Chapter 4

The Environment (Protection) Act

1986
-Back ground of the Act

In the wake of Bhopal tragedy ,the Government of India enacted the

Environment (Protection) Act of 1986.under Article 253 of the
Constitution.

The purpose of the Act is to implement the decision of the United Nations
conference on the Human Environment of 1972.

The Act relate to the protection and improvement of the human

environment and the prevention of hazards to human beings, other living
creatures, plants and property.

The Act is an Umberlla Legislation designed to provide a frame work

for central government co-ordinating the activities of various central and
state authorities established under previous laws.

-Objectives of the Environment Protection Act 1986

The Act come in to effect on 9th November 1988 with following objectives:

1) to co-ordinate the activities of other various regulatory agencies

already in existence.

2) Creating an authority with adequate power for environmental protection

3) Regulation of discharge of environmental pollutions and handling of

hazardous substances.

4) Speedy response in the event of accidents threatening environmental

equilibrium and different punishment to those who endanger human and
environmental safety and health.

-Definitions of certain terms of the ACT

Environment includes water , air , and land and the inter-relationship

which exists among and between water,air and land, and human being ,
other living creatures,plants,micro-organism and property.

Environment Pollutant means any solid, liquid, or gaseous substance

present in such concentration as may be,or tend to be, injurious to
environment

Environment pollution means the presence of any environment

pollutant in the environment

Hazardous Substance means any substance or preparation of

which,by reason of its chemical or physio-chemical properties or

handling,is liable to cause harm to human being , other living creatures ,

plants, micro organism, property or environment.

Occupier in relation to any factory or premises, means a person who

has control over the affairs of the factory or the premises and includes
,in relation to any substance , the person in possession of the substance.

Handling ( in relation to any substance) means the Manufacture

processing,treatment,package,storage,transportation,use,collection,conve
rsion, destruction,offering sale etc . of such substance.

-General Power of Central Govt. in relation to protection of

environment.

A) Take all such measures to protect and improve the quality of the
environment.

B) prevent, control, and abating (reduction)environmental pollution

c) Co-ordination of actions of the State Government offices and other

authorities , under this Act or any other laws.

D) planning and execution of a nation-wide program for prevention,control

and abatement(reduction/decrease) of environmental pollution

E) laying down standards for the quality of environment in its various

aspects.

F) fixing standards for emission or discharge of environmental pollutants

from various sources.

G) Restriction of Areas in which any industries ,operations,or processes,or

class of industries shall not be carried out or shall be carried out subject
to certain safeguards

H)examination of such manufacturing process ,material substances that

are likely to cause environmental pollution

i) Establish and recognize environmental laboratories and institutes to

carry out such functions which are entrusted by the Act.

J) such other act as the Central Government deems fit to secure the
implementation of the provision of the Act.

K) power to appoint officers and delegation of their powers as it thinks for

the purpose of this Act.

L) power to make rules to regulate environmental pollution

-ROLE of the Central Government to prevent and control

environ.. pollution

Section 7 to 26 of the Environment protection Act 1986 provide the

measures for prevention ,control and abatement of Environment pollution

1. Persons carrying on Industry,operation or process,should not allow

emissions or discharge of environmental pollutants in excess of the
standards.

2)persons handling hazardous substances has to comply with procedural

safety measures and other prescribed procedure.

3)Information should be given to authorities concerned regarding

discharging of any environmental pollutions in excess of the fixed
standards. So that accidents can be prevented and quick measures could
be taken to mitigate the likely losses.

4)Central Government can empower any person to enter any place of

any time in order to examine whether all provisions of the Act are
scrupulously followed or not.

5) such person /officer can test any equipment ,plants, registers or

document and can search any building ,plant, documents ,materials as
necessary to protect the environment and prevent pollution.

6) The provisions of criminal procedure, code are applicable whenever

search or Seizure takes place
-FEMA 1999.(Foreign Exchange Management Act 1999)

Major changes have been introduced in Indian Economy in 1991,to

facilitate increased inflow of foreign investment and capital .

This is done to accelerate industrial growth and promote trade, especially

Exports.

In this Scenario FERA(Foreign Exchange Regulation Act )1973 was

amended to simplify regulations relating to foreign Investment.

Considering these developments,.the FEMA Bill was introduced in the

loka sabha on Augaust 4th 1998 and the Foreign Exchange Managemet
Act ,1999 came in to force on 1st June 2000.

