2019 (4) TMI 1088 - HC - FEMA

Court overturns passport suspension order under Passports Act, emphasizing cooperation in FEMA investigation.

Junaid Iqbal Mohammed Memon Versus Union Of India & Ors.

The Court set aside the order suspending the petitioner's passport under the Passports Act, emphasizing that impounding a passport solely for ... Cancellation of the Passport - investigation being conducted under FEMA - Request for an alternate mode of examination by video conferencing - HELD THAT:- In the present case, the petitioner is a non-resident Indian and contends that the provisions of FEMA are inapplicable. Notwithstanding the aforesaid contention, Mr. Tripathi, learned Senior Counsel for the petitioner had made a statement before this Court on 14.08.2018 that the petitioner would provide all documents as required by the respondents even though, according to the petitioner, the same are not required to be disclosed. It is not disputed that in compliance with the aforesaid order, the petitioner has supplied all documents that were called for by the ED. This Court had, during the course of proceedings, also pointedly asked Mr. Amit Mahajan, learned counsel for the respondents that whether there was any other document that was required by the ED. Although, he did not dispute that all documents had been provided, he nonetheless submitted that the petitioner was required to be confronted with certain documents and, therefore, his presence was necessary. The petitioner had voluntarily agreed to appear by teleconferencing and also make all arrangements for the same, however, that was not accepted. In this regard, the Division Bench of this Court in Lalit Kumar Modi [2014 (10) TMI 527 - DELHI HIGH COURT] had observed that FEMA did not entail custodial interrogation and, therefore, a request for an alternate mode of examination by video conferencing ought not to be shrugged aside This Court is of the view that the controversy involved in the present petition is covered by the decision of the Division Bench in Lalit Kumar Modi [2014 (10) TMI 527 - DELHI HIGH COURT] and the petitioner’s passport could not be suspended in public interest. In terms of Section 10(1)(e) of the Passports Act, a passport can be cancelled in cases where offence alleged to have been committed by the holder of passport is pending before a criminal court in India. Further, in terms of Section 10(3)(h) of the Passports Act, a passport can be cancelled if a warrant or summons for the appearance, or a warrant for the arrest, of the holder of the passport has been issued by a Court under any law for the time being in force. Criminal prosecution as contemplated under Section 13(1C) of FEMA can be commenced by filing a criminal complaint. Plainly, if such a complaint is filed and summons are issued by a competent court, the passport facilities provided to the accused could be withdrawn by virtue of Section 10(3)(h) of the Passports Act. Impugned order suspending the petitioner’s passport is set aside. However, it is clarified that respondent no.3/ED is not precluded from initiating any other proceedings as permissible in law. Issues:- Impugning an order suspending petitioner's passport under the Passports Act.- Applicability of Foreign Exchange Management Act, 1999 (FEMA) on Non-Resident Indians (NRIs).- Legality of impounding passport solely based on non-appearance in FEMA investigation.- Interpretation of Section 10(3)(c) of the Passports Act in the context of impounding passports.Analysis:1. The petitioner challenged the order suspending his passport under the Passports Act, arguing that as an NRI, he was not subject to FEMA. The respondents contended that FEMA applies to NRIs. The central issue was the legality of impounding the passport based on non-appearance in the FEMA investigation.2. The petitioner, a permanent UAE resident, faced allegations of money laundering and transferring assets abroad. The ED issued directives under FEMA to furnish information on companies he was associated with. Despite compliance, the petitioner's passport was suspended for failing to appear before the ED, triggering the legal challenge.3. The Court examined Section 10(3)(c) of the Passports Act, which allows impounding passports in the public interest. It referenced a previous case that highlighted differences between FEMA and FERA, emphasizing that FEMA lacks provisions for arrest or custodial interrogation, suggesting impounding a passport for non-appearance in FEMA investigations may not be justified.4. The petitioner's willingness to cooperate, including offering to appear via video conferencing, was noted. The Court emphasized that FEMA investigations do not entail custodial interrogation, supporting alternative examination methods. The judgment highlighted that the petitioner's passport suspension was not in the public interest, aligning with the precedent set in a similar case.5. The Court clarified that subsequent amendments to Section 13 of FEMA, allowing criminal prosecution and imprisonment, do not diminish the relevance of the previous decision. It maintained that passport suspension under the Passports Act should align with legal proceedings initiated through competent courts.6. Ultimately, the Court set aside the impugned order suspending the petitioner's passport but allowed the ED to pursue other legal actions as per the law. The judgment provided clarity on the interpretation of the Passports Act in the context of impounding passports for FEMA-related matters, ensuring procedural fairness and legal compliance.