2026 (1) TMI 1 - HC - FEMA

FERA/RBI approval dispute in property transaction re-litigated via Article 226 after civil suit and s.96 appeal; dismissed as res judicata.

A party sought, in Art. 226 writ proceedings, to re-agitate an issue already decided in a civil suit and affirmed in first appeal under s.96 CPC, ... Writ proceedings under Article 226 for reopening of issues sought to be agitated by the appellant therein had already been considered and decided by the Division Bench - underlying writ petition was predicated on violation of statutory conditions within the statutory framework of the Foreign Exchange Regulation Act, 1973 (“FERA”) - RBI approval regarding property transaction - Valid documents before 31.12.1999 - GPA/SPA/Will etc. - HELD THAT:- In light of the clear findings recorded by an Appellate Court under Section 96 of the Code of Civil Procedure, 1908, we are unable to appreciate as to on what grounds a writ Court can examine the same issue again. Moreover, in case the appellant was not satisfied with the findings recorded either by the learned Single Judge in the Original Suit or the observations of the Appellate Court, nothing precluded him from challenging the same in accordance with law. This Court also has to bear in mind the fact that once an issue was framed, though the burden of discharging the onus was on the respondent nos.2 and 3, who were the plaintiffs in CS (OS) 2773/2000, nothing precluded the appellant from adducing proper evidence, whether documentary or oral, in support of the aforesaid contention which could and ought to have been placed in the trial proceedings to vindicate his stand. This would have been the appropriate procedure to be followed by the appellant in order to sustain and prove the stand taken on the additional issue. If the appellant has failed in such endeavour for any reason whatsoever, it would not, ipso facto, vest any right upon the appellant to agitate the very same issue again which has been settled by the learned Single Judge as also the learned Division Bench. Urging that the fundamental question is one of violation of statutory framework, and hence, amenable to writ jurisdiction is unsustainable, furthermore, on the grounds of constructive res judicata too. Law conceives of finality of disputes. Thus, we do not find any merit in the present appeal and the same is dismissed, Issues: Whether the challenge to the legality of transaction compliance with Section 31(1) of FERA and the related RBI Notification could be reopened in writ proceedings under Article 226 after the issue was framed and decided in the trial suit and subsequently affirmed on appeal.Analysis: The Court examined the record of the trial proceedings where an additional issue was framed regarding applicability of Section 31 of FERA and the related RBI Notification. The Division Bench of the High Court had analysed Section 31(1) of FERA and the RBI Notification, found that the transaction fell within the scope of the general permission granted by the RBI Notification, and recorded that the purchase consideration was remitted through NRE/NRO/FCNR accounts and that the declaration (Form IPI-7) was accepted by the RBI. The Court noted that these findings were rendered by the Appellate Court under Section 96 of the Code of Civil Procedure and that the appellant had opportunities in the suit proceedings to lead evidence on the framed issue. The Court further considered the principles limiting re-litigation, including constructive res judicata and the finality of disputes, and held that the matter, having been substantively decided in the suit and on appeal, could not be reopened by way of writ proceedings merely on the ground that statutory provisions were said to have been violated.Conclusion: The writ challenge to the same issue is not maintainable and the appeal is dismissed; decision is in favour of the Revenue.