PARAMJIT KAUR V. UNION OF INDIA AND ORS.

CWP/3623/2008

AI Insights

Paramjit Kaur filed a petition against the Union of India seeking to quash an order that denied her interest on funds in her bank account, which had been blocked by the Directorate of Enforcement. The court had previously ordered the release of her account but allowed her to claim interest. The Directorate of Enforcement, however, rejected her claim for interest, stating that the funds were never seized or in their custody, but merely blocked for investigation purposes. The High Court upheld this decision, finding no grounds to award interest as the funds were not seized but only blocked, and interest had accrued in the account during this period.

• Counselvise Citation: [2008] 140 COUNSELVISE.COM (IT) 742464 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 12-03-2008
• Assessment Year: misc
• Other Referred Cases: C.W.P.No.2151 of 2007, CWP No.707 of 2008
• Laws Referred To: Foreign Exchange Management Act, 1999, Foreign Exchange Management Rules, 2000, Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: R K BAJAJ
• Keywords: Certiorari; Certiorari; Illegal seizure; Interest claim; Mandamus; Bank account blockage
• Section: 133(6); 37; 132(3)

Judgement Text

"CWP No.3623 of 2008 1 In the High Court for the States of Punjab and Haryana at Chandigarh … CWP No.3623 of 2008 Date of decision:12.3.2008 Paramjit Kaur .. Petitioner Versus Union of India Respondent Coram: Hon’ble Mr.Justice Satish Kumar Mittal Hon'ble Mr.Justice Rakesh Kumar Garg Present: Mr.R.K.Bajaj, Advocate for the Petitiioner. Rakesh Kumar Garg,J. This petition has been filed by the petitioner for the issuance of a writ in the nature of certiorari quashing the impugned order dated 22.2.2008 (Annexure P-8), whereby the application of the petitioner claiming interest at the rate of 6 % P.A. under Rule 8 of the Foreign Exchange Management Rules, 2000 has been rejected and further for the issuance of a direction in the nature of mandamus directing the respondents to pay the interest at the rate of 6 % P.A. under Rule 8 of the Foreign Exchange Management Rules, 2000 on the illegal seizure of the amount as per the orders of this Court passed in C.W.P.No.2151 of 2007 decided on 20.8.2007. The petitioner was having a saving fund account No.25854 maintained by her with Canara Bank, Football Chowk, Jalandhar City. The Directorate of Enforcement through its Assistant CWP No.3623 of 2008 2 Director issued direction to the Canara Bank that no withdrawal should be allowed from the account of the petitioner. The petitioner had alleged that the account had been illegally attached vide order dated 2.8.2005 merely on the basis of suspicion and therefore, she filed C.W.P.No.2151 of 2007 in this Court on the allegation that provisions of Section 37 of the Foreign Exchange Management Act, 1999 read with Section 132(3) and 133(6) of the Income Tax Act, 1961 were violated. The above said writ petition was disposed of vide judgment dated 20.8.2007 by this Court with a direction to the respondents to release her bank account. The petitioner was also given liberty to file appropriate application to claim interest from the date of attachment i.e., 2.8.2005 till the release of her account. The operative part of the judgment-dated 20.8.2007 passed in C.W.P.No.2151 of 2007 is reproduced as under: - “In view of the above, we dispose of the writ petition with a direction to the respondents to release her bank accounts on or before 27.8.2007. The petitioner is at liberty to file appropriate application to claim interest from the date of attachment i.e., 2.8.2005 till the release of her account. We further find that there was no justifiable reason for the respondents to proceed against the petitioner without any credible material or information. It is made clear that while releasing Saving Fund Account No.25854 belonging to the petitioner which is maintained with Canara Bank, Football Chowk, CWP No.3623 of 2008 3 Jalandhar, we should not be understood to have expressed any opinion with regard to the account belonging to Shri Kuldeep Singh, who is husband of the petitioner. The petitioner is entitled to her costs which are determined at Rs.10,000/-. The costs shall be initially paid by respondent No.4 and the same shall be recovered from the officer/official who may be found responsible after holding inquiry. The inquiry shall be completed within a period of three months from the date of receipt of copy of this order.” In pursuance of the said order passed by this Court, the petitioner filed application dated 29.8.2007 claiming interest at the rate of 6 % P.A. under Rule 8 of the Foreign Exchange Management Rules, 2000. When the said application was not decided, the petitioner filed CWP No.707 of 2008 which was disposed of vide order dated 17.1.2008 by this Court with a direction to Assistant Director, Directorate of Enforcement, Department of Revenue, New Delhi to consider and decide the application filed by the petitioner for payment of interest in terms of the earlier order dated 20.8.2007 passed by this Court in accordance with law within a period of one month by passing a speaking order. In pursuance of the order dated 17.1.2008 passed by this Court in CWP No.707 of 2008, the respondents after considering the claim of the petitioner for payment of interest at the rate of 6 % under Rule 8 of the Foreign Exchange Management Rules, 2000 on the CWP No.3623 of 2008 4 amount which was lying in the saving bank account for the period from 2.8.2005 to 27.8.2007 rejected the application filed by the petitioner observing that in the case of the petitioner, the amount remained in her bank account even after blocking of the said account and the amount lying in the said account never came into the custody/possession of the Directorate and therefore, she is not entitled to any interest. Learned counsel for the petitioner has argued that Rule 8 of the Foreign Exchange (Management) Rules, 2000 is applicable in the instant case as the seizure was made under Section 37 of the Foreign Exchange Management Act, 1999 read with Sections 132 (3) and 133(6) of the Income Tax Act, 1961 and the petitioner is entitled to the interest at the rate of 6 % for the period her amount lying in the bank account was blocked illegally. There is no force in the argument raised by the counsel for the petitioner. Rule 8 of the Foreign Exchange Management Rules, 2000 relied upon by the petitioner is reproduced as under:- “8(i) Where it is found after completion of the investigation that the Indian Currency seized under Section 37 of the Act is not involved in the contravention and is to be returned, the same shall be returned to such persons together with interest at the rate of 6% per annum from the date of seizure till the date of payment. 8(ii) Where it has been found during the course of adjudication that the seized Indian currency is not CWP No.3623 of 2008 5 relevant for such adjudication, the Adjudicating Authority may pass such order returning such Indian Currency together with interest at the rate of 6 % per annum to such person.” A perusal of the above said rule clearly shows that the said rule is applicable only in those cases where the Indian Currency is seized under Section 37 of the Act illegally. In that case if after completion of the investigation, it is found that the same was not involved in the contravention, such currency shall be returned with interest at the rate of 6 % P.A. from the date of seizure till the date of payment. Admittedly, in the present case, the amount of the petitioner remained in her bank account and it was never taken into possession/ custody by the respondent nor it was seized by the respondent-department and it was only blocked by the department of Revenue during the period of investigation. Again it is not disputed that during the period of blocking of this amount by the department, ihe interest accrued on this amount has been allowed in the account of the petitioner by the bank; therefore, no loss on this account has been caused to the petitioner. Thus we find no ground to interfere in the present writ petition, the same is hereby dismissed. (RAKESH KUMAR GARG) JUDGE March 12,2008 (SATISH KUMAR MITTAL) nk JUDGE "