Module: General Practice
Q7: Consider the following statements regarding the legal nature of contraventions under FEMA:
Assertion (A)- Under FEMA, 1999, a contravention is treated as a civil wrong, and the concept of "Mens Rea" (criminal intent) is generally not an essential ingredient for imposing penalties.
Reason (R)- FEMA aims to manage foreign exchange as a civil liability, whereas its predecessor FERA treated violations as criminal offences where Mens Rea was often presumed.
Reason (R)- FEMA aims to manage foreign exchange as a civil liability, whereas its predecessor FERA treated violations as criminal offences where Mens Rea was often presumed.
✅ Correct Answer: A
The Judicial Shift: Assertion is True: Under FEMA (Section 13), a violation is termed a "Contravention" (Civil), not an "Offence" (Criminal). The Supreme Court and various tribunals have held that for civil penalties under regulatory statutes like FEMA, Mens Rea (guilty mind/intent) is not strictly required to be proved by the department.
The mere act of contravention invites penalty.
Reason is True: This structure exists because FEMA replaced FERA.
Under FERA (Section 56), violations were criminal offences punishable by imprisonment, where Mens Rea was a critical (and often presumed) element.
FEMA decriminalized this to facilitate trade, making the penalty monetary (civil) in the first instance.
Imprisonment in FEMA (Section 14) arises only if the civil penalty is not paid, effectively acting as a civil imprisonment for recovery.
The mere act of contravention invites penalty.
Reason is True: This structure exists because FEMA replaced FERA.
Under FERA (Section 56), violations were criminal offences punishable by imprisonment, where Mens Rea was a critical (and often presumed) element.
FEMA decriminalized this to facilitate trade, making the penalty monetary (civil) in the first instance.
Imprisonment in FEMA (Section 14) arises only if the civil penalty is not paid, effectively acting as a civil imprisonment for recovery.