NADADUR VARADHAN Vs. DEPUTY DIRECTOR OF ENFORCEMENT

JUDGEMENT

(1.) THIS writ petition is filed for direction against the respondents to de-freeze the petitioner's N. R. I. Account maintained by the 4th respondent, State Bank of India, N. R. I. Branch, Chennai-600 002 and consequently to permit the petitioner to operate the said account.

(2.) THE petitioner who is an Indian origin, is a citizen of U. S. A. , living in the city of Santa Monica, California State for the past 20 years and he is a Management Consultant. According to him, he came to India in 1994, particularly to Chennai and during his visit he met his cousin one Sampath, a Chartered Accountant by profession, who was keen in promoting the game of Basketball in Chennai. The petitioner being interested in the said game, along with the said Sampath, floated a business by which the sponsorship of multinational companies was obtained for bringing professional teams from USA to play the game in various places in India, especially in Chennai at the newly constructed Stadium for Basket Ball at Nungambakkam and the petitioner also met one Dyaneswaran, Ex Officio President of the Madras Basket Ball Association for the promotion of the project. Since he requested the petitioner to donate some amount for construction of a new stadium, the petitioner opened an NRI Account with the 4th respondent. Thereafter, he borrowed loan to the tune of Rs. 30 lakhs from the 4th respondent bank and donated the same through a non-profit Trust called, Dr. Dharmambal Nambasivam Trust by way of fixed deposits held by him. Since the petitioner was in a financial crisis, the abovesaid Sampath and the petitioner had an arrangement by which the said Sampath had advanced some loan to him and based on the said arrangement, he borrowed moneys from the said Sampath through transfer from Sampath's account with the 4th respondent. He has made some repayments and it was by payment of cash the entire transactions were done through banking channels and there is no violation of Foreign Exchange Regulation Act,1973 (FERA) which stood in force at that time.

(3.) THE first respondent officials, at the instance of the second respondent started investigation into the conduct of the said Sampath and Dyaneswaran for certain violations of Foreign Exchange Regulation Act and they were prosecuted in the jurisdictional Court at Chennai. By letter dated 3. 2. 1997, the petitioner was directed to furnish certain particulars regarding payments made by the said Sampath on the petitioner's instructions. After the response from the petitioner, a memorandum dated 24. 3. 1997 was issued to the petitioner charging him under Section 9 (1) and 9 (d) of the Foreign Exchange Regulation Act. The matter was adjudicated and by an order dated 23. 6. 1997, a penalty of Rs. 40,000/- was imposed on the petitioner under Section 50 of the said Act and the penalty was also paid and as on date no proceeding is pending against him. At the beginning of the year 1996, the N. R. I. Account of the petitioner with the 4th respondent was frozen by the order of the first respondent. After the abovesaid proceedings against the petitioner under the Foreign Exchange Regulation Act were completed, he made many representations requesting the 1st respondent to lift the ban order in order to maintain the account with the 4th respondent, there is no response from the respondents. However, the 1st respondent by communication dated 4. 3. 1998, informed the petitioner that the proceedings against Dyaneswaran and Sampath were pending and the amount blocked in the account of the petitioner being used as a material object in the said case since it had nexus and inter-link with the said proceedings and in that view of the matter, the request of the petitioner to de-freeze the account was turned down. Hence, the petitioner has filed the present writ petition.