13. Penalties.—(1) If any person contravenes any provision of this Act, or contravenes any rule,
regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes
any condition subject to which an authorisation is issued by the Reserve Bank, he shall, upon
adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such
amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such
contravention is a continuing one, further penalty which may extend to five thousand rupees for every day
after the first day during which the contravention continues.
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[(1A) If any person is found to have acquired any foreign exchange, foreign security or immovable
property, situated outside India, of the aggregate value exceeding the threshold prescribed under the
proviso to sub-section (1) of section 37A, he shall be liable to a penalty up to three times the sum
involved in such contravention and confiscation of the value equivalent, situated in India, the Foreign
exchange, foreign security or immovable property.
1. Ins. by Act 20 of 2015, s. 140 (w.e.f. 9-9-2015).
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(1B) If the Adjudicating Authority, in a proceeding under sub-section (1A) deems fits, he may, after
recording the reasons in writing, recommend for the initiation of prosecution and if the Director of
Enforcement is satisfied, he may, after recording the reasons in writing, may direct prosecution by filing a
Criminal Complaint against the guilty person by an officer not below the rank of Assistant Director.
(1C) If any person is found to have acquired any foreign exchange, foreign security or immovable
property, situated outside India, of the aggregate value exceeding the threshold prescribed under the
proviso to sub-section (1) of section 37A, he shall be, in addition to the penalty imposed under
sub-section (1A), punishable with imprisonment for a term which may extend to five years and with fine.
(1D) No court shall take cognizance of an offence under sub-section (1C) of section 13 except as on
complaint in writing by an officer not below the rank of Assistant Director referred to in
sub-section (1B).]
(2) Any Adjudicating Authority adjudging any contravention under sub-section (1), may, if he thinks
fit in addition to any penalty which he may impose for such contravention direct that any currency,
security or any other money or property in respect of which the contravention has taken place shall be
confiscated to the Central Government and further direct that the foreign exchange holdings, if any, of the
persons committing the contraventions or any part thereof, shall be brought back into India or shall be
retained outside India in accordance with the directions made in this behalf.
Explanation.—For the purposes of this sub-section, “property” in respect of which contravention has
taken place, shall include—
(a) deposits in a bank, where the said property is converted into such deposits;
(b) Indian currency, where the said property is converted into that currency; and
(c) any other property which has resulted out of the conversion of that property.
14. Enforcement of the orders of Adjudicating Authority.—(1) Subject to the provisions of
sub-section (2) of section 19, if any person fails to make full payment of the penalty imposed on him
under section 13 within a period of ninety days from the date on which the notice for payment of such
penalty is served on him, he shall be liable to civil imprisonment under this section.
(2) No order for the arrest and detention in civil prison of a defaulter shall be made unless the
Adjudicating Authority has issued and served a notice upon the defaulter calling upon him to appear
before him on the date specified in the notice and to show cause why he should not be committed to the
civil prison, and unless the Adjudicating Authority, for reasons in writing, is satisfied—
(a) that the defaulter, with the object or effect of obstructing the recovery of penalty, has after the
issue of notice by the Adjudicating Authority, dishonestly transferred, concealed, or removed any part
of his property, or
(b) that the defaulter has, or has had since the issuing of notice by the Adjudicating Authority, the
means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or
neglected to pay the same.
(3) Notwithstanding anything contained in sub-section (1), a warrant for the arrest of the defaulter
may be issued by the Adjudicating Authority if the Adjudicating Authority is satisfied, by affidavit or
otherwise, that with the object or effect of delaying the execution of the certificate the defaulter is likely
to abscond or leave the local limits of the jurisdiction of the Adjudicating Authority.
(4) Where appearance is not made pursuant to a notice issued and served under sub-section (1), the
Adjudicating Authority may issue a warrant for the arrest of the defaulter.
