DIRECTORATE OF ENFORCEMENT Vs. SUBHASH MULJIMAL GANDHI

JUDGEMENT

(1.) The challenge in this Intra-Court Appeal is to the judgment dated 4 th May, 2011 of the Learned Single Judge allowing W.P.(C) No. 4542/2010 preferred by the respondent and directing the appellant to pay to the respondent simple interest @ 6% per annum on the sum of Rs.7,75,000/- from the date of seizure i.e. 3 rd January, 2003 till 31 st December, 2007 and @9% per annum from 1 st January, 2008 till 1 st December, 2008. Notice of this appeal was issued and the operation of the judgment of the Learned Single Judge stayed. The counsels have been heard.

(2.) The writ petition was filed by the respondent pleading that the appellant had on 3 rd January, 2003 seized Rs. 7,75,000/- in Indian currency and foreign currency equivalent to Rs.96,000/- from the custody of the respondent and initiated inquiry under the provisions of Foreign Exchange Management Act 1999 (FEMA); that the adjudicating authority vide order dated 28 th June, 2004 forfeited the seized currency and also imposed a penalty of Rs.5 lacs on the respondent; that the respondent filed an appeal before the Appellate Tribunal for Foreign Exchange and which appeal was allowed vide order dated 17 th December, 2007 which order has attained finality but the seized currency was not returned inspite of repeated request and ultimately the Indian currency was released only on 1 st December, 2008 and foreign currency on 02.02.2009. The respondent thus averred in the writ petition that his monies having been wrongfully withheld by the appellant, he was entitled to interest @ 24% per annum thereon from the date of seizure i.e. 3 rd January, 2003 till return on 1 st December, 2008 and 02.02.2009 respectively. It was also the contention of the respondent that in fact under Rule 8 of the Foreign Exchange Management (Encashment of Draft, Cheque, Instrument and Payment of Interest) Rules, 2000 the return/refund should have been accompanied with interest @6% per annum.

(3.) It is apposite to at this stage set out Rule 8 which is as under:-