Specific performance under foreign exchange law is maintainable where the sale agreement itself does not defeat the statutory scheme.

Section 31 of the Foreign Exchange Regulation Act, 1973 restricts acquisition, holding, transfer or disposal of immovable property by a non-citizen without prior Reserve Bank permission, but Section 47 preserves the validity of a contract where the agreement itself does not defeat the statutory scheme and only the eventual conveyance needs approval. On that reasoning, an agreement for sale that does not itself transfer title and contemplates compliance before execution of the conveyance can be specifically enforced, and the Act does not bar institution of the civil suit. Section 78 also did not exclude civil court jurisdiction on these facts.

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Issues: Whether the suit for specific performance was barred by Section 31 of the Foreign Exchange Regulation Act, 1973.

Analysis: Section 31 restricts acquisition, holding, transfer or disposal of immovable property by a non-citizen without prior permission of the Reserve Bank of India, while Section 47 recognises that a contract is not invalid merely because the eventual transfer requires such permission, provided the agreement does not itself evade or defeat the Act. The agreement for sale did not itself effect a transfer of title, did not on its terms frustrate the statutory scheme, and contemplated compliance before execution of the conveyance. The civil suit sought enforcement of the agreement and alternative reliefs, and the Act did not create a bar against institution of such a suit. Section 78 also did not oust civil court jurisdiction in these circumstances.

Conclusion: The suit was not barred by Section 31 of the Foreign Exchange Regulation Act, 1973, and the preliminary objection to maintainability failed.

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