Resident status for returning Indian national justified redesignation of NRE account under foreign exchange rules

A returning Indian national who had indicated by his own correspondence that he was exploring resettlement in India, while leaving open the possibility of a later overseas assignment, was treated as resident because the surrounding conduct showed an intended stay for an uncertain period. On that basis, Section 2(p)(ii)(c) of the Foreign Exchange Regulation Act, 1973, read with Regulation A.15 of the Exchange Control Manual, required redesignation of his Non-Resident External account as a resident account. The redesignation was therefore valid.

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Issues: Whether the petitioner, on returning to India, was rightly treated as a resident for the purpose of redesignating his Non-Resident External account and related facilities.

Analysis: The petitioner's own correspondence showed that he had returned to India to explore resettlement and had kept open the possibility of leaving for an overseas assignment later. His subsequent letter to the company in which he held investments expressly stated that he had returned to India and requested that correspondence be made directly with him as a resident. On this material, the surrounding circumstances and conduct supported the conclusion that his stay in India was intended to be for an uncertain period. Under Section 2(p)(ii)(c) of the Foreign Exchange Regulation Act, 1973, that status attracted Regulation A.15 of the Exchange Control Manual, under which the Non-Resident External account had to be redesignated as a resident account.

Conclusion: The petitioner was rightly treated as a resident, and the redesignation of his account was valid.

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