HIGH COURT FOR THE STATE OF TELANGANA: AT HYDERABAD

FRIDAY, THE TWENTY FIFTH DAY OF FEBRUARY TWO THOUSAND AND TWENTY TWO

PRESENT

THE HON'BLE THE CHIEF JUSTICE SATISH CHANDRA SHARMA AND THE HON'BLE SRI JUSTICE ABHINAND KUMAR SHAVILI

WRIT APPEAL NO: 87 OF 2022

Writ Appeal under clause 15 of the Letters Patent Appeal preferred against the order dated 11/02/2022 passed in W.P.No.36212 of 2021, on the file of the High Court.

Between:

Directorate of Enforcement, Represented by Joint Director, Hyderabad Zonal Office 3 Floor Shakar Bhawan, Basheerbagh Hyderabad 500004

...Appellant/Respondent No.2

AND

1. P C Financial Services Private Limited, having its registered office at Building RZ2 Pole No 3 G/F Kapashera Near HDFC Bank New Delhi 110 037 Represented by its Authorised Signatory Ms Anjali Agarwal also at Plot No 177, Udyog Vihar-1 Gurugram Haryana 122016

...Respondent No.1/Petitioner

2. Union of India, Ministry of Finance Department of Financial Services Road No.46 North Block, New Delhi 11001

...Respondent No.2/Respondent No.1

3. Commissioner of Customs, through Commissioner of Customs Appeals I Chennai VII Commissionerate Air Cargo Complex Meenambakkam Chennai 600027

...Respondent No.3/Respondent No.3

4. Mr.Raghuvir Gakhar, S/o.Surinder Kumar Gakhar, Resident of Flat No.B103 Plot No.17, Sector 7, Dwarka Siddhartha Apartments, South West Delhi, Delhi

...Respondent No.4/Proforma Respondent No.4

IA NO: 1 OF 2022

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend the operation of the order dated 11/02/2022 in WP No.36212 of 2021

passed by the learned single Judge of this Hon'ble Court pending disposal of WA.

Counsel for the Appellant: M/s. ANJALI AGARWAL, SC FOR ENFORCEMENT DIRECTORATE

Counsel for the Respondent No.1: SRI SHIREEN SETHNA BARIA

Counsel for the Respondent No.2: SRI N.RAJESWAR RAO, Asst.Sol.General

Counsel for the Respondent No.3: SRI GANDI PRAVEEN KUMAR, SC for CG

The Court delivered the following:

THE HON'BI,E THE CHIEF JUSTICE SATISH CHANDRA SHARMA AND THE HON'BLE SRI JUSTICE ABHINAI{D SHAVILI KI'

WRIT APPEAL No. 87 of 2022

JUDGMENT: Per the Hon'bte the Chief Justice Satish Ctwndm Sturma)

The present writ appeal is arising out of an order dated 1L.O2.2O22 passed by the learned Single Judge in W.P.No.36212 ot 2021.

The respondent No.1 before this Court (writ petitioner), being aggrieved by the action initiated by the appellant herein under the Foreign Exchange Management Act, 1 999 (for short, ',the Act,,), has preferred the writ petition challenging the legality and validity of the seizure orders dated 26.O8.2021, 30.O9.202I and 15.12.2021, by which a sum of Rs.270.00 crores has been seized. The prayer made in the writ petition reads as under:_