OBJECTIVES OF

FEMA 1999.

1)substantial increase in our foreign exchange reserves,

2)growth in foreign trade ,

3) liberalization of Indian investments in abroad,

4)increased access to external commercial borrowings by Indian

corporates

5) participation of foreign Institutional investors in our stock markets,

6) To promote an orderly maintenance of the foreign Exchange market

in Our Country. etc.,

Scope of FEMA 1999

The FEMA 1999 is applicable to the whole of India

It shall also apply to all branches,offices,and agencies,outside India

owned or controlled by a person resident in India and

Any contraventions, of the provisions of FEMA by all those who are

covered under the above two aspects, committed outside India

Definitions/ meaning of TERMS used in the ACT

Foreign Currency ,means any currency other than Indian Currency.

Foreign exchange means foreign currency and includes:

1) deposits,credits, and balances payable in foreign currency.

Ii) drafts, travellers cheques,letters of credit, bills of exchange drawn by

banks,institutions or persons out side India,but payable in Indian currency.
Adjudicating Authority.

Means an officer authorised under subsection (1) of section 16(8.2 (a).

Authorised person means an authorised dealer, money changer,offshore banking unit, or any other person for time being authorised under
sub section (1) of section 10 to deal in foreign exchange.

Appellate Tribunal means the Appellate Tribunal of Foreign Exchange

established under section 18 of the Act.

Capital Account Transaction means transaction which alters the assets

or liabilities ,including contingent liabilities,outside India of persons
resident in India and of assets or liabilities in India of persons resident
outside India, and includes transactions referred to in sub-section (3) of
section 6

Definitions/ meaning of TERMS used in the ACT

Currency Includes all currency notes,postal notes,postal orders,money

orders, cheques,drafts,travellers cheques,letters of credit,bills of exchange
and promisory Notes, credit cards or such other similar instruments,as
may be notified by the reserve Bank

Currency Notes means and includes cash in the form of coins and bank
notes

Definitions/ meaning of TERMS used in the ACT

Current Account Transactions means a transaction other than a

capital account transaction and without prejudice to the generality of the
foregoing such transaction includes :

( i ) payments due in connection with foreign trade , other current

business,services,and short term banking and credit facilities in the
ordinary course of business.

(ii) payments due as interest on loans and as net income from

investments ,

(iii) remittances for living expenses of parents,spouse,and children

residing abroad

(iv) expenses in connection with foreign travel, education,and medical

care of parents ,spouse and children

Definitions/ meaning of TERMS used in the ACT

Export means :

(i) taking out of India to a place outside India any goods ;

(ii) provision of services from India to any person out side India

Import means bringing into India any goods or services

Foreign Security

Means any security , in the form of shares, stocks,. Bonds,debentures, or

any other Instrument denominated or expressed in foreign currency and
includes securities expressed in foreign currency, but where redemption
or any form of return such as dividend or interest is payable in Indian
Currency

person resident in India

(1) a person residing in India for more than one hundred and eighty two
days during the course of preceding financial year but does NOT include:

(a) a person who has gone out of India or who stays outside India , in
either case:

(i) for or on taking up employment out side India or

(ii) for carrying on outside India a business or vocation out side India or

(iii) for any other purpose , in such circumstances as would indicate his
intention to stay out side India for a uncertain period

Indian Currency means currency which is expressed or drawn in

Indian rupees but does not include special bank notes and special one
rupee notes issued under section 28A of the RBI Act of 1934.

Person resident outside India means a person who is not resident in

India

Repatriate to India means bringing to India the realised foreign

exchange and:

(i) the selling of such foreign exchange to an authorised person in India in

exchange for rupees or

(ii) the holding or realised amount in an account with an authorised

person in India to the extent notified by the Reserve Bank,

and includes use of the realised amount for exchange of a debt liability
denominated in foreign exchange and the expression

means :

repatriation shall be construed accordingly.

-Salient features of FEMA 1999

1. Dealing in Foreign Exchange (section 3)

1. No person shall deal in or transfer any foreign exchange or foreign

security to any person not being an authorised person ,without the general
or special permission of the Reserve Bank and as per rules and regulations
made in this FEMA Act.

2. No person shall make any payment to or for the credit of any person
resident outside India in any manner other than mentioned in Act.

3. No person shall receive otherwise through an authorised person any

payment by order or on behalf of any person resident outside India in any
manner.