(5) A warrant of arrest issued by the Adjudicating Authority under sub-section (3) or sub-section (4)
may also be executed by any other Adjudicating Authority within whose jurisdiction the defaulter may for
the time being be found.
(6) Every person arrested in pursuance of a warrant of arrest under this section shall be brought
before the Adjudicating Authority issuing the warrant as soon as practicable and in any event within
twenty-four hours of his arrest (exclusive of the time required for the journey):
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Provided that, if the defaulter pays the amount entered in the warrant of arrest as due and the costs of
the arrest to the officer arresting him, such officer shall at once release him.
Explanation.—For the purposes of this sub-section, where the defaulter is a Hindu undivided family,
the karta thereof shall be deemed to be the defaulter.
(7) When a defaulter appears before the Adjudicating Authority pursuant to a notice to show cause or
is brought before the Adjudicating Authority under this section, the Adjudicating Authority shall give the
defaulter an opportunity showing cause why he should not be committed to the civil prison.
(8) Pending the conclusion of the inquiry, the Adjudicating Authority may, in his discretion, order the
defaulter to be detained in the custody of such officer as the Adjudicating Authority may think fit or
release him on his furnishing the security to the satisfaction of the Adjudicating Authority for his
appearance as and when required.
(9) Upon the conclusion of the inquiry, the Adjudicating Authority may make an order for the
detention of the defaulter in the civil prison and shall in that event cause him to be arrested if he is not
already under arrest:
Provided that in order to give a defaulter an opportunity of satisfying the arrears, the Adjudicating
Authority may, before making the order of detention, leave the defaulter in the custody of the officer
arresting him or of any other officer for a specified period not exceeding fifteen days, or release him on
his furnishing security to the satisfaction of the Adjudicating Authority for his appearance at the
expiration of the specified period if the arrears are not satisfied.
(10) When the Adjudicating Authority does not make an order of detention under sub-section (9), he
shall, if the defaulter is under arrest, direct his release.
(11) Every person detained in the civil prison in execution of the certificate may be so detained,—
(a) where the certificate is for a demand of an amount exceeding rupees one crore, up to three
years, and
(b) in any other case, up to six months:
Provided that he shall be released from such detention on the amount mentioned in the warrant for his
detention being paid to the officer-in-charge of the civil prison.
(12) A defaulter released from detention under this section shall not, merely by reason of his release,
be discharged from his liability for the arrears, but he shall not be liable to be arrested under the
certificate in execution of which he was detained in the civil prison.
(13) A detention order may be executed at any place in India in the manner provided for the execution
of warrant of arrest under the Code of Criminal Procedure, 1973 (2 of 1974).
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[14A. Power of recover arrears of penalty.—(1) Save as otherwise provided in this Act, the
Adjudicating Authority may, by order in writing, authorise an officer of Enforcement not below the rank
of Assistant Director to recover any arrears of penalty from any person who fails to make full payment of
penalty imposed on him under section 13 within the period of ninety days from the date on which the
notice for payment of such penalty is served on him.
(2) The officer referred to in sub-section (1) shall exercise all the like powers which are conferred on
the income-tax authority in relation to recovery of tax under the Income-tax Act, 1961 (43 of 1961) and
the procedure laid down under the Second Schedule to the said Act shall mutatis mutandis apply in
relation to recovery of arrears of penalty under this Act.]
15. Power to compound contravention.—(1) Any contravention under section 13 may, on an
application made by the person committing such contravention, be compounded within one hundred and
eighty days from the date of receipt of application by the Director of Enforcement or such other officers
of the Directorate of Enforcement and officers of the Reserve Bank as may be authorised in this behalf by
the Central Government in such manner as may be prescribed.
1. Section 14A shall stand inserted (date to be notified) by Act 28 of 2016, s. 229.
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(2) Where a contravention has been compounded under sub-section (1), no proceeding or further
proceeding, as the case may be, shall be initiated or continued, as the case may be, against the person
committing such contravention under that section, in respect of the contravention so compounded.