2024 (8) TMI 404 - HC - FEMA

Adjudication Order imposing penalties under FEMA - Writ of Mandamus directing the respondent to foreclose the fixed deposit opened by the first respondent out of the money of the petitioners and direct the second respondent Bank, to release the money in favour of the petitioners - HELD THAT - At the time when the proceedings were pending against the petitioners before the Adjudicating Authority under Section 3 of the Foreign Exchange Management Act, 1999, the Accounts of the petitioners, in which, Fixed Deposit were made by them, were ordered to be freezed by the first respondent and the amounts were transferred to the account of the first respondent. Since the proceedings against the petitioners have been dropped vide the aforesaid Adjudication Order, we see no impediment in allowing this Writ Petition. The respondents are directed to take steps to release the amount in the Fixed Deposits to the petitioners, in accordance with the aforementioned Adjudication Order, as expeditiously as possible. WP allowed.

Summary

Issues:
1. Foreclosure of fixed deposit opened by the first respondent out of the money of the petitioners.
2. Transfer of frozen amounts to the account of the first respondent.
3. Adjudication Order imposing penalties under FEMA, 1999.
4. Release of fixed deposit amounts to the petitioners post dropping of proceedings.

Issue 1: Foreclosure of Fixed Deposit:
The Writ Petition sought a Writ of Mandamus to direct the respondent to foreclose the fixed deposit opened by the first respondent using the petitioners' money. The petitioners requested the second respondent Bank to release the money in their favor by considering their representation dated 06.02.2018. The frozen Fixed Deposit accounts were central to this issue.

Issue 2: Transfer of Frozen Amounts:
During the proceedings under the Foreign Exchange Management Act, 1999, the first respondent froze the accounts of the petitioners containing Fixed Deposits and transferred the amounts to their account. This action was taken while the Adjudicating Authority was dealing with the case against the petitioners, indicating a significant financial impact on the petitioners.

Issue 3: Adjudication Order and Penalties:
The Deputy Director, CEZO-II, as the Adjudicating Authority, issued an Adjudication Order imposing penalties under Section 13(1) of FEMA, 1999 on the involved parties. The penalties were detailed for each Noticee, specifying the contravened sections and the corresponding penalty amounts. Notably, certain charges were dropped, leading to the decision not to order confiscation of specific cash balances.

Issue 4: Release of Fixed Deposit Amounts:
Following the dropping of proceedings against the petitioners as per the Adjudication Order, the Writ Petition was allowed. The Court directed the respondents to release the amount in the Fixed Deposits to the petitioners promptly, aligning with the terms outlined in the Adjudication Order. The judgment emphasized the need for expeditious action in releasing the funds to the petitioners.

In conclusion, the judgment addressed multiple issues concerning the foreclosure of Fixed Deposits, the transfer of frozen amounts, the imposition of penalties under FEMA, 1999, and the subsequent release of funds to the petitioners post the dropping of proceedings. The detailed analysis of each issue provided clarity on the legal actions taken, the penalties imposed, and the directives for releasing the frozen amounts to the petitioners in line with the Adjudication Order.