2010 (12) TMI 1159 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Refusal/rejection of the petitioner's application under the Payment and Settlement Systems Act (PASSA) and issuance of a Full-fledged Money Changer License.
2. Consideration of criminal prosecution against the petitioner in his individual capacity by the Reserve Bank of India (RBI).
3. Jurisdiction and maintainability of the writ petition.
4. Interim relief and appeal process under Section 9 of PASSA.

Detailed Analysis:

1. Refusal/Rejecting the Application under PASSA and Issuance of Full-fledged Money Changer License:
The petitioner, as Chairman of a foreign company, sought a writ of mandamus to prevent the RBI from rejecting its application under PASSA and the issuance of a Full-fledged Money Changer License due to pending criminal prosecution against him individually. The court noted that the RBI had granted interim authorization for setting up a payment system but later refused to extend it based on the petitioner's criminal case and the financial instability of the company.

2. Consideration of Criminal Prosecution Against the Petitioner:
The court observed that the RBI considered the criminal case against the petitioner, which was stayed by the Supreme Court, while evaluating the application. The petitioner argued that the criminal case should not affect the company's authorization since it was against him personally and not the company. The court found merit in the contention that the criminal case should not have influenced the RBI's decision, but also noted the company's financial instability as a significant factor.

3. Jurisdiction and Maintainability of the Writ Petition:
The RBI raised preliminary objections regarding the maintainability of the writ petition, arguing that the foreign company should file the petition through an authorized representative, and the cause of action did not arise within the jurisdiction of the Madurai Bench of the High Court. The court agreed, stating that the petitioner had no authorization from the company to file the writ petition and that the events leading to the RBI's decision occurred in Mumbai, not within the court's jurisdiction.

4. Interim Relief and Appeal Process under Section 9 of PASSA:
The petitioner had filed an appeal under Section 9 of PASSA with the Central Government but simultaneously sought interim relief from the court. The court criticized this approach, emphasizing that interim relief should not be granted when an appeal is pending unless the appellate authority has the power to do so. The court cited several precedents to support this view, stating that the petitioner's attempt to secure an interim order was an abuse of the process of law.

Conclusion:
The court dismissed the writ petition, highlighting that the petitioner lacked the locus standi to file it and had engaged in forum shopping. The petition was deemed an abuse of the process of law, and the petitioner was ordered to pay costs to the RBI. The interim relief previously granted was vacated, and the appeal pending before the Central Government was left to be decided on its merits.