Resident status under FERA and power over foreign property depend on reliable evidence and statutory authority.
Resident status under FERA section 2(p)(ii) requires reliable proof that a person previously resident outside India later ceased to be so resident by returning to or staying in India in the statutory circumstances. On the stated facts, continued foreign business, properties and bank accounts, together with an absence of intention to abandon non-resident status, were insufficiently rebutted by the evidence relied on by the adjudicating authority. The commentary also notes that a direction to sell immovable property in London and repatriate the proceeds was treated as a power specifically vested in the Central Government under the former section 25(3), not in the adjudicating authority under section 63, so the jurisdictional basis for such a direction was absent.
Issues: (i) Whether the appellant was a person resident in India within the meaning of section 2(p)(ii) of the Foreign Exchange Regulation Act, 1973 so as to sustain the findings of guilt under the show cause notices; (ii) Whether the adjudicating authority had jurisdiction under section 63 of the Foreign Exchange Regulation Act, 1973 to direct sale of the London property and repatriation of the sale proceeds.
Issue (i): Whether the appellant was a person resident in India within the meaning of section 2(p)(ii) of the Foreign Exchange Regulation Act, 1973 so as to sustain the findings of guilt under the show cause notices.
Analysis: The definition of a person resident in India under section 2(p)(ii) requires proof that the person had earlier been resident outside India and had thereafter ceased to be so resident by returning to or staying in India in the circumstances contemplated by clauses (b) or (c). On the evidence, the appellant had left India in 1974, carried on business abroad, retained foreign properties and bank accounts, and had not abandoned the intention to stay outside India. The material relied upon by the adjudicating authority was found insufficient and unreliable to establish cessation of non-resident status or a voluntary stay in India for carrying on business or for an indefinite period.
Conclusion: The appellant was not shown to be a person resident in India under section 2(p)(ii), and the findings of guilt could not be sustained. This issue is answered in favour of the appellant.
Issue (ii): Whether the adjudicating authority had jurisdiction under section 63 of the Foreign Exchange Regulation Act, 1973 to direct sale of the London property and repatriation of the sale proceeds.
Analysis: The direction to sell immovable property abroad and repatriate the proceeds was treated as a power specifically conferred by section 25(3) on the Central Government prior to its omission, and not as a power vested in the adjudicating authority under section 63. Since the statutory source of authority was absent, the direction could not be sustained.
Conclusion: The direction for sale of the London property and repatriation of the proceeds was without jurisdiction and liable to be set aside. This issue is answered in favour of the appellant.
Final Conclusion: The impugned adjudication failed on both the substantive jurisdictional issue of residential status and the ancillary direction concerning foreign immovable property, resulting in complete relief to the appellant.
Ratio Decidendi: A person can be treated as resident in India under section 2(p)(ii) only if prior non-resident status and subsequent cessation of that status are established on reliable evidence, and an adjudicating authority cannot assume a power of compulsory sale of foreign immovable property where that power is specifically vested elsewhere by statute.
TaxTMI 
AI Drafter ✕
TaxTMI 
