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Section 34 FEMA Act 1999 - Civil Court Not to Have Jurisdiction

Section 34 of the Foreign Exchange Management Act, 1999 creates a statutory bar on civil court jurisdiction for matters that FEMA entrusts to its designated adjudicatory and appellate authorities. It also restricts courts and other authorities from granting injunctions against action taken, or proposed to be taken, under powers conferred by FEMA.

In simple terms: where FEMA gives a particular matter to an Adjudicating Authority, the Appellate Tribunal or the Special Director (Appeals), an ordinary civil suit or proceeding cannot be used to have that same matter determined. The section also contains a separate bar against injunctions concerning action under FEMA.

Text of Section 34 of the Foreign Exchange Management Act, 1999

34. Civil court not to have jurisdiction. No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which an Adjudicating Authority or the Appellate Tribunal or the Special Director (Appeals) is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.

What Section 34 means

Section 34 has two connected parts. First, it excludes the jurisdiction of a civil court in relation to a matter that FEMA authorises the specified statutory authorities to determine. Second, it prevents a court or other authority from granting an injunction in respect of action taken or proposed under a power conferred by FEMA.

The provision therefore directs FEMA disputes into the adjudication and appeal structure created by the Act. The bar is tied to the subject matter entrusted by FEMA to the statutory authority; the wording does not say that every dispute having any connection with foreign exchange is automatically outside the civil courts.

Authorities referred to in Section 34

Adjudicating Authority

Under Section 16, the Central Government may appoint officers of the Central Government as Adjudicating Authorities for adjudication under Section 13. The inquiry must be conducted in the prescribed manner and the person alleged to have committed a contravention must be given a reasonable opportunity of being heard.

Special Director (Appeals)

Section 17 provides for appeals to the Special Director (Appeals) against specified orders of Adjudicating Authorities. The provision identifies the orders that may be appealed and prescribes the statutory appellate route.

Appellate Tribunal

FEMA provides an appellate mechanism through the Appellate Tribunal. Section 19 deals with appeals to the Appellate Tribunal against the orders specified in that provision. Section 35 separately provides for an appeal to the High Court on a question of law, subject to the conditions and time limits stated in that section.

Effect of the civil court jurisdiction bar

A civil court cannot entertain a suit or proceeding to determine a matter that FEMA empowers the authorities named in Section 34 to determine.
The statutory remedies under FEMA should be examined where an adjudication or appellate order is challenged.
The second limb of Section 34 restricts injunctions against action taken or proposed under powers conferred by FEMA.
Section 34 should be read with FEMA's adjudication and appeal provisions, particularly Sections 16, 17, 19 and 35.

Section 34 and appeal to the High Court

The bar on civil court jurisdiction does not erase the remedies expressly created by FEMA. Section 35 provides a statutory appeal to the High Court from a decision or order of the Appellate Tribunal where the appeal involves a question of law, subject to the statutory requirements. This is different from filing an ordinary civil suit.

Practical point: Before starting a civil proceeding concerning a FEMA matter, identify the precise order, action or dispute and check whether FEMA assigns its determination to an Adjudicating Authority, the Special Director (Appeals) or the Appellate Tribunal. The appropriate statutory remedy depends on the nature and stage of the proceeding.

Background of FEMA

The Foreign Exchange Management Act, 1999 is Act 42 of 1999. It replaced the Foreign Exchange Regulation Act, 1973 and came into force on 1 June 2000. Its statutory objective is to consolidate and amend the law relating to foreign exchange with the aim of facilitating external trade and payments and promoting the orderly development and maintenance of the foreign exchange market in India.

Official legal resources

For the current statutory text and official material, refer to the India Code database and the Department of Revenue - Foreign Exchange Management page. Regulatory directions and foreign exchange material are also published by the Reserve Bank of India.

This page is intended as a general explanation of Section 34. The application of a jurisdiction bar depends on the facts, the relief claimed and the statutory remedy available in the particular proceeding.