Court declares 1986 & 1988 orders illegal, orders refund with interest. Stay granted for appeals.

The court found the orders dated 8th September 1986 and 20th June 1988 to be illegal and lacking authority. The petitioner was entitled to a refund of the confiscated amount with 12% interest per annum. The court granted a four-week stay for potential appeals.

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Issues Involved:
1. Legality of the order dated 8th September 1986 under Section 33(2) of FERA.
2. Legality of the order of adjudication dated 20th June 1988 under Section 63 of FERA.
3. Violation of natural justice principles.
4. Applicability of Section 6(4) and 6(5) of FERA.
5. Jurisdiction of the High Court under Article 226 of the Constitution of India.
6. Entitlement to refund and interest.

Issue-wise Detailed Analysis:

1. Legality of the order dated 8th September 1986 under Section 33(2) of FERA:
The petitioner challenged the order dated 8th September 1986 issued by the Assistant Director, Enforcement (FERA), under Section 33(2) of the Foreign Exchange Regulations Act, 1973. The court found that the order was ex-facie illegal and without the authority of law. The amount of Rs. 17,00,057/- was confiscated without issuing a show-cause notice to the petitioner. The court held that Section 33(2) permitted only the requirement of furnishing information, not confiscation. The order was deemed ultra vires and was struck down for lacking the authority of law and for infringing the principles of natural justice.

2. Legality of the order of adjudication dated 20th June 1988 under Section 63 of FERA:
The second impugned order dated 20th June 1988 held the petitioner guilty of charges and imposed penalties and confiscation. The court noted that the main issue was that the FTS forms and A-2 forms were signed by the employees of the petitioner instead of the passengers themselves. The court concluded that this did not infringe any provisions of FERA since the foreign exchange was not misappropriated and was given to bona fide passengers. The court held that the signing of forms by employees was an inconsequential formality and did not amount to a contravention of Section 6(4) or 6(5) of FERA. Consequently, the order of adjudication was deemed illegal and was quashed.

3. Violation of natural justice principles:
The court observed that the order dated 8th September 1986 was passed without issuing a show-cause notice to the petitioner, violating the principles of natural justice. The petitioner was not given an opportunity to be heard, making the order invalid.

4. Applicability of Section 6(4) and 6(5) of FERA:
The court analyzed whether the petitioner's actions constituted a violation of Section 6(4) and 6(5) of FERA. It was concluded that the signing of forms by the petitioner's employees did not breach these sections. The court emphasized that not every procedural infraction leads to a violation of FERA unless it results in substantial harm or defalcation of foreign exchange.

5. Jurisdiction of the High Court under Article 226 of the Constitution of India:
The respondents argued that the petitioner had an alternate remedy of an appeal under Sections 52 and 54 of FERA. However, the court held that the rule requiring exhaustion of alternative remedies is a rule of convenience and discretion, not a rule of law. The court decided to exercise its jurisdiction under Article 226, as the impugned orders were found to be illegal and without jurisdiction.

6. Entitlement to refund and interest:
The court concluded that the petitioner was entitled to a refund of the amount confiscated along with interest at 12% per annum. The court rejected the argument that the amount belonged to the passengers, noting that the petitioner had advanced the amounts to the bank for the purchase of foreign exchange.

Conclusion:
Both the impugned orders dated 8th September 1986 and 20th June 1988 were found to be illegal and were struck down. The petitioner was entitled to a refund of the amount along with interest at 12% per annum. The court stayed its order for four weeks to allow the respondents to prefer an appeal.

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