Indian-Origin Malaysian Can Transfer Property to Indian Citizen under FEMA Act

The Court held that there is no legal restriction on transferring property from persons of Indian Origin to Indian citizens under the Foreign Exchange Management Act. The petitioner, a Malaysian citizen of Indian origin, sought to convey property rights to an Indian citizen, which was initially rejected. The Court ruled in favor of the petitioner, directing the conveyance to proceed in accordance with relevant laws and upon submission of necessary documentation. This decision clarifies the permissibility of such transfers under FEMA regulations, emphasizing compliance with statutory requirements for valid property conveyances.

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Issues:
1. Whether there can be a bar in conveying the property over which persons of 'Indian Origin' having rights and interests, in favor of an 'Indian Citizen'.

Analysis:
The case revolves around the issue of whether there can be a restriction on conveying property from persons of 'Indian Origin' to an 'Indian Citizen' as per Regulations 4(d) and 4(e) of the Foreign Exchange Management (Acquisition and Transfer of Immovable property in India) Regulations, 2000. The petitioner, originally from Tirur Taluk in Malappuram district but now a Malaysian citizen, sought to release rights and interests in a property to the widow of his deceased brother, who was an Indian citizen. The petitioner, along with his brothers and nieces, decided to convey their interests in the property to the widow. However, the Registrar rejected the conveyance citing the assignors being foreign citizens.

The petitioner contended that there is no legal bar in transferring property from persons of Indian Origin to Indian citizens, citing a previous judgment in Ayisha Beebee vs. State of Kerala. Additionally, the petitioner referred to a reply from the RBI which clarified the provisions under FEMA regarding such transfers. The RBI's reply stated that transfers by Persons of Indian Origin (PIO) to Indian residents do not require specific approval from RBI, provided they conform to the provisions of FEMA. The RBI also highlighted that it is the responsibility of individuals to prove their residential status under FEMA if required by any authority.

The Court, after hearing the arguments, reiterated the legal position that there is no restriction on transferring property from persons of Indian Origin to Indian citizens as per FEMA provisions. The Court directed the second respondent to effect the conveyance upon production of the relevant deed, subject to compliance with the Registration Act/Rules and payment of applicable fees. The petitioner was instructed to provide necessary identification documents, such as a Passport, to establish identity. Ultimately, the writ petition was disposed of in favor of the petitioner, granting the relief sought.

In conclusion, the judgment clarifies that there is no legal impediment in conveying property from persons of Indian Origin to Indian citizens as long as the transfer complies with FEMA provisions. The Court's decision emphasizes the importance of adhering to the applicable laws and regulations governing such property transfers to ensure a lawful and valid conveyance process.

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