Bombay High Court Sets Aside Appellate Tribunal’s Order and Orders Refund of Seized Amount in Landmark FERA Case

In a significant judgment, the Bombay High Court, comprising of Justices G.S. KULKARNI and RAJESH .S. PATIL, has set aside the Appellate Tribunal’s order dated 24^th March 2004 in a case related to the Foreign Exchange Regulation Act, 1973 (FERA). The court also directed the respondent to refund an amount of Rs.1,48,000/- that was seized from the petitioner’s cloth store on 12^th May 1988.

The case, filed as Writ Petition No.8148 of 2004, involved a series of events where officers of the Enforcement Directorate (E.D.) had raided the petitioner’s store and seized cash, leading to the issuance of Show Cause Notices alleging contravention of FERA provisions. The petitioner had appealed the first Show Cause Notice, and the Appellate Board ruled in his favor, setting it aside and ordering the refund of a penalty amount.

However, the E.D. did not desist and issued a second Show Cause Notice, which the petitioner contested, denying any violation of FERA and asserting that no evidence supported the allegations. Subsequently, the E.D. imposed a penalty under Section 9(1)(d) r/w Section 64(2) of FERA.

The petitioner appealed to the FEMA Appellate Tribunal but was unable to attend the hearing due to financial constraints, a fact duly informed to the tribunal. Despite this, the tribunal passed the impugned order in the petitioner’s absence.

The High Court observed that the E.D.’s approach in issuing a second Show Cause Notice after the first one was set aside was unjust and lacked substantial evidence to prove the petitioner’s guilt. The court held that the petitioner had been deprived of the seized amount without any valid basis and that there was no case made out for holding him guilty of any violations.

In its judgment, the High Court stated, “This is a clear case where the Petitioner appears to have been deprived of his amount of Rs.1,48,000/- without authority of law on a totally untenable basis.” The court found the Appellate Tribunal’s order to be flawed and allowed the writ petition, setting it aside.

Justice Rajesh S. Patil, while pronouncing the judgment, said, “The Petitioner was not given a fair opportunity to defend himself, and the impugned Order was passed in his absence. The petitioner’s inability to attend the hearing due to financial constraints was duly communicated, yet the tribunal proceeded without him.”

The High Court ordered the respondent to refund the seized amount of Rs.1,48,000/- along with simple interest at the rate of 6% per annum from the date of seizure. The court emphasized that the petitioner’s legitimate entitlement to the amount could not be withheld without proper authority.

 Date of Decision: 21st July 2023                           

Shri Abdul vs The Union of India

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