2018 (2) TMI 1682 - HC - FEMA

Order of seizure in terms of provisions of Section 37A(1) of FEMA - foreign exchange worth USD 352258.25 suspected to be held outside India in contravention of Section 4 of FEMA - Held that - The petitioner filed an additional affidavit dated 08.01.2018 placing certain factual details regarding the amount, which was lying in the foreign Bank account in 2002. Along with the additional affidavit, the petitioner has enclosed copy of the letters of HSBC dated 07.03.2016, 25.11.2014, enclosing the information regarding transfer of the petitioner s banking operation etc. In the light of the material, which has been placed before this Court, it would be necessary for the competent authority to consider the same as it may impact the proceedings by going to the root of the matter. However, I do not wish to express anything on the merits of the matter except to state that the petitioner should be afforded one more opportunity and place their objections to the confirmation of the order of seizure before the competent authority. So far as the order of seizure is concerned, the petitioner cannot be stated to be aggrieved by such an order of seizure, as no amount has been withdrawn from the petitioner s Bank account. Since the order of seizure has already been confirmed by the order passed by the first respondent, the question of interfering with the same at this juncture does not arise. Writ Petition is allowed and the impugned order passed by the competent authority is set aside and the matter is remanded to the competent authority for fresh consideration

Summary

Issues:
Challenge to order of seizure under FEMA, retrospective application of law, violation of principles of natural justice, statutory remedy under FEMA, opportunity for personal hearing, duty to participate in proceedings, time-bound proceedings under FEMA, grant of adjournments, effective opportunity for representation, ex-parte proceedings, granting opportunity to petitioner, evidence of repatriation of funds, remand of matter for fresh consideration.

Analysis:
1. Challenge to Order of Seizure under FEMA:
- Two writ petitions were filed challenging the seizure order under FEMA. The first petition contested the Assistant Director's seizure order, while the second challenged the Commissioner of Customs' confirmation of the seizure.

2. Retrospective Application of Law:
- The petitioner argued that applying Section 37A of FEMA retrospectively violates Article 20(1) of the Indian Constitution. The petitioner contended that the order of seizure was unsustainable in law.

3. Violation of Principles of Natural Justice:
- The petitioner claimed a violation of principles of natural justice, as the order was ex-parte without affording an opportunity to defend. The petitioner sought another chance to present their case before the Commissioner (Appeals).

4. Statutory Remedy under FEMA:
- The Enforcement Directorate emphasized the statutory remedy available under FEMA, urging the petitioner to follow the proper appellate procedures instead of filing a writ petition directly.

5. Opportunity for Personal Hearing:
- The petitioner was granted multiple opportunities for personal hearings by the competent authority. However, the petitioner failed to participate effectively in the proceedings, leading to an ex-parte decision.

6. Duty to Participate in Proceedings:
- The court noted that the petitioner did not cooperate in the adjudication process despite opportunities provided. The absence of an interim stay did not exempt the petitioner from participating in the proceedings.

7. Grant of Adjournments and Effective Representation:
- While the competent authority granted adjournments, the court stressed the importance of effective representation in statutory proceedings, emphasizing that opportunities should not be mere formalities.

8. Granting Opportunity to Petitioner:
- The court granted another opportunity to the petitioner before the competent authority due to the historical nature of the case and the petitioner's submission of additional evidence regarding fund repatriation.

9. Remand of Matter for Fresh Consideration:
- The court set aside the order of the competent authority and remanded the matter for fresh consideration, directing the petitioner to present all relevant materials for review.

10. Continuation of Order of Seizure:
- The court allowed the continuation of the order of seizure while awaiting fresh consideration by the competent authority, as no funds had been withdrawn from the petitioner's account.

In conclusion, the court allowed one writ petition, remanding the matter for fresh consideration, while the other petition was disposed of with the order of seizure continuing. The judgment highlighted the importance of active participation in statutory proceedings, the need for effective representation, and the granting of opportunities for fair adjudication in matters involving legal complexities under FEMA.