2022 (3) TMI 917 - HC - FEMA

Seizure orders - respondent No.2 has seized an amount of approximately 270 crores and has transferred a substantial portion of the said amount to its own bank account - HELD THAT - Several circumstances are narrated with regard to the hardship which the petitioner Company would face if an amount of 15, 35, 45, 317/- is not ordered to be released. Under these circumstances in order to keep the petitioner Company alive and to enable it to meet its day to day expenses like payment of salaries to its employees payment of taxes statutory dues and operational expenses etc. this Court in the interest of justice deems it appropriate to direct the respondent No.2 to release an amount of 15, 35, 45, 317/- (Rupees fifteen crores thirty five lakhs fourty five thousand three hundred and seventeen only) which is commensurate with the amount mentioned in paragraph 9 of the affidavit filed in support of I.A. No.1 of 2022 i.e. expenditure incurred by the petitioner company for the months of November and December 2021 and January 2022.

Issues:
Challenge to seizure orders under FEMA, Release of seized amount, Lack of Presiding Officer for Appellate Tribunal, Direction for release of funds to meet company expenses, Authority to determine merits of the case, Requirement to furnish details of fund utilization, Permission to credit amounts in frozen accounts.

Analysis:
1. Challenge to Seizure Orders under FEMA:
The petitioner, a finance company, filed a Writ Petition challenging the seizure orders issued by respondent No.2 under Section 37A of FEMA, seizing an amount of approximately 270 crores. The petitioner sought the quashing of the seizure orders and the release of the seized properties.

2. Release of Seized Amount:
The petitioner argued that the seized amount was crucial for the company's operations, as it had to manage daily expenses and pay salaries to its 500 employees. The petitioner requested the release of the seized amount to enable the company to continue its operations and meet its financial obligations.

3. Lack of Presiding Officer for Appellate Tribunal:
It was highlighted that there was no Presiding Officer appointed to the Appellate Tribunal constituted under FEMA to adjudicate the appeal that the petitioner intended to file against the seizure orders. This lack of adjudicatory authority added urgency to the need for the release of the seized amount.

4. Direction for Release of Funds to Meet Company Expenses:
Considering the financial strain on the petitioner company due to the seizure of funds, the Court directed respondent No.2 to release an amount of &8377;15,35,45,317 to the petitioner within a week. This direction aimed to ensure the company's survival and ability to cover expenses like salaries, taxes, and operational costs.

5. Authority to Determine Merits of the Case:
The Court refrained from expressing any opinion on the merits of the case, leaving all issues raised in the petition open for determination by the appropriate authority. This decision maintained the legal process intact for further examination of the seizure orders and related matters.

6. Requirement to Furnish Details of Fund Utilization:
As a condition for the release of the funds, the petitioner was instructed to provide details of how the amount would be utilized within two weeks of receiving it. This requirement aimed to ensure transparency and accountability in the use of the released funds.

7. Permission to Credit Amounts in Frozen Accounts:
Respondent No.2 clarified that there was no restriction on the petitioner company depositing the released amounts into its frozen or seized accounts. This permission allowed the company to manage the funds effectively within the legal constraints.

In conclusion, the Writ Petition was disposed of with the direction for the release of funds, leaving the determination of the case's merits to the appropriate authority. Miscellaneous petitions related to the case were closed, and no costs were imposed.

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