Delhi High Court
Harshad Kantilal Patel vs Union Of India & Others on 21 July, 2009
Author: Sanjiv Khanna
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 10268/2009
HARSHAD KANTILAL PATEL ... Petitioner
Through Mr. Sudhir Nandrajog, Sr. Adv. with
Mr. Manish Jain, Adv.
versus
UOI & ORS. ..... Respondent
Through Ms. Rajdipa Behru, Adv.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
ORDER
% 21.07.2009
C.M.No.8833/2009
Exemption allowed subject to all just exceptions.
W.P.(C) No.10268/2009
Counsel for the respondent states that she is ready for arguments
and as the issue involved is limited, the matter may be heard and disposed
of today itself. With the consent of the parties, the matter has been heard
and is being disposed of.
2. The petitioner, Mr. Harshad Kantilal Patel, who is about 65 years old,
has filed the present petition impugning the order dated 4th May, 2009
passed by Appellate Tribunal* for Foreign Exchange disposing of his
application for waiver of pre deposit of the penalty amount. The learned
Tribunal* has directed the petitioner to deposit 50 % of the penalty
amount in cash and submit an unconditional bank guarantee for the
remaining amount.
3. The allegations against the petitioner are that as an agent of non-
resident persons, he had let out a flat in Mumbai and had received Rs.65
lacs from the tenant towards interest free security deposit. It is stated that
*Modified by Order dated 28.09.2009
this amount was deposited in the account of the petitioner and there was
violation of Section 9(1)(b) and 9(a)(d) of the Foreign Exchange Regulation
Act, 1973 (FERA, for short). The alleged transaction pertains to year 1987.
4. By the adjudicating order dated 27th September, 1997, penalty of
Rs.32, 50,000/- was imposed on the petitioner. Penalty was also imposed
on the tenants. The petitioner has filed an appeal against the said order.
5. Counsel for the petitioner has relied upon proviso to Section 31 of
FERA and submits that the petitioner was entitled to acquire or transfer any
immovable property by way of lease for a period of upto 5 years without
permission. It is stated that Rs. 65 lacs were refunded to the tenants. The
alleged violation, if any, is technical and venial in nature, no malafides or
illegal transfer by way of Hawala is alleged. Moreover, the amount was
deposited in the bank account and was fully accounted for.
6. The petitioner it is stated has not been filing Income Tax returns as
he does not have taxable income and he is dependent upon his daughter,
who is earning. Counsel for the petitioner has drawn my attention to
statement of bank accounts and it is stated that the said documents were
filed before the Appellate Tribunal*.
7. It is stated that the petitioner has 4 immovable properties and the
said properties are in occupation of tenants and rent has been attached by
the Income Tax Department. He further states that the petitioner is residing
in the 5th property at Mumbai and in the said property he has 1/11th share.
He states that the said property is inherited.
8. The petitioner's first appeal against the adjudication order is pending
before Appellate Tribunal*. The alleged violation pertains to year 1987.
There is no evidence or material on record to show that the petitioner has
sufficient cash to pay the penalty amount of Rs. 32, 50,000/- or even 50 %
*Modified by Order dated 28.09.2009
thereof and furnish bank guarantee for the balance amount. The fact that
the petitioner does not have taxable income is not controverted and
denied. There is no evidence and material to the contrary. Even if levy of
penalty is legal, question of quantum has to be examined. It is not disputed
that the amount of Rs. 65 lacs was deposited in a bank account and
subsequently refunded to the tenant. There is no allegation of hawala.
Whether there was only a technical and venial breach and effect thereof
requires examination.
9. However, from the records it is seen that the petitioner had
purchased a LIC policy of Rs.2,66,665/- in the year 2004 and also made
investment of Rs. 1 lac in an FDR.
10. Keeping all these aspects in mind, it is directed that the petitioner
will deposit 10% of penalty amount and give an undertaking before the
Appellate Tribunal* that he shall not dispose of/sell/create any charge on
the immovable properties, without permission of the Appellate Tribunal*.
In case attachment order passed by the Income Tax Department is
withdrawn, the petitioner shall inform the Appellate Tribunal, who will be
at liberty to amend the order. 10 % of the penalty amount will be deposited
in two equal installments. The first installment will be paid on or before 24th
August, 2009 and the second installment will be paid on or before 14th
September, 2009. The impugned order is modified to the extent indicated
above.
The petition stands disposed of. Observations made in this order are
*Modified by Order dated 28.09.2009
for disposal of writ petition and learned Tribunal* will decide the appeal
without being influenced by the said observations.
Dasti to both parties.
SANJIV KHANNA, J.
JULY 21, 2009
NA/P
*Modified by Order dated 28.09.2009
