No Arrest or Imprisonment Under FEMA but COFEPOSA Continues!
AS per Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA), a person can be detained with a view to preventing him from acting in any manner prejudicial to the conservation or augmentation of foreign exchange.
But under the present FEMA which replaced the FERA, there is no arrest or imprisonment. Now can somebody be detained under the assumption that he may contravene the provisions of FEMA for which there is no imprisonment? In the absence of imprisonment under FEMA, is COFEPOSA not redundant as far as Foreign Exchange violations are concerned?
The Supreme Court does not think so. In a landmark judgement upholding the COFEPOSA provisions, the Supreme Court observed, "After all, the essential concept of preventive detention is not to punish a person for what he has done but to prevent him from doing an illegal activity prejudicial to the security of the State. It is too naïve to suggest that in today's economic scenario of abundant foreign exchange and booming foreign trade, contravention of foreign exchange laws does not pose any threat to the national interest for which a person has to be detained."
In this case, another interesting issue cropped up.
The Order of Detention was passed on 23.9.2009, which was stayed by several court orders. The preventive detention was valid for one year. The Supreme Court judgement came after nearly three years of the detention order. Even if he was detained in 2009, he would have been released in 2010. Now, in 2012, can he be detained because he lost in the Supreme Court? His plea was that therefore, no purpose for the execution of the detention order survives. The Supreme Court did not agree and observed, "The detention order could not be executed because of the contumacious conduct of the second petitioner and, therefore, he cannot take advantage of his own wrong."
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