Dismissed writ petition; petitioners must appeal under FEMA within 3 weeks. No limitation objection allowed. AFTE may request records.

The court dismissed the writ petition, stating that the petitioners should have utilized the alternative remedy of appeal under FEMA. The petitioners were given three weeks to file an appeal before the AFTE, with no objection on the ground of limitation permitted. The court also specified that the AFTE could request the complete records from the original authority if needed.

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Issues Involved:
1. Applicability of Section 6(3)(j) of the Foreign Exchange Management Act (FEMA), 1999.
2. Requirement of Reserve Bank of India (RBI) permission for offering guarantees to non-residents.
3. Alleged violation of principles of natural justice.
4. Availability and appropriateness of alternative remedies.

Detailed Analysis:

1. Applicability of Section 6(3)(j) of FEMA:
The petitioners argued that Section 6(3)(j) of FEMA was not applicable as they did not stand as guarantors for any non-resident but provided a letter of comfort-guarantee to a resident of India. The court noted that the petitioners had entered into a Sale Purchase Agreement with a non-resident company in Mauritius and provided a letter of lien and guarantee to the State Bank of Mauritius. The court found that the transaction involved a non-resident and thus fell under the purview of Section 6(3)(j) of FEMA, which regulates guarantees involving non-residents.

2. Requirement of RBI Permission:
The petitioners contended that no RBI permission was necessary for offering guarantees to a non-resident under capital account transactions. The court observed that Section 6(3)(j) allows the RBI to regulate guarantees involving non-residents, and the petitioners failed to obtain the required permission. The court highlighted that the Foreign Exchange Management (Guarantees) Regulation, 2000, issued under Section 6(3)(j), required such permissions, and the petitioners' failure to obtain it constituted a contravention.

3. Alleged Violation of Principles of Natural Justice:
The petitioners claimed that the principles of natural justice were violated as they were not given a fair opportunity to present their case. The court noted that multiple opportunities for personal hearings were provided to the petitioners, which they did not avail. The court emphasized that the petitioners themselves requested the court to direct the respondent to consider their objections based on their written explanation, implying they waived further personal hearings. Therefore, the court found no violation of natural justice principles.

4. Availability and Appropriateness of Alternative Remedies:
The respondent argued that the petitioners had an alternative remedy by way of an appeal before the Appellate Tribunal for Foreign Exchange (AFTE) under Section 19 of FEMA. The court referred to the Supreme Court's ruling in Raj Kumar Shivhare's case, which emphasized that when a statutory forum is available, it should be utilized before invoking writ jurisdiction. The court held that the petitioners should have availed the statutory remedy of appeal and dismissed the writ petition on this ground.

Conclusion:
The court dismissed the writ petition, holding that the petitioners should have availed the alternative remedy of appeal provided under FEMA. The court granted the petitioners three weeks to file an appeal before the AFTE and directed that no objection on the ground of limitation should be raised by the appellate authority. The court also clarified that the AFTE could call for the entire records from the original authority if necessary.

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