'For the reasons stated in the accompalying affidavit prayed that this Hon'ble Court may pleased to issue a Writ of certiorari, or any other appropriate writ, order or direction for quashing the Impugned Seizure Order No.O 1 / 202 1 bearing No.F.No.T_3/HyZ O / ^TS / 2O2 ¹

dat:d 26 August 2021 read with Order bearing No. t.No.T-3/HYZOl75l2O2l dated 12 Octobe:- 2021, Sei: ure Order No.O2/2O21 bearing no.T-3lhYZO175/2O21 dated 30 September, 2O2l; and Seiz rre Order No.03/2021 bearing no.T-3lH(ZO/75/2O21 dated 15 December,202I passed by the Respondent No.2 as being illegal arbitrary, uncr nstitutiona-l alld destructive of the Petitioner's fund rmental rights; and restrain the Respondents, their servi nts and agents and a1l persons acting on their beha f from taking any coercive action in furtherance of the tmpugned Seizure Order no.Ol /2021 bearing no.F. {o.T-3/fryZO 175/2021 dated 26 August 2021 as amer: 1ed by letter bearing no.T-3/l{YZO /7512021 dated 12 O:tober 2021; Seizure Order No.02l2021 bearing ns.T- t /I{YZO /75 /2021 dated 30 September 2O2l and Seizu e order No.O3/2O21 bearing no.T-3llff.',O l75l2O2l dated 15 December, 2021 against the Petitic 1er, its Directors, employees etc., during the pende rcy of the present Writ Petition; and/or pass any such 1 lrther Order{s) that this Hon'ble Court deer:rs fit in the acts and circumstances of this case."

Durin 3 the pendency of the writ petition, an order was passe( on 04 .O2.2O22 by the competent authority under Sect cn 37 A(2\ of the Act affirming the orders of seizure anc the order dated O4.O2.2O22 has not been chalienged )y amending the writ petition. The learned Single Judgt has taken a humanitarian view in the matter

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by directing release of Rs.15,35,45,3L7 /- while disposing of the writ petition.

It has been argued by the learned counsel appearing for respondent No.1/writ petitioner that earlier also a sum of Rs.9.68 crores was reieased for payment of salary and other dues and a utilization certificate was also frled. He has stated that the order of release of Rs.15,35,45,3IT lhas been passed to ensure that salary is paid to the employees of the company.

The Officer present in the Court, Sri Ahbishek Goyal, IPS, appearing for the appellant has informed this Court that at no point of time such an amount was released by the Enforcement Directorate (ED) and, in fact, the aforesaid amount of Rs.9.68 crores was never seized by the ED. Therefore, the question of releasing the same does not arise. He has categorically stated that not a single rupee has been released in the matter so far out of Rs.270,00 crores attached by the ED. It has been further clarilied that the amount of Rs.9.6g crores was lying in the bank ' account of the respondent No.l/writ petitioner and the

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bank wr s permitted by the ED to disburse t he aforesaid amount. He has further stated that it is not il case where the amol mt was seized and later on released b1' the ED'

Tht facts of the case reveal that before t]le leamed Single J-rdge, though a prayer for quashment of seizure orders drlted 26.08.2021,30'Og'2O2L and 15'12'2021 was made, a n interlocutory appiication was preferred for release o'Rs.15,35,45,317 l- and the learned Single Judge has alloved the application The writ petition itself has been disl osed of by the impugned orcler dated I 1'O2'2O22'

In he considered opinion of this Court' once the seizure , ,rders were not set aside and no statutory provision was brought to the notice of the learned Single Judge for release of such amount and the seizure orders have bee r affirmed by the competent authorilv under Section 3' 'A(2) of the Act, no such provisional release could have beer: ordered by disposing of the writ petitron itself'

Lear ned counsel for the Union of India has also brought to the notice of this Court the press release issued by the Rt serve Bank of lndia dated 24'02'2022 and the

same reflects that even the banking licence of the respondent No. 1/writ petitioner has been cancelled. However, as this Court is not dealing with the cancellation of licence, no comment has been offered in respect of such cancellation. Lcarned counsel for the respondent No.l/writ petitioner has stated that he does not have ^a copy of the aforesaid order and he is not aware of the same.

In the present case, as already stated, now an order has been passed on O4.O2.2O22 by the competent authority under Section 37A(2) ofthe Act.

