Justice Ravi at this stage remarked that the law says the RBI ‘may’ investigate any misutilisation under Section 12 of FEMA.
“RBI has chosen not to do it. They are not required to. My question is, is there any other body that can conduct an enquiry?,” the judge asked.
In response, Datar said the word “may” has been used because using the word “shall” would not be appropriate as that would make it mandatory.
However, the Court again asked whether RBI’s power under Section 12 was exclusive.
“FEMA is the omnibus law for how foreign funds come and go from India. That is why the term “management”. Section 12 comes in when reports come in to RBI raising doubts about the utilisation. Parliament has noted that in the case of foreign exchange, all scrutiny falls under RBI. RBI has to appoint a special officer by authorisation to investigate, in this case the affairs of KIIFB. If parliament wanted to, it could have said ED has the power. It is my humble submission that another body will have the power only if parliament expressly allows it,” Datar said.
Source: Barandbench
