Rule 9 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 9 lets the Director General or the licensing authority suspend the operation of a licence by written order in two situations. Under sub-rule (1), a licence held by a person against whom an order of detention or conviction has been made under three named Acts, or by a firm, company or other entity of which that person is a partner, whole-time director, managing director or proprietor, can be suspended, and the suspension ceases when the order is revoked or set aside as the proviso says. Under sub-rule (2), a licence can be suspended where cancellation proceedings have been started under rule 10. The 2015 Amendment Rules widened rule 9 to certificates, scrips and instruments and substituted clauses (a) and (b). This article explains rule 9 as per the Rules as notified in 1993 read with the 2015 Amendment Rules.
Rule 9(1)(a): a licence held by a person may be suspended if an order of detention or conviction has been made against him under three named Acts. Rule 9(1)(b): the licence of a firm, company or other entity may be suspended if that person is its partner, whole-time or managing director or proprietor. The proviso: the suspension ceases if the detention order is revoked or set aside. Rule 9(2): a licence can be suspended while cancellation proceedings under rule 10 are on.
What changed in 2015
The 2015 Amendment Rules (G.S.R. 300(E), 17 April 2015) made four changes to rule 9:
- "Licence" in the heading and in sub-rules (1) and (2) became "licence, certificate, scrip or any instrument bestowing financial or fiscal benefits".
- Clause (a) was substituted, so that it now covers an "order of detention or conviction" and names three Acts.
- Clause (b) was substituted to cover "a partnership firm (including a limited liability partnership) or a company or a firm or any other entity".
- In the proviso, the words "the partnership firm or company" became "a partnership firm (including a limited liability partnership) or company or a firm or any other entity".
In this article "licence" stands for the whole phrase.
Rule 9(1): the power to suspend
Rule 9(1) begins: "The Director General or the licensing authority may by order in writing, suspend the operation of a licence granted to—". If your firm's licence has been suspended because of an order against a partner or director, a legal consultation can help you check which limb of rule 9 is relied on and whether the proviso applies.
Clause (a): a person against whom an order has been made
Clause (a), as substituted, reads: "any person, if an order of detention or conviction has been made against such person under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974) or the Prevention of Money Laundering Act, 2002 (15 of 2003) or Foreign Exchange Management Act, 1999 (42 of 1999);" The printed notification has a stray "or" after the closing quotation mark, which is a printing slip and is flagged here.
Three things to notice:
- Detention or conviction. The 1993 clause covered only "an order of detention" under the 1974 Act. The 2015 clause adds "conviction" and two more Acts.
- Three named Acts. The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, the Prevention of Money Laundering Act, 2002 and the Foreign Exchange Management Act, 1999 are quoted as printed. They are other laws and are not explained here; the reader should check the current law for each. See our general guides on the Foreign Exchange Management Act and on enforcement powers under the Prevention of Money Laundering Act.
- "Any person". The person need not be a firm. A licence held by an individual proprietor falls under clause (a).
Clause (b): the firm, company or entity
Clause (b), as substituted: "a partnership firm (including a limited liability partnership) or a company or a firm or any other entity, if the person referred to in clause (a) is a partner or a whole time director or managing director or a proprietor, as the case may be, of such firm or company:"
| Entity | Link to the person in clause (a) |
|---|---|
| Partnership firm (including a limited liability partnership) | Partner |
| Company | Whole-time director or managing director |
| Firm or any other entity | Proprietor, as the case may be |
In 1993 clause (b) spoke only of "a partnership firm or a private limited company". The 2015 clause reaches limited liability partnerships, any company (not only a private limited company), a firm and "any other entity". The clause does not say how large the person's stake must be; the status named is enough on the words.
Example: if Mr. Rao (an invented person), a partner in Carnation Overseas LLP (an invented firm), is convicted under one of the three Acts, clause (b) lets the Director General suspend the LLP's licence as well as Mr. Rao's own under clause (a).
The proviso: when suspension ceases
The proviso says the order of suspension "shall cease to have effect in respect of the aforesaid person or, as the case may be, , when the order of detention made against such person,—"
| Clause | When it ceases |
|---|---|
| (i) | The detention order is one to which section 9 of the 1974 Act does not apply, and it has been revoked on the report of the Advisory Board under section 8 of that Act, or before receipt of that report, or before making a reference to the Advisory Board |
| (ii) | The detention order is one to which section 9 of the 1974 Act applies, and it has been revoked on the report of the Advisory Board under section 8 read with section 9(2) of that Act, or before receipt of such report |
| (iii) | The order of detention has been set aside by a court of competent jurisdiction |
The sections of the 1974 Act are quoted as printed and are not explained here.
Observation on the text: the proviso speaks of "the order of detention". The 2015 amendment added "conviction" to clause (a) but the proviso was changed only in the description of the entity; it does not say when a suspension based on a conviction ceases. The sources consulted do not say more. A person in that position should ask the licensing authority in writing and check the official text and the current law.
Rule 9(2): suspension pending cancellation
"The Director General or the licensing authority may by an order in writing suspend the operation of any licence granted under these rules, where proceedings for cancellation of such licence has been initiated under rule 10."
This is a separate power. It does not depend on detention or conviction. It applies where cancellation proceedings "has been initiated" (the grammar is as printed) under rule 10, whose grounds are fraud, breach of condition, tampering and contravention of customs or foreign exchange law. See rules 8 and 10. The rule does not say how long the suspension lasts; it follows the cancellation proceedings.
Hearing, appeal and related provisions
Rule 9 is silent on hearing. Section 9(4) of the Act allows the Director General, or the officer authorised under section 9(2), to "suspend or cancel" a licence for good and sufficient reasons recorded in writing, and its proviso says that no suspension or cancellation shall be made "except after giving the holder of the licence a reasonable opportunity of being heard". An order suspending a licence can be appealed as under section 15 (section 9(5)). See our articles on section 9 and section 15.
A suspension of the Importer-exporter Code under section 8 or section 11(7) is a different thing from a suspension of a licence under rule 9; see our article on section 8.
Need help with a suspension?
If your licence or your firm's licence has been suspended, our legal consultation service can help you read the order against rule 9 and section 9(4), prepare your representation and consider an appeal. Later amendments to the Act, the Rules and the Policy should be checked.
Key takeaways
- Rule 9(1)(a) allows suspension of a licence held by a person against whom an order of detention or conviction has been made under three named Acts.
- Rule 9(1)(b) extends it to a partnership firm (including a limited liability partnership), a company, a firm or any other entity of which that person is a partner, whole-time or managing director or proprietor.
- The proviso ends the suspension when the detention order is revoked or set aside, in the cases it lists.
- Rule 9(2) allows suspension where cancellation proceedings have been initiated under rule 10.
- Section 9(4) requires a reasonable opportunity of being heard before suspension; section 9(5) gives an appeal as under section 15.
Read next
- Rules 8 and 10: amendment and cancellation of licence
- Rule 7: refusal of licence and recovery of benefits
- Section 9: issue, suspension and cancellation of licence
- Introduction to FEMA, 1999
Disclaimer: Based on the Foreign Trade (Development and Regulation) Act, 1992 as enacted read with the Amendment Act of 2010, and on the Foreign Trade (Regulation) Rules, 1993 as notified read with the Amendment Rules of 2015, as consulted on 2 October 2026. Later amendments, the current Foreign Trade Policy and the Handbook of Procedures should be checked. This article is general information, not legal advice; check the official text before acting.