2013 (9) TMI 834 - HC - FEMA

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 ... Bar in conveyance - Whether there can be a bar in conveying the property over which persons of 'Indian Origin' having rights and interests, in favour of an 'Indian Citizen' - Held that:- petitioner has not actually approached the second respondent and that there was no instance of refusing registration, as alleged by the petitioner. However, in view of the law declared, as above, this Court does not require any second thought to reiterate the same and to hold that the petitioner is entitled to have the reliefs sought for - In the said circumstance, there will be a direction to the second respondent to effect conveyance, as and when the relevant deed is produced, so as to have the desired relief, provided the document is otherwise in order and subject to satisfaction of the requirements under the Registration Act/Rules and satisfies the fees payable in this regard. So as to establish the identity of the petitioner, the petitioner shall produce the required materials, such as Passport or such other legally acceptable documents - Decided in favour of appellant. 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.