1991 (6) TMI 255 - HC - Indian Laws

Summary

Issues Involved:
1. Entitlement to interest on the seized amount and penalty under Section 42(3) of the Foreign Exchange Regulation Act, 1973.
2. Relief for delayed payment of the refunded amount.

Detailed Analysis:

Issue 1: Entitlement to Interest on Seized Amount and Penalty

The petitioner sought interest at 6% per annum on Rs. 29,176 seized on 25-4-1970 and Rs. 10,000 collected as penalty, from the date of collection until 21-12-1984, under Section 42(3) of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as 'the Act'). Additionally, the petitioner claimed interest at 15% per annum on Rs. 68,258 from 21-12-1984 until the date of payment.

The respondent argued that Section 42 of the Act pertains only to drafts, cheques, travelers' cheques, or other instruments, not to currency notes. The respondent contended that the object of Section 42 is to avoid drafts, cheques, travelers' cheques, and other instruments from becoming invalid or stale.

The court examined the language of Section 42 and concluded that it does not support the petitioner's claim. Section 42 deals specifically with drafts, cheques, travelers' cheques, and other instruments, not currency notes. Section 42(3) provides for the payment of interest only on proceeds realized from such instruments, not on currency notes. Therefore, the petitioner is not entitled to interest under Section 42(3) of the Act on the seized amount of Rs. 29,176 and the penalty amount collected.

Furthermore, the judgment in C.M.A. No. 409 of 1980, which directed the refund of the confiscated amount and penalty, did not provide for interest. The petitioner did not claim interest in that appeal, and the judgment became final without any provision for interest. Consequently, the petitioner cannot now claim interest through a separate writ petition.

Issue 2: Relief for Delayed Payment of the Refunded Amount

The court then addressed whether the respondent was justified in withholding the payment ordered to be refunded by the judgment in C.M.A. No. 409 of 1980 until 21-12-1987. The respondent argued that the delay was due to the filing of a Special Leave Petition (SLP) before the Supreme Court, which was dismissed on 7-9-1987. The respondent refunded the amount on 21-12-1987.

The court held that the respondent was under an obligation to refund the amount within a reasonable time after the judgment in C.M.A. No. 409 of 1980. The filing of the SLP did not justify withholding the payment, especially since no stay order was obtained from the Supreme Court. The respondent could have taken sufficient securities from the petitioner to safeguard the department's interest. The delay of three years was deemed unauthorized, and the respondent was liable to pay interest on the refunded amount.

The court directed the respondent to pay interest at 12% per annum on Rs. 39,176 (Rs. 29,176 seized amount + Rs. 10,000 penalty) for the period from 21-12-1984 to 21-12-1987.

Conclusion:
The writ petition was partly allowed. The respondent was directed to pay the petitioner interest at 12% per annum on Rs. 39,176 for the period of three years from 21-12-1984 to 21-12-1987, within three months from the date of receipt of the order. The petition was dismissed in other respects, with no order as to costs.