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2022 (6) TMI 1043 - HC - FEMAForeign Exchange Regulatory Appellate Board confirming the order passed by the Assistant Director imposing penalty and confiscating as per section 63 of the Foreign Exchange Regulation Act, 1973 - HELD THAT - Though the Appellant may be right in insisting on compliance of the order of this Court as it is and it is because of the pendency of the litigation that the Appellant is agreeable for receipt of the amount in Indian rupees, the Appellant cannot be penalized but must be compensated in fair manner. Accordingly, we direct that the order passed by this Court be complied with by the Enforcement Directorate within a period of eight weeks, with a clarification that the amount of US 1,300 should be converted in Indian rupees as per the rate prevailing as on today i.e. 14 June 2022 and be paid to the Appellant within a period of eight weeks along with interest. We place the responsibility of compliance with this order on the Assistant Director, Enforcement Directorate, the Respondent No.2 and if the order is not complied within a period of eight weeks as above, the Court may take serious view of non-compliance. As regards the claim of interest is concerned, it is the contention of the Enforcement Directorate that since the Department had offered to return the amount immediately in Indian rupees, interest need not be imposed. The order dated 30 September 2010 stipulates 10% interest. Department has not followed the procedure under section 42(4) of the Act and has taken unilateral steps. The approach of the Enforcement Directorate is to keep the application pending. In the circumstances, we do not propose to deviate from the rate of interest specified in the order dated 30 September 2010.
Issues:
1. Modification of the order dated 30 September 2010 passed by the Division Bench. 2. Interpretation of section 42 of the Foreign Exchange Regulation Act, 1973 regarding the return of foreign currency. 3. Compliance with the court order by the Enforcement Directorate. 4. Conversion of US$ 1,300 to Indian rupees and payment to the Appellant. 5. Claim of interest on the converted amount. Analysis: 1. The civil application sought modification of the order dated 30 September 2010, which allowed FERA Appeal No.86/2006 filed by the Appellant. The Division Bench found the impugned orders unsustainable and directed the Enforcement Directorate to return US$ 1,300 to the Appellant within eight weeks. Subsequently, the Enforcement Directorate filed an application seeking a clarification to return the amount in Indian rupees. 2. The Enforcement Directorate argued that as per section 42 of the Act, foreign currency should be encashed, and they did not have US dollars to return. The Appellant, however, referred to a previous case where foreign currency was directed to be returned as is. The Court noted the absence of specific directions regarding the return of seized foreign currency in rupees, emphasizing the Division Bench's clear direction to return foreign exchange, i.e., US$ 1,300. 3. Despite the 2010 order, the Enforcement Directorate delayed compliance, prompting the Court to issue a notice for non-attendance. The Court emphasized the need for timely compliance and directed the Enforcement Directorate to convert US$ 1,300 to Indian rupees at the prevailing rate and pay the Appellant within eight weeks, holding the Assistant Director responsible for compliance. 4. The Court addressed the issue of interest, with the Enforcement Directorate arguing against imposing interest since they offered immediate payment in Indian rupees. However, the Court maintained the 10% interest specified in the 2010 order due to the Directorate's unilateral actions and pending application, emphasizing adherence to the original order. 5. In conclusion, the Court directed the Enforcement Directorate to comply with the 2010 order within eight weeks, converting US$ 1,300 to Indian rupees at the prevailing rate and paying the Appellant with interest. The Court warned of consequences for noncompliance and disposed of the civil application accordingly.
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