4. enter into any financial transaction in India as consideration for or in

association with acquisition or creation or trtansfer of a right to acquire ,
any asset outside India by any person.

Holding of Foreign Exchange. ( section 4)

No person in India shall acquire ,hold,own,possess,or transfer any foreign

exchange ,foreign security or any immovable property situated out side
India.

Current Account Transaction

Section 5.

Any person may sell or draw foreign exchange to or from an authorised

person if such sale or drawal is a current account transaction,subject to
Reserve Bank restrictions.

CAPITAL ACCOUNT transactions. Subject to Section 6,sub section(2)

of the FEMA 1999,any person may sell or draw foreign exchange to or from
an authorised person for a capital Account transaction

Contd.Capital Account Transactions

The Reserve Bank may in consultation with the Central Government,

specify:

(i) any class or classes of capital account transactions which are

permissible

(ii) the limit up to which foreign exchange shall be admissible for such
transactions:

Provided that The RBI shall not impose any restriction on the drawal of
foreign exchange for payments due on account of amortization of loans
for depreciation of direct investments in the ordinary course of business.

( to pay off(as mortgage) by instalments of principal & interest -------- to

gradually reduce or write off the cost or value of an asset)

Export of Goods & Services

AS per Section 7 of the FEMA , every Exporter of goods shall :-

(a) furnish to the RBI or to such authority a declaration in such form and in
such manner as may be specified correct material particulars including full
value of Export of goods.

If the full value of export is not ascertainable at the time of export, the
expected value has to be furnished to RBI.

(b) the exporter should also furnish such other information as may be
required by RBI for the purpose of ensuing the realisation of such export
proceeds.

ContdExport of Services

Every exporter of Services shall furnish to the RBI or to such other

authorities a declaration in the prescribed format containing the true
and correct material particulars in relation to payment of such services.

Realisation and Repatriation of foreign exchange.

As per section 8 , any amount of foreign exchange due or accrued to any

person resident in India,such person shall take all reasonable steps to
realise and repatriate to India such foreign exchange in such manner as
prescribed by RBI.

Exemption from realisation and repatriation

Provisions of sections 8 shall not apply to the following:

A) possession of foreign currency or foreign coins by any person up to

such limit as the RBI may specify.

B) foreign currency account held or operated by such person or class of

persons and the limit up to which the RBI may specify.

OFFENSES under FEMA 1999

1. Only a person Authorised by Reserve Bank can deal in Foreign

Exchange.

2. No one can make a payment to a person resident outside India, without

permission of RBI

3. No one receives any Payment from a person resident outside India,

without permission of Reserve Bank

4.A person resident in India cannot deal in foreign exchange,or any

immovable property situated out side India ,without permission of RBI

5.Similarly a person resident out side India, cannot acquire immovable

property in India without permission of RBI

Difference between FERA & FEMA

FERA

Consisting of 81 Sections and was more Complex

Terms like Capital Account Transaction & Current Account Transctions were
not defined in FERA

Definition for Authorised Person was Narrow

FEMA
Only 49 Sections and is much Simple

Terms Like Capital Account Transaction/ current Account Transactions are

Well defined in FEMA

Definition For Authorised Personwere widened to include Banks,money

changes, Offshore Banking Units etc.

ContdDifference between
FERA & FEMA

FERA

Criminal Offence punishable with Imprisonment as per Criminal Procedure

Amount of Penalty was nearly 5 times the amount involved

It conferred wide powers on a police officer not below the rank of Deputy
Superintendent of police to make a search.

FEMA

Offence is Considered as CIVIL offence only punishable with some

amount of money as penalty.

Penalty is considerably decreased to 3 times the amount Involved.

The Scope and power of search and seizure has been curtailed to a great
extent.

ContdDifference between
FERA & FEMA

There was a major difference in the definition of Resident under FERA

and Income tax Act.

An appeal against the order of Adjudicating Office before Foreign

Exchange Regulation Appellate Board went before High Court

The Definition of Residentas per FEMA are in consistent with Income tax
Act.( i.e. the Criteria that residing In India for 182 days) is same both in
FEMA and Income tax Act.

The Appellate Authority under FEMA is the Special Director (Appeals).

Appeal against the order of Adjudicating Authority and special Director
(Appeals) lies before Applleate Tribunal For Foreign Exchange.