The burden of backlog

But the little-known, sleepy office has been in the news because of one particular appeal in the pile of 4,630. In May this year, the appeal of T.T.K. Dinakaran, nephew of Jayalalitha8217;s close associate, Sasikala, challenging the Rs 31 crore penalty imposed on him landed in the office in Indian Oil Bhavan. And life in the FERA Board has never been the same again.

Interestingly, the fate of Dinakaran8217; s appeal is being followed by people with diametrically opposite views on it. Jaya-baiters, aware of the heavy backlog, claim that the FERA Board Chairman, Sarvesh Chandra began hearing it in a tearing hurry. In fact, they imputed clear motives when Chandra8217;s term was extended on May 12 for two years.

However, sources in the Board say one reason why the case was heard 8220;soon8221; was because overburdened and understaffed, Chandra has simply stopped taking up old appeals and has listedonly fresh appeals for hearing in his courtroom. The Dinakaran case was listed as no. 51 of 1998 and three hearings have been completed. With day-to-day hearings scheduled for August 11-14, the case was expected to be wound up by August-end. The contentious issue to be decided by Chandra here were: should the Board uphold ED8217;s order? Should Dinakaran pay the pre-deposit penalty of Rs 31 crore?

The case has now taken a curious turn with Dinakaran8217;s lawyers asking for an eight-week adjournment shortly before hearings were to commence. Observers feel the adjournment could well be a stalling move since according to the draft of the recently-introduced Foreign Exchange Management Act FEMA, the entire FERA Appellate Board is to be 8220;dissolved8221; and be replaced by an Appellate Tribunal see box.

Chandra and his motley team thus, might shortly be on their way out and the backlog of 4,600-odd cases would become inheritance of the new Tribunal. As one ED-watcher put it, 8220;the Dinakaran appeal has become amillstone round the neck of the beleaguered FERA Board. While many feel the appeal has been heard hastily, the Jayalalitha camp has begun to feel the board has been dragging its feet. They are clearly worried about the outcome of the appeal.8221;

But the Dinakaran case has also highlighted the apathy and neglect with which the FERA board has been treated. While there is a provision of the FERA Board Chairman being assisted by a maximum of four members, there has been no full-time member since 1994. At present, there are two part-time members, both Joint-secretary level officers of the Law Ministry. And there has been no registrar since the beginning of this year.

It was during the tenure of Manmohan Singh as Finance Minister that the last attempt was made to resurrect the FERA Board and resolve the problem of pending cases. Chandra who joined the board in May 1993 requested for the full-strength of members to assist him. He was, in turn, advised by the ministry to begin disposing of fresh appealsimmediately. Thus, around 1995 the disastrous, though informal, decision of ignoring the backlog of 3,000-odd cases was taken.

When contacted by The Indian Express, Chandra said he would not like to comment on the lackadaisical manner in which the board was functioning or on the likely outcome of the Dinakaran appeal. However, ED officials point out that the chairman had earlier been hearing 7-8-year-old appeals in places like Mumbai. Only to find that either either the lawyers had lost interest in the appeal or that even, in a few old cases, the appellants were no longer alive. The board switched its modus operandi and decided to deal with appeals which the 8220;sting8221; of the penalty would still be felt.

The fallout of the decision is that against a target disposal rate of around 75 cases per month, the FERA board was presently deciding only about 15-20 cases. And nobody appears to be worried.

Since almost everyone booked by the ED challenges his/her adjudication orders and almost half the ordersare subsequently quashed by the board, this was certainly a miscarriage of justice. In a few months, the FERA board may be wound up, and the apathetic manner in which it ran will hopefully have no bearing on functioning of the proposed FERA tribunal.

Future of FERA board

There is considerable confusion about the future of the FERA Board in view of the 8220;dissolution8221; recommended in the draft of the Foreign Exchange Management Act FEMA. The draft states that after dissolution, the present Chairman and Members would be required to vacate their offices. However, all offences committed under the repealed act FERA of 1973 shall continue to be governed by its provisions till FEMA comes into force.

The FERA Board is to be replaced with an Appellate Tribunal, probably on the lines of the Income-Tax Appellate Tribunal which also functions under the Ministry of Law. The FEMA draft says the Tribunal will be headed by the Chairman and 8220;such number of Members as the Central Government may deem fit.8221; Thedraft provides for direct appeals against orders of the Appellate Tribunal to be filed in the High Court.

On the question of penalty imposed by the Enforcement Directorate, the draft says the Appellate Tribunal may dispense with the clause of deposit of penalty where it is of the opinion 8220;that such penalty would cause undue hardship to any such person.8221;

While a majority of the guidelines and rules which will govern the FERA Board and the Appellate Tribunal remain the same, M. Chandrasekharan, former Additional Solicitor General, points out that there may be some finer differences. The FEMA draft says that eligibility for appointment for Chairman or Members had been broadened for members of the Central Administrative Tribunal, besides for that of the High Court Judges and Grade I officers of the Indian Legal Service.

This, according to Chandrasekharan, could be one method of bringing in IAS officers into the Appellate authority, which has till now been run exclusively by legal officers. 8220;This will beone significant change in the shift from FERA Board to Appellate Tribunal,8221; he says.