TMI Blog2010 (5) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... rest on the seized amounts. W.P. allowed. - WRIT PETITION NO. 2777 OF 2003 - - - Dated:- 4-5-2010 - V.C. DAGA AND K.K. TATED, JJ. Zal Andhyarujina and Ms. P. Mhatre for the Petitioner. S.V. Pakale and Y.R. Mishra for the Respondent. JUDGMENT V.C. Daga, J. - Heard. Perused petition. 2. This petition, filed under article 226, is directed against the order-in-original 28-2-2001 passed by the Special Director of Enforcement under the provisions of Foreign Exchange Regulation Act, 1973 ( the repealed Act ) to the extend it does not consider the question of grant of interest on the amount seized from the premises of the petitioners and returned to them without interest. Factual Backdrop 3. The petitioner No. 1 is the partnership firm, whereas petitioner No. 2 is the proprietary concern having their places of business at Ahmedabad and Mumbai. On or about 12-11-1998, the officers of the Enforcement Directorate of Bombay Zonal Unit seized a cash amount of Rs. 85 lakhs in Indian currency belonging to petitioner No. 1 and a cheque for the sum of Rs. 5,21,490 belonging to petitioner No. 2 under section 37 of the Foreign Exchange Regulation Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Mr. Andhyarujina, learned counsel for the petitioners, urged that the respondents had no authority to pocket the interest admittedly accrued on the aforesaid seized amount and, hence, the retention of the said amount by the respondents is illegal, arbitrary and without any justification whatsoever. According to him, the amounts seized by the respondents on 12-11-1998 under the provisions of FERA were not in any way involved in the contravention of any of the provisions of the FERA as held in the order dated 28-2-2001, which has been passed after detailed hearing. Thus, there was no basis to seize the amounts at all. That having seized the amounts illegally, which were ordered to be returned back to the petitioners, the respondents are bound and liable to return the same together with interest accrued thereon as otherwise it would amount to travesty of justice. That on the face of the findings, the seized amounts were not in any way involved in contraventions of any provisions of the FERA, the petitioners cannot be deprived of the amount of interest accrued thereon without any basis of justification whatsoever. 8. Mr. Andhyarujina further submits that permitting the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest thereon till payment in full and final since they were deprived of the use of their property, viz., seized amounts with accrued interest thereon. The Issue 11. In the aforesaid backdrop, the issue for consideration is : "whether the petitioners are entitled to amount of interest earned on the seized amount which was invested by the respondents in the fixed deposits with the bank?" Consideration 12. Having heard rival parties, it is necessary to recapitulate undisputed and admitted facts. That on 12-11-1998, the officers of the Enforcement Directorate, Bombay Zonal Unit seized cash amount of Rs. 85 lakhs and cheque for Rs. 5,21,490 from the petitioners under section 37 of the FERA. A show cause dated 9-11-1999 alleging contravention of provisions of the FERA were contested by the noticees and after fullfledged investigation, by an order in original dated 28-2-2001, the petitioners were exonerated and, ultimately, on 5-4-2002 and 23-5-2002, the seized amounts were released to the petitioners by bankers cheques without any payment of interest accrued thereon. It is not in dispute that the seized amounts were deposited in fixed deposits with the Bank and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e original shares and that it was impossible to contend that the right to these shares could be differentiated from the right to the original shares. Applying the same logic, holding against the findings of the Special Court, the Apex Court held that dividend and interest which were received by the Bank and which were relatable to the pledged stocks must also be regarded as accretions thereto. 18. In the aforesaid judgment, the Apex Court was required to consider the scope of sections 163 and 172, 176 of the Contract Act. While considering the scope of section 163 of the Contract Act, Apex Court observed that in absence of a contract to the contrary, the bailee is bound to deliver to the bailor or according to his directions, any increase or profit which may have accrued from the bailed goods. The Apex Court, to bring home its view with clarity, relied upon the illustration given in the section that if a calf is born to a cow then the bailee is bound to deliver the calf as well as the cow to the bailor. 19. The Apex Court, in the above judgment of the Standard Chartered Bank s case ( supra ), while considering the scope of sections 172 and 176 of the Contract Act, observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioners which were invested in the fixed deposits by the revenue. 22. The petitioners, in our considered view, would be entitled to accrued interest on the seized amount and that the respondents were not justified in refusing to pay the said amount of interest. There is no justification on the part of the respondents in retaining the amount of interest earned on the seized amount especially, on the touchstone of the doctrine of accretion, which is squarely applicable to the facts of the case in hand. 23. It is quite clear from the order-in-original that the seizure of amounts in the sum of Rs. 85,00,000 and Rs. 5,21,490 from the petitioners was not in accordance with law and upon adjudication respondents refunded these amounts to the petitioners. There can be no dispute, therefore, that amounts of Rs. 85,00,000 and Rs. 5,21,490 were seized and retained by the respondents for a period of three and half years without authority of law. In a given case where aggrieved party requires to be compensated not merely by repayment of the amount so seized and withheld but also by the payment of interest though it is a matter of discretion of the Court. Undoubted, the discretion w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon merely as illustrations of cases where only a claim for interest can be made. In the present case, interest is claimed to put a party whose money is retained without the authority of law, in the same position he would have occupied, had his money not been so retained. The Court can exercise discretionary powers under article 226 in a given case to award interest if it is necessary in order to bring about an equitable result. 27. In the present case, however, as we have set out earlier, the respondents themselves have refunded the amounts seized from the petitioners which they had invested in the fixed deposits. The interest earned on the fixed deposits was nothing but accretion to the original amounts. The petitioners were, therefore, entitled to receive proceeds of the fixed deposits in its entirety on the date when the fixed deposits were encashed. Having said so, the fixed deposits were encashed and seized amounts were refunded to the petitioners on 5-4-2002 and 23-5-2002 but without interest accrued thereon, as such the respondents withheld the amount of accrued interest without any justification. In our considered view, on the amount of accrued interest, not p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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