign exchange due to India was recorded.
• Rea lisa tion of pa yment
• The exporter had to take a ll reas ona ble s teps to:
Realise the full value of the goods,
Repatriate the foreign exchange to India,
Within the period prescribed by the Reserve Bank of India (RBI).
• RBI’ s rol e
• RBI could issue directions:
Prescribing the time limits for receiving payment,
Allowing deferment of payment under certain circumstances,
Granting exemptions for specific exports.
• P ena lties for contra vention
• Failure to declare, realise, or repatriate export proceeds was treated as a contra vention under F E RA, punishable with prosecution, fine, and
even imprisonment.
 S E C 1 9 - R E S T R I C T I O N O N E X P O RT O F
SECURITIES

• No person could, except with genera l or s pecia l permiss ion of the Res erve Ba nk of India (RBI) ,
Export or attempt to export any security (shares, debentures, bonds, etc.) from India.
• This applied whether the securities were:
In physica l form (certificates), or
By transfer of ownership (endorsement/assignment).

• Res triction on tra ns fer of securities to non-residents

• No person could, without RBI’s permission:
Tra nsfer, issue, or deliver any securit y to a person resident outside India, or
Register a ny such tra nsfer in the books of a company/authority.
• Applica bility
• Covered both India n and foreign s ecurities dealt with in India.
• Applied to s ha res of Indian compa nies (to regulate foreign ownership/control).
• RBI’ s power
• RBI could grant general permis s ion (for certain categories of transactions) or require s pecific a pprova l.
• RBI could also direct companies to refus e regis tra tion of trans fer if it contravened FERA.
• To regul ate ca pital flows and prevent uncontrolled foreign ownership of Indian companies.
• To check smuggling of securities abroad (which could be encashed for foreign currency).
• To ensure India’ s foreign excha nge res erves were protected.
A D J U D I C AT I O N

(SE C 50 -60 )
 If any person contravenes any of the provisions of this Act
[other than section 13(1)(a) ,sec [section 18(1) , section 18
(1)A] and section 19(1)(a)]

or of any rule, direction

SECTION 50 -
PENALTY
or order made thereunder, he shall be liable to such penalty
not exceeding five times the amount or value involved in any
such contravention or five thousand rupees, whichever is more
as may be

adjudged by the Director of Enforcement or any other officer

of Enforcement not below the rank of an Assistant Director of
Enforcement specially empowered in this behalf by order of
the Central Government (in either case hereinafter referred to
as the adjudicating officer).
 For the purpose of adjudging under section
50
whether any person has committed a
contravention of any of the provisions of
this Act or of any rule, direction or order
made
SECTION 51 - • thereunder, the adjudicating officer shall
P OW E R T O hold an inquiry in the prescribed manner
after giving that person a reasonable
A D J U D IC AT E opportunity for making a representation
in the matter and
• if, on such inquiry, he is satisfied that the
person has committed the contravention,
he may impose such penalty as he thinks
fit in accordance with the provisions of
that section.
SECTION 52 - APPEAL
TO A P P E LL AT E B OA R D

• Any person aggrieved by an order of

the Adjudicating Officer (under FERA)
could prefer an appeal to the Appellate
Board.
• Such appeal had to be filed within 45
days from the date of receipt of the order.
• The Appellate Board had the power
to confirm, modify or set aside the
adjudicating officer’s order.
• The decision of the Appellate Board was
final, subject to appeal to the High Court on
questions of law.
S E C T I O N 5 3 – P OW E R S O F T H E A D J U D I C AT I N G
O F F I C E R A N D T H E A P P E L L AT E B O A R D T O
SU MMON WITNESSES, ETC.

• The Adjudicating Officer and the Appella te Board have powers similar to those of a civil court under the
Code of Civil Procedure, 1908.
• These powers are exercised while trying a suit in respect of certain matters, namely:
• Summoning a nd enforcing the a ttendance of any person and examining them on oath.
• Requiring discovery and production of documents.
• Receiving evidence on a ffidavits.
• Requisitioning any public record or a copy thereof from any office.
• Issuing commissions for examination of witnesses or documents.
• Any other matters prescribed.
• Every proceeding before the Adjudicating Officer or the Appellate Board is deemed to be a judicial
proceeding under Sections 193 and 228 of the IPC (perjury, contempt, etc.).
 SECTION 56 - OFFENCES AND
P RO S E C U T I O N S

