Court Orders Refund with Interest for Seized Amount

The court allowed the writ petition, directing the respondent to refund the withheld interest and pay interest on the due amount at 6% per annum from the date it was payable. The court emphasized that the petitioner was entitled to the interest accrued on the seized amount, including the interest earned on the fixed deposit. It held that the delay in refunding the seized amount should not result in profit through interest earned and that interest serves as compensation for the denial of fund utilization. The court's decision aligned with legal precedents and provided directions for interest payment in favor of the petitioner.

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Issues:
Claim for actual interest earned on seized amount, Interpretation of Foreign Exchange Management Act, 1999, Adjudication proceedings and penalties, Appeal against Adjudication order, Release of confiscated amount, Payment of interest on seized amount, Accrual of interest on fixed deposit, Applicability of Rules on interest payment, Delay in refunding confiscated amount, Entitlement to interest on seized amount, Compensation for denial of fund utilization, Direction for interest payment.

The petitioner filed a petition seeking payment of the actual interest earned by the respondent on the seized amount. The Enforcement Directorate seized a total amount under the Foreign Exchange Management Act, 1999, and later issued a Show Cause Notice leading to an order of confiscation and penalties. The petitioner appealed this order, which was set aside by the Appellate Tribunal, directing the return of the confiscated amount within 30 days. The respondent released the amount after two years without paying any interest initially. The petitioner claimed interest on the seized amount invested in a fixed deposit and on the interest withheld by the respondent. The respondent argued that they had paid the principal and interest at 6% per annum as per the Rules. The petitioner contended that they should be entitled to any accretion in the seized amount based on legal precedents.

The court observed that the seized amount was invested in a fixed deposit by the respondent, earning interest at a rate higher than 6% per annum. The Rules mandated payment of interest at 6% per annum on seized currency, but in this case, the funds were invested separately. The court emphasized that the delay in refunding the seized amount cannot be exploited for profit through interest earned. Referring to a Bombay High Court decision, the court agreed that the petitioner should be entitled to the interest accrued on the seized amount. The court highlighted that the interest on the fixed deposit represented an accretion to the seized amount and must be paid to the petitioner as the funds belonged to them.

The court directed the respondent to refund the balance amount of interest withheld and pay interest on the due amount from the date it was payable. The court justified this by stating that the petitioner was deprived of utilizing the funds, warranting compensation in the form of interest. Quoting a Supreme Court decision, the court reiterated that interest serves as compensation for the denial of the right to utilize the money due. Consequently, the court ordered the respondent to pay interest at 6% per annum on the due sum for the period it was withheld. Ultimately, the writ petition was allowed, and the court issued directions for the payment of interest as per the petitioner's claims.

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