A memorandum of December 2001 is still being litigated, and the Court has had to decide first which of its own judges should hear it
Justice Krishna Rao held that foreign exchange falls within the Revenue and Tax Laws group under the Court's own classification rules, released three writ petitions, and extended interim protection to 3 December 2026.
Three writ petitions, filed in 2023, 2024 and 2026, challenge a memorandum issued on 5 December 2001 by the Special Director, Enforcement Directorate, under Rule 3 of the Adjudication Proceedings and Appeal Rules, 1974 read with sub-sections (3) and (4) of Section 49 of the Foreign Exchange Management Act, 1999. The merits were not reached on 14 October 2026. What was decided was a preliminary objection about where in the High Court the case belongs — a question that, on this record, has outlived a quarter of a century of the underlying dispute.
The objection
Mr Arijit Chakraborty, for the Enforcement Directorate, raised the point that the petitions are connected with Group IV and not Group IX. He took the Court to the rules relating to computerisation of the cause list of the Original Side, in Chapter XXXIX-A, Appendix-I, Table III, Subject Classification, Group-A (Writ Matters), and in particular to the entry under the heading “Revenue” which includes “Foreign Exchange”.
Mr J.P. Khaitan and Mr Dhrubo Ghosh appeared as senior advocates for the petitioners with a team of five, and Mr Debsoumya Basak and Ms Swati Kumari Singh with Mr Chakraborty for the Directorate.
How the Court got to Group IV
The order works its way to the answer through the statutory history and function of the legislation, which is unusual in a determination matter but makes the classification intelligible.
The Foreign Exchange Regulation Act had required foreign exchange to be collected and handed over to the Reserve Bank of India, and the Bill that produced it was formulated with the aim of regulating certain kinds of payments and dealings in foreign exchange. That Act became incompatible with the liberalisation policies of the Government of India, became redundant, was repealed in 1998 and replaced by the Foreign Exchange Management Act in 1999, which liberalised foreign exchange controls and restrictions on foreign investment.
FEMA is the legislation that governs foreign exchange transactions in India, facilitating sending and receiving money across borders, making overseas investments and acquiring property outside India; its object is to consolidate and amend the law relating to foreign exchange with a view to facilitating external trade and payments and promoting the orderly development and maintenance of the foreign exchange market. It gives the Reserve Bank authority, in consultation with the Government, to establish the categories of capital account dealings and the exchange restrictions applicable to them, and empowers the Central Government to regulate foreign exchange activities. All transactions must be carried out through an “Authorized Person” — authorised dealers, money changers and offshore banking units among them — and the Reserve Bank may authorise any person to deal in foreign securities in such a capacity.
The Court also noted the penal consequences, which are substantial: a person found in contravention may be liable to pay up to three times the amount involved in the violation or ₹2,00,000, whichever is higher, with an additional penalty of ₹5,000 per day for a continuing default.
The link to revenue was then drawn through accounting. Foreign exchange transactions or earnings from exports and services are recorded as revenue in a company's profit and loss statement when they arise from regular trading or business operations; foreign currency received from selling goods or rendering services to overseas customers is recognised as core revenue at the spot exchange rate on the date of the transaction. “Revenue” in an Appellate Side determination refers to cases involving income tax, sales tax, cess, customs, foreign exchange, excise and miscellaneous. On that basis the Court found that a matter relating to foreign exchange is covered under Group IV, matters relating to revenue and tax laws, excluding land revenues.
The order, and the interim protection
The three writ petitions were released from the list of this Court, with liberty to the parties to mention before the appropriate Court having determination. Parties were permitted to act on the basis of a server copy of the order placed on the Court's official website, and urgent certified photocopies were made available on compliance with formalities.
That left a practical problem, which counsel for the petitioners raised immediately. Although the Court had released the matters, an interim order was running to 19 November 2026, and with the petitions now headed for a different roster there was no guarantee they would be reached before it lapsed. Recording the submission, the Court extended the interim order until 3 December 2026 or until further order, whichever is earlier.
The substantive challenge to the 2001 memorandum therefore remains undecided, now before whichever Bench has determination over Group IV.