Prior RBI permission for foreign nationals' property transfers is mandatory, making unauthorised gifts unenforceable in law.

Prior RBI permission under Section 31 of the Foreign Exchange Regulation Act, 1973 is a condition precedent to a valid transfer or disposal of immovable property by a non-citizen of India. Read with the statute's penalty and confiscation provisions, the requirement is mandatory rather than directory, so a gift or transfer made without that permission is prohibited and unenforceable in law until approval is obtained. The absence of express words declaring such a transaction void does not save it from invalidity where the statutory scheme shows a clear prohibition.

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Issues: Whether the requirement of previous permission of the Reserve Bank of India under Section 31 of the Foreign Exchange Regulation Act, 1973 for transfer or disposal of immovable property by a person who is not a citizen of India is mandatory, and whether a gift made in contravention of that requirement is unenforceable in law.

Analysis: Section 31 was enacted to restrict dealings in immovable property by foreigners and to prevent foreign exchange drainage. Read with Sections 47, 50 and 63 of the 1973 Act, the provision shows that prior RBI permission is not a mere formality but a condition precedent to a valid transfer. The statutory scheme, the imposition of penalty for contravention, and the power of confiscation all indicate that a transfer made without such prior permission is forbidden and cannot be given legal effect until permission is granted. The Court distinguished authorities treating the provision as directory and held that the absence of express words declaring the transaction void does not prevent the transaction from being treated as unenforceable, because the statutory prohibition and penal consequence imply invalidity.

Conclusion: The requirement of previous RBI permission under Section 31 is mandatory, and the gift deeds executed without such permission are unenforceable in law and not binding on the appellant.

Ratio Decidendi: Where a statute regulating foreign exchange expressly requires previous permission of the Reserve Bank of India before a foreign national transfers immovable property, and contravention is visited with statutory penalties and allied consequences, the transaction is prohibited and unenforceable until such permission is obtained.

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