Interim relief granted in challenge to attachment orders under Foreign Exchange Management Act.

The Court granted interim relief to the petitioners in a case challenging provisional attachment orders under the Foreign Exchange Management Act, 1999. The Court allowed the interim release of Rs. 25 crores to the petitioners for day-to-day expenses and employee salaries, with conditions to disclose utilization details and prohibit remittance overseas. This decision supplemented a previous release of Rs. 15.5 crores, providing support until the final resolution of the writ petition.

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Issues:
1. Challenge to provisional attachment orders under the Foreign Exchange Management Act, 1999.
2. Legitimacy of seizure of bank accounts under relevant rules.
3. Impact of RBI's cancellation of Certificate of Registration.
4. Request for interim release of funds pending final disposal of the writ petition.

Analysis:
1. The petitioners contested an order confirming provisional attachment orders under the Foreign Exchange Management Act, 1999, involving remittances totaling approximately Rs. 463 crores. The impugned orders resulted in the attachment of around Rs. 270 crores from the petitioner's accounts. The Court acknowledged the nonfunctionality of the appellate tribunal currently.

2. The Court found merit in the argument that the seizure of the petitioner's bank accounts might not be sustainable under the Act and related Rules. It was contended that the expenses incurred by the petitioner, even if questionable, should not lead to penal or coercive actions. The absence of a statutory obligation for prior approval from the Central Government for the transactions in question was highlighted, especially after the deletion of specific requirements from Schedule II in 2010.

3. The cancellation of the petitioner's Certificate of Registration by the RBI was noted, but the Court determined that this action, taken under the Banking Regulation Act, 1949, did not directly impact the issues raised in the present writ petition. The Court considered the release of Rs. 15.5 crores as an interim measure by another court, emphasizing the necessity for the petitioner to meet essential expenses.

4. Despite opposition, the Court directed the interim release of Rs. 25 crores to the petitioner, subject to specific conditions. The funds were to be used solely for day-to-day expenses and employee salaries, with a requirement for the petitioner to disclose the utilization details. The petitioner undertook not to remit any part of the released funds overseas. This interim release was in addition to the previously released amount of Rs. 15.5 crores, aimed at supporting the petitioner until the final resolution of the writ petition.

This detailed analysis covers the various legal issues addressed in the judgment, highlighting the arguments presented by the parties and the Court's reasoning leading to the interim relief granted to the petitioner.

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