Section 63 FERA confiscation is discretionary, requires independent reasoning; automatic seizure of NRE/SB balances invalid

HC held that under section 63 FERA, the power to order confiscation is discretionary, not mandatory, as indicated by the use of "may" rather than "shall." Confiscation requires independent application of mind and a reasoned belief that the amounts are related to the breach; it cannot follow automatically from any violation. In the present case, the authority had not applied its mind independently, and the confiscation was ordered as a matter of course. The Appellate Tribunal, having considered the nature of the violation, rightly set aside the confiscation of the NRE/SB account balances. The HC found no substantial question of law arising and dismissed the appeal.

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"Under the facts circumstances of the case whether Hon'ble Appellate Tribunal for Foreign Exchange was justified in setting aside the order of confiscation of the amounts lying in NRE/SB accounts which accounts are admittedly used for contravention/violation of provisions of FERA, 1973, without considering clause (a) to the Explanation to section 63 of the FERA, 1973 and without appreciating the expression 'in respect of' used in said section 63." The Tribunal upheld most of the impugned order but interfered only with the confiscation. It found confiscation to be a discretionary remedy and concluded the authority had "mechanically exercised" its discretion without an independent application of mind. The court reasoned Section 63 uses the word "may" (not "shall"), and the main provision requires the authority to have reason to believe that the amounts "relate to" the breach before ordering confiscation; therefore confiscation is not automatic upon proof of violation. Given the lack of considered exercise of discretion and the Tribunal's factual appraisal, the appeal raises no sustainable question of law and is dismissed.

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