FEMA confiscated amount refunded after 21 years must carry 6% interest under Section 42

Madras HC directed respondents to pay interest on confiscated amount under FEMA that was refunded after 21 years. Court held petitioner had legitimate right to receive interest citing Section 42 of Foreign Exchange Regulation Act, 1973 which mandates 6% per annum interest on such proceeds. Court emphasized restitution principle, noting petitioner lost potential earnings from fixed deposits during illegal confiscation period. Respondents ordered to pay prevailing bank interest from confiscation date to refund date within 3 months. Writ petition disposed of without costs.

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Issues:
1. Petitioner seeking interest accrued on deposited amount.
2. Imposition of penalty and confiscation of seized amount.
3. Interpretation of relevant sections and rules.
4. Applicability of interest payment under different statutes.
5. Comparison with relevant case law.
6. Discretion of the Appellate Tribunal in directing interest payment.
7. Legal provisions regarding payment of interest post judgment.

Analysis:
The Writ Petition was filed to obtain a Writ of Mandamus instructing the respondents to pay interest on the petitioner's deposited amount and penalty sum, as per specific sections and rules. The petitioner, aged 65 at the time of filing, had Rs. 9,00,000 seized under the Foreign Exchange Regulation Act, leading to a penalty of Rs. 10,00,000 and confiscation order. An appeal to the Appellate Tribunal resulted in the refund order of the seized and penalty amounts, but no mention of interest payment was made.

The petitioner argued for interest under Rule 8 of the Foreign Exchange Management Rules, 2000, citing the right to interest if no contravention is found or if the seized currency is irrelevant to adjudication. Additionally, Section 42(3) of the Foreign Exchange Regulation Act, 1973, mandates interest payment on confiscated amounts. The petitioner claimed the right to interest due to the prolonged period the amount was held by the Department.

Contrary to the petitioner's stance, the respondents contended that interest payment requires a specific directive from the Appellate Tribunal, as per Section 53 of the Foreign Exchange Regulation Act, 1973. They relied on Section 34 of the Civil Procedure Code, stating that a decree silent on interest payment implies refusal, necessitating a separate suit for interest recovery.

The Court opined that interest payment was justified under Section 42 of the Act, emphasizing the obligation to pay interest on confiscated amounts. It noted that the respondents' actions did not merit favor, as they merely complied with refund orders. Thus, the Court ruled in favor of the petitioner, directing the respondents to pay interest on the confiscated amount from the date of confiscation to the refund date at prevailing bank interest rates within three months.

In conclusion, the judgment resolved the issue of interest payment on the confiscated amount in favor of the petitioner, highlighting the legal basis for such payment and the obligation of the respondents to fulfill it within the specified timeline.

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