MADANLAL MANEKCHAND SHARMA Vs. RESERVE BANK OF INDIA

JUDGEMENT

(1.) This motion is to permit utilisation of frozen assets by investment in petitioner's concerns and their repatriation subject to the result of the petition.

(2.) Non-resident Indians (NRIs) have been doing their bit by the motherland by investing in this country monies earned elsewhere. To tap this important source for improving the country's economy, the Government of India has floated various schemes. Responding to these, petitioner an NRI with flourishing businesses in Hongkong and Dubai, brought to India sizeable sums of foreign exchange. Petitioner started two ventures in the name and style of (1) Supersonic Photo-Lab Pvt. Ltd. and (2) Ebasco Finance Co. Pvt. Ltd. Supersonic was in association with resident Indians while Ebasco was a 100% Non-Resident holding. Part of the foreign exchange brought in and accruals there from was deposited in accounts with Respondents 3 to 5 in what are styled as Foreign Currency Non-Resident (FCNR) and Non-Resident Exchange (NRE) accounts and NRE Monthly Income Certificates (MIC). Treated initially as an NRI, the petitioner was on 29 April 1988 intimated of the declaration to be treated as a resident as from January 21, 1983. This led to the institution of the petition. In this petition, petitioner claims a declaration of his being an NRI under Section 2(p)(i) of the Foreign Exchange Regulation Act, quashing of the contrary declaration and an injunction to restrain Respondents from treating his accounts as though he were ordinarily resident in this country. The petition has been admitted and interim relief freezing the assets on as is where is' basis granted.

(3.) By the motion petitioner complains of the frozen funds lying unutilised resulting in huge losses to him. To alleviate this state of unproductivity, petitioner seeks permission to loan the Indian Rupee equivalent of the unutilisable foreign exchange to Supersonic and Ebasco. The transaction will be at the rate of exchange prevailing on the date the loan is given and repatriable only if petitioner succeeds in the petition. Though not so recited in the motion, Mr. Bharucha for the petitioner further states that the advances to the two concerns will be interest free and next that his client will repatriate on succeeding in the petition at the rate of exchange prevailing not on the date of remittance but as on the day the advances are made.