Inheritance rights under foreign exchange law survive unless the statute clearly makes acquisition void or prohibited.

Section 31 of the Foreign Exchange Regulation Act, 1973 was construed as a regulatory restriction backed by penalty, not as a provision that by itself extinguished civil title or invalidated an inherited share. The Court held that the plaintiffs' claim through inheritance was not defeated by the statutory bar and that the Reserve Bank of India general permission for acquisition of immovable property by purchase or inheritance applied, since the cause of action arose after the notification came into force. The trial court's decree was upheld as correct in law and on evidence.

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Issues: (i) Whether section 31 of the Foreign Exchange Regulation Act, 1973 barred the plaintiffs from claiming and holding the suit property so as to defeat their suit for partition and possession; (ii) Whether the Reserve Bank of India notification granting general permission to acquire immovable property by purchase or inheritance entitled the plaintiffs to relief.

Issue (i): Whether section 31 of the Foreign Exchange Regulation Act, 1973 barred the plaintiffs from claiming and holding the suit property so as to defeat their suit for partition and possession.

Analysis: The restriction in section 31 was construed in the light of the preamble of the Act and the penalty provision in section 50. The Act was treated as one enacted for conservation and proper utilization of foreign exchange resources, and the mere existence of a penalty provision was held not to mean that every contravention destroyed civil title or made the underlying claim void. The Court accepted the line of authority that a provision imposing penalty, without declaring the transaction illegal or void, does not necessarily prohibit the act itself. It further held that the plaintiffs were claiming through inheritance, and the statutory restriction on acquiring or holding immovable property could not be stretched to extinguish an inherited share.

Conclusion: Section 31 of the Foreign Exchange Regulation Act, 1973 did not bar the plaintiffs' claim based on inheritance, and their entitlement to the suit property was not lost by operation of law.

Issue (ii): Whether the Reserve Bank of India notification granting general permission to acquire immovable property by purchase or inheritance entitled the plaintiffs to relief.

Analysis: The notification issued under section 31 was treated as granting general permission to foreign citizens of Indian origin to acquire immovable property by purchase or inheritance, subject to the stated exclusions. The Court held that the plaintiffs could take benefit of the notification because the cause of action arose after the notification came into force, and the claim did not depend on giving the notification retrospective effect.

Conclusion: The plaintiffs were entitled to the benefit of the Reserve Bank of India notification.

Final Conclusion: The trial court's decree was found to be correct in law and on evidence, and the appeal failed.

Ratio Decidendi: A statutory penalty provision restricting acquisition or holding of property does not, by itself, extinguish title or invalidate a claim based on inheritance unless the statute clearly makes the transaction void or prohibited.

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