Introduction

The judgment in Sachin Bansal v. The Directorate of Enforcement delivered by the Madras High Court on January 29, 2025, offers a deep insight into how the legal interpretation of omission versus repeal can affect the legitimacy of regulatory actions, particularly under the Foreign Exchange Management Act (FEMA) and the Transfer or Issue of Security by a Person Resident Outside India, Regulations 2000 (TISPRO Regulations). The case involves a complex interplay of statutory provisions, legislative amendments, and longstanding judicial precedents. The petitioners, led by Sachin Bansal, challenge the issuance of a show cause notice based on alleged contraventions dating from 2009–2011, arguing that the statutory basis for such notice has been eliminated by later legislative amendments. The primary dispute centers on whether the omission of Section 6(3)(b) of FEMA by the Finance Act, 2015 effectively nullifies the regulatory ground for initiating adjudicatory proceedings.

The parties involved include the petitioner, Sachin Bansal (and related entities with reference to Flipkart and WS Retail Services Limited), and several respondents representing various tiers within the Directorate of Enforcement, Government of India, Ministry of Finance. The legal arguments raised hinge on issues of statutory interpretation, the doctrine of implied repeal or omission, principles of natural justice, and the availability of alternative remedies under FEMA.

Summary of the Judgment

The Madras High Court, presided over by Justice S. Sounthar, ultimately dismissed the writ petitions filed by the petitioners. The Court held that:

• The omission of Section 6(3) of FEMA by the Finance Act, 2015 may be treated as a repeal, thereby enabling the continued operation of the saving clause under Section 47(3) which “saves” certain actions under the TISPRO Regulations. The Court rejected the petitioner’s argument that an omitted provision should be treated as if it had never existed.
• The issues regarding the “unreasonable delay” (nearly 10 years) in initiating action were not sufficient grounds in themselves to quash the show cause notice because such delay could be assessed by the adjudicating authority later during proceedings if necessary.
• The existence of an alternative remedy through the statutory appeal route under Sections 19 and 35 of FEMA did not automatically preclude the court’s jurisdiction under Article 226, especially where questions of natural justice were raised. However, the Court ultimately held that the petitioners had not adequately demonstrated that a violation of natural justice occurred in this particular instance.
• Finally, the petitioners were allowed the opportunity to file explanations or objections to the show cause notice within 30 days, thereby preserving their right to be heard within the administrative framework.

In essence, the Court upheld the lawfulness of the issuance of the show cause notice, emphasizing that legislative amendments which omit a provision do not necessarily strip a regulatory instrument of its legal authority if a saving clause is provided.

Analysis

Precedents Cited

The judgment extensively discussed several leading precedents, which include:

• Union of India v. Citi Bank (2022 SCC OnLine SC 1073) and State of Punjab v. Bhatinda District Co-operative Milk Producers Union Ltd. (2007 SCC 11 363) – These cases were cited in support of arguments on the issue of “delay” in initiating adjudicatory proceedings. However, the Court carefully distinguished the present facts from those cases.
• Rayala Corporation (P) Ltd. v. Director of Enforcement (1969 2 SCC 412) and Kolhapur Cane Sugar Works Ltd. v. Union Of India (2000 2 SCC 536) – These seminal cases discussed the distinction between repeal and omission. The petitioners argued that these precedents support a view that omitted provisions should lose their regulatory effect. However, the Court noted that these cases had not considered the subsequent legislative development afforded by Section 6-A of the General Clauses Act.
• Fibre Boards Private Ltd. v. Commissioner of Income Tax (2015 10 SCC 333) – The Apex Court in this decision clarified that the concept of “repeal” should include “omission” and declared some earlier statements in the Rayala and Kolhapur Cane Sugar cases as per incuriam. This judgment significantly influenced the Court’s reasoning by dismantling the petitioner’s argument that an omitted provision could never serve as a basis for regulatory action.
• Additional references were made to judgments such as Shree Bhagwati Steel Rolling Mills v. Commissioner of Central Excise and other decisions that examined the underlying principles of statutory construction – particularly the interplay between legislative intent, the saving clauses, and the operation of omitted provisions.

