2016 (11) TMI 1114 - HC - Money Laundering

Refund claim - interest on delayed payment - Held that - We are of the opinion that the sum of ₹ 10,00,000/- has been refunded to the petitioner during the pendency of this writ petition. The order passed by the Appellate Tribunal clearly records at para 14 that no penalty could have been imposed on the Bank. The penalty imposed on the Bank has been set aside. Once that penalty has been set aside, then, if no further proceedings were initiated by the respondents, the amount paid by the petitioner s predecessor should have been refunded to the petitioner within a reasonable time. That was not refunded, forcing the petitioner to file a writ petition. Even if we do not agree with Mr. Patil that the employees were parties to the Bank s Appeal and therefore the direction of the Appellate Tribunal must enure to the benefit of these officers, still, we find that the Union of India took considerable time to refund the amount of ₹ 10,00,000/-. That should have been done within a reasonable time. To that extent, there is merit in the submission of Mr. Patil that if that amount was not refundable at all and on the grounds now urged, namely, unjust enrichment, then, there was no occasion for the respondents to have honoured the Tribunal s order after such a considerable delay. The fact that ₹ 10,00,000/- have been refunded and in terms of the submissions made in para 7 of the affidavit in reply, then, the defence of unjust enrichment and the principle in that behalf is not applicable, nor the same has been invoked by the respondents. The steps to refund the amount of ₹ 10,00,000/- in pursuance of the Tribunal s order passed as early as on 21-12-2010 having been taken belatedly and lawful and legitimate sum or demand was held back, that we are of the opinion that principles of equity, fairness and justice would be served if we direct the respondents to pay interest on this sum of ₹ 10,00,000/- at the rate of 8% p.a. from 1-3-2015 till actual payment/realisation. The amount of interest at such rate be computed and the same be released in favour of the petitioner as expeditiously as possible and within a period of six weeks from the date of receipt of a copy of this order

Summary

Issues:
1. Refund of deposited amount under FEMA and PMLA with interest.
2. Appeal against penalty imposed by Special Director of Enforcement.
3. Refund of penalty amount post-appeal decision.
4. Delay in refund and claim for interest on the refunded amount.

Analysis:

1. The petitioner filed a petition seeking a direction for the refund of ?16,00,000 along with interest under FEMA and PMLA. The amount was deposited by the petitioner Bank in 1996 and a claim for interest at 18% per annum was made from 2010 till 2014, with further interest till realization.

2. The petitioner's predecessor, M/s. ANZ Grindlays Bank, was aggrieved by an order of the Special Director of Enforcement in 1996, imposing penalties on the bank and three officers. An appeal was filed, which was disposed of in 2010, setting aside the penalties imposed on the bank and officers.

3. The Director of Enforcement imposed penalties on the predecessor and three officers, which were paid. After the appeal decision, the petitioner sought a refund of the penalty amount. The court noted that the penalty on the bank was set aside, but there was no mention of the penalties on the officers. The petitioner claimed that the amount deposited covered the penalties of the officers as well.

4. The court found that a portion of the penalty amount had been refunded during the petition's pendency, but there was a delay in the refund process. Despite the disagreement on whether the officers were party to the appeal, the court directed the respondents to pay interest on the refunded amount at 8% per annum from 2015 till realization, citing principles of equity and justice.

5. The court emphasized the need for timely refund and criticized the delay in honoring the tribunal's order. It concluded that the defense of unjust enrichment was not applicable, and interest at 8% per annum was ordered to be paid on the refunded amount. The writ petition was disposed of with directions for the interest payment within a specified timeframe.