Case Note & Summary
The petitioner, Chandru P. Jethwani, filed a writ petition before the Bombay High Court seeking the release of Indian currency amounting to Rs. 5.90 lakhs seized during a search by SIIB Customs on 21 March 1997 under the Foreign Exchange Regulation Act, 1973 (FERA). The adjudicating authority, by order dated 19 May 1998, confiscated foreign currencies and imposed a penalty of Rs. 1 lakh, but held that there was no evidence that the Indian currency represented proceeds of foreign currency and directed its release to the petitioner after obtaining a no-objection from the Income Tax authorities. The order attained finality on 4 July 1998. The Income Tax Officer (Investigation) issued a no-objection for release of Rs. 5.90 lakhs after adjustment of the penalty. Despite repeated representations by the petitioner on 3 August 2000, 25 February 2001, 8 January 2002, 25 September 2007, 5 November 2007, 22 February 2008, 5 February 2009, and 8 June 2009, the Enforcement Directorate delayed the release, citing the need for clearance from the Deputy Legal Adviser at New Delhi. The court found that the department had no justification to withhold the amount for over a decade after the order became final. The court held that the State cannot retain property without authority of law and that the delay was arbitrary. It directed the respondents to pay the petitioner Rs. 4.90 lakhs (after deducting the penalty of Rs. 1 lakh) with interest at 6% per annum from 4 July 1998 until the date of payment, within four weeks. The writ petition was allowed in those terms.
Headnote
A) Constitutional Law - Right to Property - Article 300A - Delay in Release of Seized Amount - The petitioner's Indian currency was ordered to be released by the adjudicating authority under FERA, but the Enforcement Directorate delayed compliance for over a decade without valid reason - Held that the State cannot retain property without authority of law and must compensate for unjustified delay (Paras 2-8). B) Foreign Exchange Regulation Act, 1973 - Section 63 - Adjudication Order - Finality and Implementation - The adjudication order dated 19 May 1998 attained finality on 4 July 1998, yet the Enforcement Directorate failed to release the Indian currency despite no objection from Income Tax authorities - Held that the order must be implemented promptly and the delay was arbitrary (Paras 2-5). C) Interest - Compensation for Delay - Unjust Enrichment - The court directed payment of interest at 6% per annum on the amount of Rs. 4.90 lakhs from 4 July 1998 until the date of payment, as the department's inaction caused undue hardship to the petitioner - Held that interest is necessary to prevent unjust enrichment of the State (Paras 6-8).
Issue of Consideration
Whether the Enforcement Directorate is justified in withholding the release of Indian currency seized under FERA after the adjudication order attained finality and whether the petitioner is entitled to interest for the period of delay.
Final Decision
The court allowed the writ petition and directed the respondents to pay the petitioner Rs. 4.90 lakhs (after deducting penalty of Rs. 1 lakh) with interest at 6% per annum from 4 July 1998 until the date of payment, within four weeks.
Law Points
- Delay in compliance with adjudication order
- Interest on delayed refund
- Unjust enrichment
- Enforcement Directorate's duty to implement final orders
