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, 1. ISSUES PRESENTED AND CONSIDERED 1. Whether a writ petition under Article 226 can be used to re-agitate and reopen a concluded determination on compliance with Section 31 of the Foreign Exchange Regulation Act, 1973 and the applicable RBI permission/notification, after the same issue has been framed, tried, and finally decided in civil proceedings and affirmed in appeal. 2. Whether the appellant could maintain a separate writ challenge to the RBI's letter accepting the relevant declaration/intimation (including objections based on delay and alleged lack of enquiry), notwithstanding binding civil/appellate findings that the underlying property transaction was compliant with FERA and the RBI procedural framework. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Reopening, in writ jurisdiction, an issue finally decided in civil and appellate proceedings (FERA Section 31/RBI permission compliance) Legal framework (as discussed by the Court): The Court treated the matter as governed by the principle that once an issue has been adjudicated in civil proceedings (including on an issue framed for decision) and affirmed by the appellate court exercising jurisdiction under Section 96 of the Code of Civil Procedure, the same issue cannot be re-examined in writ proceedings. The Court also applied the doctrine of constructive res judicata and emphasized finality of disputes. Interpretation and reasoning: The Court found that the civil court had framed an additional issue specifically on whether the transaction was hit by Section 31 of FERA, and that the appellate court had examined that issue in detail and returned clear findings that the transaction fell within the scope of general permission under the relevant RBI notification, that consideration was remitted through the specified banking accounts in accordance with procedural requirements, and that the RBI accepted the declaration through its letter. Given these conclusive findings, the Court held it could not appreciate how the same question could be examined again by a writ court. The Court further reasoned that the appellant had full opportunity to adduce documentary/oral evidence in trial on this framed issue; failure to succeed there could not confer a right to relitigate the same matter in writ jurisdiction. Conclusion: The Court conclusively held that the issues sought to be raised in writ proceedings had already been considered and decided in the civil suit and affirmed in appeal, and therefore could not be reopened under Article 226; the attempt was also barred on principles including constructive res judicata and finality. Issue 2: Maintainability of a writ challenge to the RBI's acceptance letter despite prior adjudication (delay/lack of enquiry arguments) Legal framework (as discussed by the Court): The Court addressed maintainability not as an abstract proposition that statutory violations are always examinable in writ jurisdiction, but in the context of a prior binding adjudication on the same statutory compliance. It treated the appellant's challenge to the RBI letter as inseparable from the already-decided statutory compliance issue. Interpretation and reasoning: The Court rejected the submission that the challenge to the RBI letter was 'distinct' from the civil/appellate findings. It relied on the appellate court's finding that the RBI had duly accepted and acknowledged the declaration and that, in consequence, the transaction was fully compliant with FERA and the procedural mandates under the RBI notification. The Court also accepted the reasoning that mere delay in submission of the declaration did not invalidate the acquisition if exchange control requirements were complied with, and noted that the RBI's stance (including the caveat regarding repatriation eligibility) did not alter the already-determined legality/compliance of the acquisition under the applicable regime. If the appellant remained aggrieved by the civil/appellate findings, the Court held that the proper course was to challenge them 'in accordance with law,' not to reopen them through writ proceedings. Conclusion: The Court held that a writ challenge to the RBI letter, grounded on the same allegations of non-compliance with FERA/RBI procedure (including delay and alleged infirmities in acceptance), was not maintainable because the legality and compliance of the transaction and the RBI acceptance had already been conclusively determined; the writ route could not be used to re-litigate the same concluded controversy.