Madras HC Dismisses Malaysian National’s Plea Demanding Payment of Interest

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Smt. Sulaihar filed a Writ Petition under Article 226 of the Indian Constitution to issue the Writ of Mandamus. She sought to direct the respondents to pay 15% interest towards the value of UK Pounds 1800 of Rs. 32, 371/-. The matter was heard and decided upon by Hon’ble Justice Senthilkumar Ramamoorthy.

Facts of the Case

In 1974, the officers of Enforcement Directorate (ED) seized travellers cheques for UK Pounds 2000 from Smt. Sulaihar. The petitioner and his wife gave a statement that they had returned from Penang, Malaysia a month earlier.

It was at that time that they had brought travellers cheques of UK Pounds 2000 which had been declared to Customs Authority of arrival. They also said that the original travellers cheques were lost and were replaced by the foreign exchange dealer- Thomas Cook.
Pursuant to this seizure, an adjunction order was pronounced in 1997.

It imposed a penalty of Rs.3000/- in addition to the confiscation. The petitioner appealed before the Foreign Exchange Regulation Appellate Board (the Appellate Board). However, the Appellate Board confirmed the order of confiscation of UK Pounds 2000 but reduced the penalty to Rs.1000/-. 

The petitioners challenged the order of the Appellate Board and the Madras HC upheld the confiscation of UK Pounds 2000. However, it set aside the order of Foreign Exchange Regulation Act, 1973(FERA) to make the requisite declaration. Consequently, the seizure was held contrary to the provisions of FERA.

Therefore, the ED was directed to refund the value of 1800 pounds. This amount was refunded in 16.03.2000. However, no interest was paid on the sum of Rs.32,371/-, which represents the principal value of UK Pounds 1800 as on the date of seizure.

Arguments Before the Court

The Counsel for the Petitioner submitted that the Madras High Court directed the ED to refund the value of UK Pounds 1800 in the year 1999. The ED failed to carry out the order and also did not make an appeal, and thus, attained finality. Section 42(3) of FERA provides for the payment of interest at 6% per year in all cases other than cases of confiscation either under Section 63 of FERA or under the Customs Act, 1962. 

The learned Counsel maintained that the confiscation was set aside by this Court. Therefore, the statutory interest liability under Section 42(3) of FERA is triggered by that very fact. The Counsel further argued that even so, when a party makes the payment belatedly, s/he is liable to pay interest on that sum. The Counsel placed reliance upon cases such as LIC & Another v. G.V. Ranade (dead) by LRs. AIR 1990 SC 185; Northern Plastics Ltd v. Collector of Customs & Central Excise, (2000) 1 SCC 545; Satinder Singh & Ors. v. Umrao Sing& Ors., AIR 1961 SC 908; UoI v. Tata Chemicals (2014) 6 SCC 335.

The Counsel for the Respondent Enforcement Directorate (ED) submitted that the Petitioner is a Malaysian citizen and thus is not entitled to maintain the Writ Petition.

The Counsel also submitted that by the order of the Madras HC in 1992, the Court only ordered to refund the value of UK Pounds 1800 but did not direct the payment of interest on the same. 

If the Petitioners were so intent on receiving the interest, they should have requested for a modification of the said order or carried the matter in appeal. However, they did not do so. Accordingly, a separate writ petition for payment of interest is liable to be dismissed. 

The Counsel further argued that the confiscation was set aside in 1999. The statutory time limit of 30 days for declaring that the Petitioner is in the possession of foreign currency had not expired as on 16.08.1974 (i.e., the date of confiscation). Hence, the Petitioner is not entitled to the interest. To further substantiate his contentions, the counsel placed reliance upon C.Arasakumar alias C.A.Kumar v. Union of India, CDJ 1991 MHC 218 (Arasakumar); M/s.Dejero Logix Pvt. Ltd. v. Commissioner of Customs (Imports) Air Cargo, New Customs House near IGI Airport, New Delhi; M/s.Kalpana Glass Fibre Pvt Ltd. v. State of Orissa & others, CDJ 2012 Orissa HC 411; Suganmal v. State of Madhya Pradesh & others (1965) 16 STC 2398.

Court’s Observations

The Court noted that the adjunction order in 1977 upheld the confiscation. The Court further observed that this confiscation was set aside in 1999 on the grounds that the Petitioner was entitled to make a declaration that she was in possession of the said UK Pounds 1800 on or before 23.08.1974.

Therefore, the foreign currency should not have been seized on 16.08.1974. The ED was thus, rightly directed to refund the value of UK Pounds 1800 on the aforesaid grounds. 

The Court noted the Petitioner’s contention that as per Section 42(3) of FERA the Enforcement Directorate is under a statutory liability to pay interest at 6% per year. The Court further laid emphasis on one of the cases cited by the counsel for the ED- C.Arasakumar alias C.A.Kumar v. UoI.

The Court observed that the expression “such proceeds” in Section 42(3) refers to proceeds realized in terms of Section 42(1) of FERA, which are required to be kept in a separate account in terms of Section 42(2). 

The Court also noticed that the Petitioner had signed the claim bill for Rs.32,371/- without prejudice to her right to claim interest at 15% per year. The Court cited State of Maharashtra v. Digambar, (1995) 4 SCC 683 in the effect that the Petitioner did not demand the interest in 9 years, and had signed the bill having to contention demanding for payment of interest at such time. 

Court’s Order

The Court dismissed the Writ Petition in question on the grounds of statute of limitations as also, the Petitioner failed to ask for a modification of or challenge the order in 1999. 

Click here to read the judgment.


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