2012 (7) TMI 1130 - HC - FEMA

Summary

Issues Involved:
1. Whether the plaintiff is a permanent resident of Singapore and if so, whether he should be non-suited u/s Foreign Exchange Regulation Act.
2. Whether the two lease deeds relied upon by the plaintiff have been acted upon and are valid.
3. Whether the plaintiff is in possession and enjoyment of the suit property as claimed.
4. Whether the suit is bad for mis-joinder of parties.

Summary:

Issue 1: Plaintiff's Residency and Foreign Exchange Regulation Act
The trial court framed the issue of whether the plaintiff, being a permanent resident of Singapore, should be non-suited u/s Foreign Exchange Regulation Act. However, this issue was not significantly addressed in the final judgment.

Issue 2: Validity and Execution of Lease Deeds
The trial court found Exs.A1 and A2 lease deeds to be true, valid, and acted upon, establishing that Thirunavukkarasu was put in possession and enjoyment of the suit property. The lower appellate court upheld this finding, confirming the validity of the lease deeds despite the defendants' challenge based on Section 36 of the Indian Trust Act and Section 23 of the Indian Contract Act. The court also held that the lease deeds did not require prior permission from the Reserve Bank of India u/s 31 of the Foreign Exchange Regulation Act, as the violation of FERA only attracts penal provisions and does not nullify the transfer.

Issue 3: Plaintiff's Possession and Enjoyment of the Suit Property
The trial court dismissed the suit, finding that the plaintiff failed to prove his possession and enjoyment of the suit property based on Ex.A3 family arrangement, which was not stamped or registered. The lower appellate court reversed this finding, relying on the judgment in O.S. No. 274 of 1995 and accepting the plaintiff's claim of possession. However, the High Court found this reliance erroneous and held that Ex.A3 could not be used to prove possession as it was inadmissible for establishing right, title, or ownership. The court concluded that the plaintiff failed to prove his possession and enjoyment of the suit property.

Issue 4: Mis-joinder of Parties
This issue was not significantly addressed in the final judgment.

Conclusion:
The High Court allowed the second appeal, setting aside the judgment and decree of the lower appellate court and restoring the judgment and decree of the trial court, thereby dismissing the plaintiff's suit for permanent injunction.