Legal Reasoning

The Court’s legal reasoning is centered on the interpretation of “omission” versus “repeal” and the application of Section 6 of the General Clauses Act. In its analysis, the Court held that:

• The legislative amendment enacted by the Finance Act, 2015, which omitted Section 6(3)(b) of FEMA, must be seen in light of the saving clause under Section 47(3) that allows the regulators to rely on previously issued TISPRO Regulations. This interconnected scheme of saving and amendment ensures that previous transactions can still be scrutinized.
• Judicial precedents that had distinguished between repeal and omission could not override the clear intent of the legislative framework – particularly after considering Section 6-A of the General Clauses Act. The Apex Court’s interpretation in the Fibre Boards case was pivotal in arriving at the conclusion that omission results in an effective “repeal by omission.”
• Arguments based on natural justice were considered in the context of the statutory framework. Since the petitioners had the opportunity to present explanations before the adjudicating authority and could also pursue further appeals under Section 19 and Section 35 of FEMA, the Court concluded that no basic fairness was violated.
• The availability of alternative remedies does not automatically strip the High Court of its discretion under Article 226. However, the petitioners’ failure to exhaust or properly utilize the statutory remedy, combined with the lack of evidence supporting jurisdictional error or bias, led to the maintenance of the show cause notice.

Impact on Future Cases and Legal Interpretations

This judgment is likely to have significant ramifications in several respects:

• Clarification of Statutory Interpretation: The Court’s stance that omission can be construed as a form of repeal serves to clarify the application of saving clauses under FEMA and similar legislations. Future litigants will need to anticipate that omissions in statute books do not necessarily wash away obligations or regulatory actions that were pending, especially in the absence of an express saving clause.
• Strengthening of Regulatory Enforcement: By upholding the validity of the show cause notice despite the alleged delay and the omission of a statutory provision, the judgment lends support to the enforcement authorities in proceeding under amended regimes where past transactions are concerned.
• Guidance on Alternative Remedies: The decision reaffirms that while alternative statutory remedies exist, petitioners must both exhaust those remedies and present clear evidence of procedural or jurisdictional lapses if they wish to approach the High Court through writ petitions.

Complex Concepts Simplified

The judgment involves several layered legal concepts that merit simplification:

• Omission vs. Repeal: Traditionally, a “repeal” meant that a statute or a provision was formally annulled, whereas an “omission” was seen as an exclusion from the statute book without necessarily nullifying the effects of past transactions. However, modern judicial interpretation—as confirmed in this judgment—holds that when a provision is omitted by operation of legislative reform, it is akin to a repeal. In practical terms, this means that even after the omission, actions taken when the provision was operative can still be subject to enforcement.
• Saving Clauses: These are clauses introduced in legislative amendments to “save” or protect the legal consequences of earlier actions. In the case at hand, Section 47(3) of FEMA protects the TISPRO Regulations, meaning that even though Section 6(3)(b) was omitted, the previous regulatory action remains enforceable.
• Alternative Remedies under FEMA: FEMA provides a multi-tiered system of administrative and judicial review. This includes the possibility to respond to a show cause notice, appeal to the Appellate Tribunal under Section 19, and further judicial review by the High Court under Section 35. The availability of these remedies implies that a writ petition under Article 226 is not automatically warranted unless there is a clear jurisdictional flaw or a violation of fundamental rights.
• Doctrine of Per Incuriam: This doctrine allows appellate courts to disregard previous decisions that were rendered without due consideration of relevant legal provisions—in this case, Section 6-A of the General Clauses Act. The High Court’s reliance on the more recent Fibre Boards judgment highlights that past interpretations failing to properly incorporate subsequent legislative amendments may be considered per incuriam.

Conclusion

The judgment in Sachin Bansal v. The Directorate of Enforcement is a landmark decision that clarifies the legal position regarding the effect of legislative omissions on the enforceability of regulatory actions under FEMA. By treating the omission of Section 6(3)(b) as a form of repeal, the Court ensures that regulatory agencies retain their authority to require explanations from parties even when statutory provisions have been removed by subsequent amendments.

Moreover, the decision reinforces the view that alternative statutory remedies, when available, do not preclude the invocation of writ jurisdiction in instances of clear jurisdictional or natural justice violations. The ruling thus provides comprehensive guidance for future cases involving questions of statutory interpretation, saving clauses, and the interplay between legislative amendments and administrative enforcement.

In summary, this judgment not only settles important doctrinal questions regarding repeal by omission but also reinforces the balance between administrative discretion and procedural fairness, ensuring that the interests of justice and regulatory integrity are maintained.