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IMPOUNDING OF PASSPORT FOR ‘FEMA’ VIOLATION

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IMPOUNDING OF PASSPORT FOR ‘FEMA’ VIOLATION
By: Mr. M. GOVINDARAJAN
September 14, 2019
All Articles by: Mr. M. GOVINDARAJAN       View Profile
  • Contents

Impounding of passport

Section 10 of the Passport Act provides the procedure for varying, impounding and revocation of passports and travel documents as detailed below-

  • The passport authority may, having regard to the provisions of sub-section (1) of section 6 or any notification under section 19, vary or cancel the endorsements on a passport or travel document or may, with the previous approval of the Central Government, vary or cancel the conditions (other than the prescribed conditions) subject to which a passport or travel document has been issued and may, for that purpose, require the holder of a passport or a travel document, by notice in writing, to deliver up the passport or travel document to it within such time as may be specified in the notice and the holder shall comply with such notice.
  • The passport authority may, on the application of the holder of a passport or a travel document, and with the previous approval of the Central Government also vary or cancel the conditions (other than the prescribed conditions) of the passport or travel document.
  • The passport authority may impound or cause to be impounded or revoke a passport or travel document-
  • if the passport authority is satisfied that the holder of the passport or travel document is in wrongful possession thereof;
  • if the passport or travel document was obtained by the suppression of material information or on the basis of wrong information provided by the holder of the passport or travel document or any other person on his behalf;
  •  if the holder of such passport obtains another passport the passport authority shall also impound or cause to be impounded or revoke such other passport.
  • if the passport authority deems it necessary so to do in the interests of the sovereignty and integrity of India, the security of India, friendly relations of India with any foreign country, or in the interests of the general public;
  • if the holder of the passport or travel document has, at any time after the issue of the passport or travel document, been convicted by a court in India for any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than two years;
  • if proceedings in respect of an offence alleged to have been committed by the holder of the passport or travel document are pending before a criminal court in India.
  • if any of the conditions of the passport or travel document has been contravened;
  • if the holder of the passport or travel document has failed to comply with a notice requiring him to deliver up the same;
  • if it is brought to the notice of the passport authority that a warrant or summons for the appearance, or a warrant for the arrest, of the holder of the passport or travel document has been issued by a court under any law for the time being in force or if an order prohibiting the departure from India of the holder of the passport or other travel document has been made by any such court and the passport authority is satisfied that a warrant or summons has been so issued or an order has been so made.
  • The passport authority may also revoke a passport or travel document on the application of the holder thereof.
  • Where the passport authority makes an order varying or cancelling the endorsements on, or varying the conditions of, a passport or travel document or an order impounding or revoking a passport or travel document, it shall record in writing a brief statement of the reasons for making such order and furnish to the holder of the passport or travel document on demand a copy of the same unless in any case, the passport authority is of the opinion that it will not be in the interests of the sovereignty and integrity of India, the security of India, friendly relations of India with any foreign country or in the interests of the general public to furnish such a copy.
  • The authority to whom the passport authority is subordinate may, by order in writing, impound or cause to be impounded or revoke a passport or travel document on any ground on which it may be impounded or revoked by the passport authority and the foregoing provisions of this section shall, as far as may be, apply in relation to the impounding or revocation of a passport or travel document by such authority.
  • A court convicting the holder of a passport or travel document of any offence under this Act or the rules made there under may also revoke the passport or travel document.  If the conviction is set aside on appeal or otherwise the revocation shall become void.
  • An order of revocation may also be made by an appellate court or by the High Court when exercising its powers of revision.
  • On the revocation of a passport or travel document under this section the holder thereof shall, without delay, surrender the passport or travel document, if the same has not already been impounded, to the authority by whom it has been revoked or to such other authority as may be specified in this behalf in the order of revocation.

Issue

The issue to be discussed in this article is whether a passport can be impounded for the violations under FEMA with reference to decided case laws.

Case laws

In Lalit Kumar Modi v. Union of India’ – 2014 (10) TMI 527 - DELHI HIGH COURT the High Court analyzed the provisions of FEMA.  There is no provision for arrest or criminal prosecution under FEMA.  Further the power to examine persons conferred on the officers of the Directorate of Enforcement does not find place in FEMA.  The High Court also observed that violation of section 13 of FEMA, as alleged in the present case, would result in the concerned officer making a complaint to the Adjudicating Authority under section 16 of FEMA.  On such complaint being made  the Adjudicating Authority would hold such enquiry under section 16(1) of FEMA.   The High Court repelled the contention that a passport could be suspended or revoked under section 10 of the Passports Act on account of non appearance before the investigation proceedings under FEMA.

