Mr. A, a resident of Kolkata was found to be involved in Hawala transactions and received notices in this regard from concerned Authorities. He approaches Mr. B, a Practising Company Secretary and seeks advice on the pro

Note on Power of Survey Hawala transaction, being a transaction involving cross border movement of money through any informal method of transferring money is in violation of Section 3(a) of Foreign Exchange Management Act, 1999 ("FEMA") which primarily prescribes the provisions for the dealing in or transfer any foreign exchange or foreign security to any person not being an authorised person, with an intent to ensure that all currency movement across the Indian border is routed only through formal Banking channels. Section 13(1) of the FEMA provides that contravention of any provision of this Act, rules, regulations, notifications, directions etc. shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to ₹2.00 Lakhs where the amount is not quantifiable, and where such contravention is a continuing one, further penalty which may extend to ₹5,000/- for every day after the first day during which the contravention continues. Further, as per Sec 13(2) Any Adjudicating Authority adjudging any contravention under sub-section (1), may, if he thinks fit in addition to any penalty which he may impose for such contravention direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government and further direct that the foreign exchange holdings, if any, of the persons committing the contraventions or any part thereof, shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf. Section 16 of FEMA, 1999 provides for the appointment of the Adjudicating Authority for section 13 of the said Act. Section 16 of FEMA provides that the Central Government may, by an order, published in the Official Gazette, appoint as many officers of the Central Government as it may think fit, as the Adjudicating Authorities for holding an inquiry, against whom a complaint has been made. The Central Government is also to prescribe the jurisdiction for the Adjudicating Authorities. According to section 16(1), for the purpose of adjudication under section 13, the Central Government may, by an order published in the Official Gazette, appoint as many officers of the Central Government as it may think fit, as the Adjudicating Authorities for holding an inquiry in the manner prescribed after giving the person alleged to have committed contravention under section 13, against whom a complaint has been made under sub-section (3) (hereinafter in this section referred to as the said person) a reasonable opportunity of being heard for the purpose of imposing any penalty: Provided that where the Adjudicating Authority is of opinion that the said person is likely to abscond or is likely to evade in any manner, the payment of penalty, if levied, it may direct the said person to furnish a bond or guarantee for such amount and subject to such conditions as it may deem fit. According to section 16(3), no Adjudicating Authority shall hold an enquiry under sub-section (1) except upon a complaint in writing made by any officer authorised by a general or special order by the Central Government. Further, according to section 16(5), every Adjudicating Authority shall have the same powers of a civil court which are conferred on the Appellate Tribunal under sub-section (2) of section 28 and- (a) all proceedings before it shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code; (b) shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973). According to section 28(2) of FEMA, the Appellate Tribunal and the Special Director (Appeals) shall have, for the purposes of discharging its functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, while trying a suit, in respect of the following matters, namely: (a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiring the discovery and production of documents; (c) receiving evidence on affidavits; (d) subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872, requisitioning any public record or document or copy of such record or document from any office; (e) issuing commissions for the examination of witnesses or documents; (f) reviewing its decisions; (g) dismissing a representation of default or deciding it ex parte; (h) setting aside any order of dismissal of any representation for default or any order passed by it ex parte; and (i) any other matter which may be prescribed by the Central Government. According to section 16(5), these powers are also available to Adjudicating Officer and may include the power of survey.