Section 37A ofthe Act reads as under:-

"37A. Special provlsions relating to assets held outside India in contravention of section 4.-(1) Upon receipt of aly information or otherwise, if the Authorised Ofhcer prescribed by the Centra.l Government has reason to believe that aly foreign exchange, foreign security, or any immovable property, situated outside lndia, is suspected to have been held in contravenlion of section 4, he may after recording the reasons in rvriting, by an order, seize va_lue equivalent, situated within India, ol such loreign exchange, foreign secu rity or immovable property:

)

I

Provided that no such seizure shall be made in case where the aggregate value of such foreign exch urge, foreign security or any immovable property, situa :ed outside India, is less than the value as may be pres< ribed.

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(2) The order of seizure along with relevant mate. ial sha-ll be placed before the Competent Authority, appoi rted by the Centra.l Govemment, who shall be an office not below the rartk of Joint Secretarv to the Gover lment of India by the Authorised Officer within a perior of thirty days from the date of strch seizure,

(3) The Competent Authority shall dispose of the petitic r within a period of one hundred eighty davs lrorn the di te of seizure by either conlirming or by sotting aside ;uch order, after giving an opportunity ol i:eing heard to the representatives of the Directorate of Enforc :ment and the aggrieved person.

Txplanation.--While compr-rting the period of one hundrt d eighty days, the period of stay granted by court shall b : excluded and a further period of at least thirry days sl all be granted from t}re date of communication of vacatio L of such stay order.

( l) The order of the Competent Authority confirm ng seizure of equivalent asset shall continue till the disl osal of adjudication proceedings and thereafter, the Ad udicating Authority sha1l pass appropriate directior s in the adjudication order with regard to further rction as regards the seizure made under subsection I I):

P. ovided that if, at any stage of the proceedings under tl is Act, the aggrieved person discloses the fact of such for:ign exchange, foreign security or immovable

property a-rtd brings back the same into India, then the Competent Authority or the Adjudicating Authority, as the case may be, on receipt of an application in this regard from the aggrieved person, and after affording an opportunity of being heard to the aggrieved person and representatives of the Directorate of Enforcement, shall pass an appropriate order as it deems fit, including setting aside of the seizure made under sub_section (1).

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(5) Any person aggrieved by any order passed by the Competent Authority may prefer an appeal to the Appellate Tribunal.

(6) Nothing conrained in section 1S shall apply ro this section. "

The aforesaid statutory provision provides for ^a remedy of appeal and therefore, as now an order dated 04.O2.2022 is in existence, the respondent No.1/writ petitioner shall certainly be free to prefer an appeal or to avail the other remedies available under the law.

Resultantly, the order passed by the learned Single Judge is set aside and the writ appeal stands allowed.

It is needless to mention that this Court has not expressed any opinion on the merits of the case and a1l the 'rights and contentions of the parties are left open.

The miscellaneous applications pending, if any, shall

stand closed. There shall be no order as to costs.

SD/-K.SRINIVASA RAO JOINT REGISTRAR

//TRUE COPY//

SECTION OFFICER

$\bigcirc$

To.

• 1. The Secretary, Union of India, Ministry of Finance Department of Financial Services, Roac No.46, North Block, New Delhi 11001
• 2. The Commissioner of Customs, Appeals I Chennai VII Commissionerate AIR Cargo Complex, Meenambakkam, Chennai 600027
• 3. One CC to M/s ANJALI AGARWAL, SC for ED [OPUC]
• 4. One CC to SRI SHIREEN SETHNA BARIA, Advocate [OPUC]
• 5. One CC to SRI N.RAJESWAR RAO, Asst.Sol.General [OPUC]
• 6. One CC to SRI GANDI PRAVEEN KUMAR, SC for Central Govt. [OPUC]
• 7. Two C.D. Copies.
• 8. One Spare Cop /.

$\mathbb{F}^{\mathsf{MRC}}$

HIGH COURT

DATED: 25/02/2022

JUDGMENT WA.No.87 of 2022

ALLOWING THE WRIT APPEAL WITHOUT COSTS.