In Junaid Iqbal Mohamed Memon v. Union of India’ – 2019 (4) TMI 1088 - DELHI HIGH COURT the petitioner is a non resident Indian (NRI).   He has been residing permanently in UAE since 1993.  He is carrying on business in property development and hospitality in UAE since 2011.  It is alleged that the petitioner has been involved in money laundering and has transferred the sale proceeds o the assets in India, belonging to his father to foreign countries. 

The Enforcement Directorate (ED) issued certain directives vide letter dated 10.04.2015 to the petitioner calling upon him to furnish information in relation to four companies under section 37 of FEMA read with Section 133(6) of Income Tax Act, 1961 in his capacity as being one of the Directors of the said four companies within 15 days from the receipt of the said letter.  The petitioner vide his letter dated 16.04.2015 requested for a period of four weeks to furnish the required information.

The ED sent another letter dated 15.05.2015 to the petitioner calling upon him to furnish the required information within 7 days from the receipt of the letter.  In his letter dated 20.05.2015 to the ED the petitioner submitted the following-

  • He is an NRI;
  • He has been residing in UAE since 1993.
  • He does not have any business in India.
  • The directives are issued on the incorrect presumption that the petitioner is a resident of India.

The petitioner requested the ED to withdraw the directives and cease the ongoing investigation.  However the petitioner submitted the required documents vide his letters dated 02.06.2015 and 03.06.2015.

A summon was issued to the petitioner under the provisions of FEMA directing the petitioner to attend the proceedings either personally or through authorized representative at the office of Assistant Director on 21.08.2015.  The petitioner was warned that in case he did  not appear in person the same will attract a penalty under section 13 of FEMA read with Section 272A (1) of the Income Tax Act, 1961.  The petitioner sought for four weeks to file the required documents.  The said request was accepted by ED.

In the meanwhile the ED sent a letter on 18.08.2015 to Foreign Secretary, Ministry of External Affairs requesting to revoke the passport of the petitioner.  The Foreign Secretary, vide his letter dated 21.08.2015 informed the ED that necessary action has been initiated by his Ministry in this regard.  Consular General of India (CGI) has suspended the passport with effect from 20.08.2015 for a period of 4 weeks which will be followed by show cause notice for impounding/revocation of his passport.

The petitioner submitted the required documents on 21.09.2015.  The petitioner was further called upon to appear personally before the ED on 01.10.2015.   The authorized representative of the petitioner sought for an advance hearing to 28.09.2015 from 01.10.2015.  The ED fixed the next hearing on 05.10.2015 and the petitioner did not appear before the ED.  The ED against issued summons dated 05.10.2015 directing him to appear in person on 19.10.2015 and also directed the petitioner to surrender his passport to CGI.

In the meanwhile the CGI, Dubai suspended the passport of the petitioner vide his letter dated 22.09.2015 for refusing to join the investigation carried out by the ED despite the issue of summons.  Against this order the petitioner filed the present writ petition before the High Court.  The petitioner submitted the following before the High Court-

  • The action of the respondents to impound his passport is arbitrary inasmuch as it is not based on any relevant material and is completely contrary to the records.
  • The petitioner is an NRI and not covered by the provisions of FEMA.

The respondents contended that section 3 of FEMA covers resident, nonresident and foreign nationals and various regulations of FEMA are also applicable to NRI.  The petitioner’s passport has been suspended in the interest of general public.

The High Court framed the issue as to whether the action of the respondents to impound the passport of the petitioner is sustainable in law.

The High Court observed that the concerned authority has not suspended the passport of the petitioner on any concern regarding sovereignty, integrity of India, the security of India, the friendly relations of India with any foreign country.  In terms of section 10 of Passports Act a passport can be cancelled, if a warrant or summons for appearance, or a warrant or the arrest, of the holder of the passport has been issued by a Court under any law for the time being in force.

In view of the above the High Court set aside the impugned order.  However the High Court clarified that the ED is not precluded from initiating any other proceedings as permissible in law.

 

By: Mr. M. GOVINDARAJAN - September 14, 2019

 

 

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