Forex & appeal rules: SC dismisses federation's plea

Business Recorder

25-04-2025

ISLAMABAD: The Supreme Court held that the condition under 23C(4) of the Foreign Exchange Regulation Act, 1947 (FERA) and rule 8 of the Adjudication Proceedings and Appeal Rules, 1998 for filing an appeal against the decision of adjudicating officer is not justified and infringed upon the fundamental rights.
A five-judge constitutional bench of the Supreme Court, headed by Justice Aminuddin Khan, decided the matter on the federation's appeal against the Lahore High Court (LHC) order. The bench maintaining the LHC order dismissed the federation's appeal.
Senior Joint Director Foreign Exchange Operations Division SBP (respondent No 8) had filed a petition before the Lahore High Court, challenging the vires of Section 23C (4) of the Foreign Exchange Regulation Act, 1947 (FERA) and rule 8 of the Adjudication Proceedings and Appeal Rules, 1998. The petition was allowed by means of order dated 01.02.2023 and struck down the said provision of FERA and rule 8 of the Rules as unconstitutional. The federation then approached the Supreme Court.
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Under section 23C of the FERA, a decision of the adjudicating officer, made under section 23B(4) is though appealable before the Foreign Exchange Regulation Appellate Board, but it shall not be admitted for hearing unless the appellant deposits in cash with the Appellate Board the amount of penalty or, at the discretion of the Appellate Board, furnishes security equal in value to such amount of penalty, as provided by its subsection (4).
The main controversy for determination is whether the pre-condition of deposition of the amount of penalty for admission of an appeal as provided by section 23C(4) of the FERA and rule 8 of the Rules, is constitutional.
The judgment said that an unreasonable condition could make it impossible or unfairly difficult to exercise the right to appeal. Similarly, conditions that obstruct the normal and fair functioning of the due process for an appellant, such as, the payment of excessive amount could be considered as unreasonable.
It said there is no justification for deposition of such an excessive amount nor has it been shown that the condition attached to the appeal is with due regard to the public requirement. Directing a party to deposit the total amount of the subject matter, before admission of his appeal would be unreasonable, resulting into preventing that party from exercising his right of appeal, which violates his fundamental right of fair trial and due process, guaranteed by Article 10A of the Constitution.
If permitted, this will not only deprive the respondents from their fundamental right of challenge to the decision of the executive authority before an independent and impartial higher forum, but will also give a license to the powerful executive to misuse its authority. The condition of deposition of the fine amount imposed by subsection (4) of section 23C of the FERA is so excessive and unreasonable that it would amount to denial of the right to appeal, which violates Article 10A of the Constitution, hence, cannot sustain.
The judgment noted that there is always a possibility of error, mistake of facts or law in a decision at the level of initial forum, therefore, the right of appeal is a substantive right of an aggrieved person. It existed since the establishment of judiciary, with its primary function to protect against miscarriage of justice. A right of access to justice and a right to a fair trial and due process is a fundamental right of a citizen, guaranteed by Article 10A of the 1973 Constitution, which includes an appeal to a higher, independent and impartial forum to scrutinise the decision of the fora below.
The court noted that the denial of right of appeal violates the fundamental rights of a citizen, the principles of natural justice and the injunctions of Islam.
Copyright Business Recorder, 2025