1998 (4) TMI 445 - HC - Companies Law

Summary

Issues:
1. Appellant seeking NRI status for holding assets in the UK.
2. Interpretation of FERA provisions regarding residency and asset holding.
3. Challenge to notification imposing conditions on NRI status.

Analysis:
1. The appellant, a citizen of India, sought NRI status to hold assets inherited from his late mother in the UK. The appellant's mother, a UK resident, passed away, leaving him as the sole inheritor. Despite staying in the UK for about seven and a half months, the RBI did not permit him to retain the assets abroad permanently. The appellant contested the requirement of a one-year continuous stay abroad to gain NRI status, challenging a 1992 notification under FERA. The appellant argued that his uncertain stay abroad should qualify him as a "person resident outside India."

2. The FERA defines a "person resident in India" and "person resident outside India," outlining restrictions on foreign exchange dealings. The Central Government's 1992 notification mandated selling foreign exchange unless a person had stayed abroad continuously for at least one year. The court rejected the appellant's claim that his uncertain stay abroad automatically made him a "person resident outside India." The court emphasized that the FERA prohibits holding foreign exchange without permission, and the notification's conditions were valid under the law.

3. The appellant's reliance on a Karnataka High Court decision was dismissed as irrelevant to his case. The Karnataka case involved different circumstances and interpretations of FERA provisions. The court clarified that notifications cannot alter statutory definitions and that the RBI lacks authority to change definitions like "person resident in India." The court upheld the legality of the 1992 notification and ruled against the appellant's NRI status claim. The appeal was dismissed, with each party bearing its own costs.

This judgment clarifies the criteria for NRI status under FERA, emphasizing the need for compliance with regulations and dismissing claims based on uncertain stays abroad. The court's detailed analysis of statutory provisions and previous case law provides a comprehensive understanding of residency and asset holding regulations under FERA.