• in the case of an offence the amount or value involved in which exceeds one lakh of
rupees, with impr isonment for a term which shall not be less than six months, but which
may extend to seven years and with fine
• in any other case, with impr isonment for a term which may extend to three years or with
fine or with both.
• A person is again convicted of an offence under this Act he shall be punishable for the
second and for every subsequent offence with imprisonment for a term which shall not be
less than six months but which may extend to seven years and with fine
• Where a person having been convicted of an offence under this Act, the court by which
such person is convicted may, in addition to any sentence which may be imposed on him
under this section, by order, direct that that person to not carry on such business as the
court may specify, being a business which is likely to facilitate the commission of such
offence for such period not exceeding three years, as may be specified by the court in the
order.
THESE FACTORS WILL NOT BE
CONSIDERED FOR A
P U N I S H M E N T L E S S T H AT S I X
MONTHS

• the fact that the accused has been convicted for the first time of an
offence under this Act;
• the fact that in any proceeding under this Act, other than a
prosecution, the accused has been ordered to pay a penalty or the
goods in relation to such proceedings have been ordered to be
confiscated or any other penal action has been taken against him for
the same offence
• the fact that the accused was not the principal offender and was
acting merely as a carrier of goods or otherwise was a secondary
party in the commission of the offence
• the age of the accused.

• WHAT WILL BE CONSIDERED:

• the fact that an offence under this Act has caused no substantial
harm to the general public or to any individual
 • If any person fails to pay the penalty
SECTION 57 - imposed by the adjudicating officer or
P E N A LT Y F O R the Appellate Board or the High Court
C O N T R AV E N T I O N
OF ORDER MADE • or fails to comply with any of his or its
BY directions or orders,
A D J U D I CAT I NG • he shall, upon conviction by a court, be
OFFICER, punishable with imprisonment for a term
A P P E L LAT E B OA R D which may extend to two years or with
A N D H I G H C O U RT fine or with both.
S E C T I O N 5 8 - V E X AT I O U S
SEARCH, ETC., BY
OFFICERS OF
ENFORCEMENT

• This section was enacted to prevent the misuse of powers by

officers of enforcement.
• If any officer of enforcement:
Vexatiously and unnecessarily searches any person, place, or
premises, or
Vexatiously detains or delays any person in search or seizure
proceedings, or
Seiz es articles without reasonable grounds,
• such officer shall be punishable with imprisonment up to six
months, or with fine, or with both.
• No court shall take cognizance of such offence except with the
previous sanction of the Central Government.
 • In any prosecution for an offence under FERA
that requires a culpa ble menta l state, the court sha ll
presume the existence of such mental state.
• It is for the a ccused to prove that he had no such
mental state with respect to the act charged.
• The accused must prove the absence of such
mental state beyond rea sona ble doubt, not merely on
SECTION 59 - balance of probabilities

PRESUMPTION • For this section:

• “Culpa ble menta l state” includes intention, motive,
O F C U L PA B L E knowledge, belief, or reason to believe a fact.
EXAMPLE:
M E N TA L S TAT E
A businessman is prosecuted for illegally holding
foreign currency.
The court presumes he
had knowledge and intention to hold it illegally.
He must prove, beyond reasonable doubt, that he had
no knowledge (e.g., someone planted it without his
awareness).
 S E C T I O N 6 0 – P OW E R T O T E N D E R
I M M U N I T Y F RO M P RO S E C U T I O N ( F E R A ,
1973)

• The Central Government may, if it thinks fit, tender immunity from prosecution to any
person who makes a full and true disclosure:
of the circumstances relating to the alleged contravention of FERA,
or
of any other person concerned in such contravention.
• The immunity is granted on condition that the person will:
Make a complete and truthful disclosure, and
Comply with any additional conditions imposed.
• If the person fails to comply or is found to have concealed facts:
The immunity may be withdrawn, and
He may then be tried for the offence as if no such immunity had been granted.
 S E C T I O N 7 0 - R E C O V E RY O F S U M S D U E T O
GOVERNMENT

• Any sum imposed by way of penalty under FERA (whether by an Adjudicating Officer,
Appellate Board, or Court) is recoverable as an arrear of land revenue.
• The Adjudicating Officer may issue a certificate to the Collector of the district, who will
proceed to recover it like land revenue dues.
• Recovery proceedings can involve:
• Attachment and sale of movable or immovable property,
• Arrest and detention of the defaulter (in rare cases),
• Other lawful means available for land revenue recovery.