IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN WEDNESDAY, THE 16TH JULY 2008 / 25TH ASHADHA 1930 WP(C).No. 28846 of 2004(H) ------------------------------------ PETITIONER: ------------------- M/S.EASY TEC (INDIA) PRIVATE LIMITED, EASY TEC HOUSE, UNION CLUB ROAD, KOTTAYAM, REPRESENTED BY ITS CHAIRMAN AND C.E.O. MR.SKANDA T.KUMAR. BY ADV. SRI.K.RAMAKUMAR (SR.) SRI.RAMA PRASAD UNNI.T. SRI.P.RAJKUMAR RESPONDENTS: ---------------------- 1. RESERVE BANK OF INDIA, EXCHANGE CONTROL DEPARTMENT, CENTRAL OFFICE, CENTRAL OFFICE BUILDING, MUMBAI 400 001. 2. THE ASSISTANT DIRECTOR, DIRECTORATE OF ENFORCEMENT, CGO COMPLEX, `C' WING, 3RD FLOOR, POONKULAM, VELLAYANI P.O., TRIVANDRUM 695 522. 3. THE SUB-REGISTRAR, KOTTAYAM. 4. ADDITIONAL R4 TAJ KERALA HOTELS & RESORTS LTD. TAJ RESIDENCY, ERNAKULAM, COCHIN, REPRESENTED BY ITS COMPANY SECRETARY IS IMPLEADED AS ADDITIONAL R4 AS PER ORDER DT.6.12.2004 I.A.16826/04. BY ADV. SRI.JOHN VARGHESE, ASSISTANT SG FOR R2 SRI.A.M.SHAFFIQUE (SR.) FOR R4 SRI.E.K.NANDAKUMAR FOR R4 SRI.A.K.JAYASANKAR NAMBIAR FOR R4 SMT.PRIYA MAHESH FOR R4 SMT.PRIYA MANJOORAN FOR R4 SRI.P.JACOB VARGHESE, SC, RBI FOR R1 SRI.P.PARAMESWARAN NAIR,ASST.SOLICITOR SRI.GEORGEKUTTY MATHEW FOR R THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16/07/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 28846 of 2004(H) -2- APPENDIX PETITIONER'S EXHIBITS EXT.P1 - TRUE COPY OF LETTER NO. A.P. (DIR SERIES) CIRCULAR NO. 43 DT. 8.12.2003. EXT.P2 - TRUE COPY OF LAYWER'S NOTICE DT. 31.7.2004 SENT ON BEHALF OF THE PETITIONER COMPANY TO THE SUB REGISTRAR, SRO, KOTTAYAM. EXT.P3 - TRUE COPY OF THE REPLY NOTICE SENT BY THE SUB REGISTRAR, KOTTAYAM TO THE PETITIONER'S LAWYER. EXT.P4 - TRUE COPY OF ORDER NO.T.1/4/TVM/04(RK) DT.28.6.04 BY R2 TO R3. EXT.P5 - TRUE COPY OF THE LETTER DATED 19.2.2003 RECEIVED BY THE PETITIONER FROM R1. EXT.P6 - TRUE COPY OF THE CERTIFICATE ISSUED BY THE BRITISH HIGH COMMISSION, SINGAPORE DATED 4.8.2003. EXT.P7 - TRUE COPY OF THE PASSPORT HELD BY THE CHAIRMAN OF THE PETITIONER CO. EXT.P8 - TRUE COPY OF THE LETTER DATED 6.11.2001 ISSUED BY THE SOFTWARE TECHNOLOGY PARKS IN INDIA TO THE PETITIONER COMPANY. EXT.P9 - TRUE COPY OF THE NO OBJECTION CERTIFICATE DATED 3.9.2002 ISSUED BY THE SOFTWARE TECHNOLOGY PARKS OF INDIA TO THE PETITIONER COMPANY. EXT.P10 - TRUE COPY OF THE LETTER DATED 22.11.2005 SENT BY THE UTI BANK TO THE PETITIONER. EXT.P11 - TRUE COPY OF THE LETTER DATED SENT BY SOFTWARE TECHNOLOGY PARKS OF INDIA DT.23.9.2002 TO THE PETITIONER. EXT.P12 - TRUE COPY OF CERTIFICATE OF FOREIGN INWARD REMITTANCE DT.10.12.2002 ISSUED BY IDBI BANK LTD. TO THE PETITIONER. EXT.P12(a) - TRUE COPY OF THE CERTIFICATE OF FOREIGN INWARD REMITTANCE DT.25..2.2002 ISSUED BY HSBC LTD. TO THE PETITIONER. EXT.P12(b) - TRUE COPY OF CERTIFICATE OF FOREIGN INWARD REMITTANCE DT. 10.12.2002 ISSUED BY HDFC BANK TO THE PETITIONER. EXT.P13 - TRUE COPY OF THE LETTER DT.31.10.2005 SENT BY THE PETITIONER TO K.A.KURUVILLA, ASSISTANT DIRECTOR, DIRECTORATE OF ENFORCEMENT. EXT.P14 - TRUE COPY OF THE RE-REGISTERED DOCUMENT DT. 4.12.2003. RESPONDENTS' EXHIBITS EXT.R1(a) - TRUE COPY OF REGULATIONS, FEMA 21/2000-RB DATED 3.5.2000. EXT. R2(a) - TRUE COPY OF FORM NO.32 SUBMITTED BY THE PETITIONER BEFORE THE REGISTRAR OF COMPANIES, DT.NIL. WP(C).No. 28846 of 2004(H) -3- EXT.R2(b) - TRUE COPY OF THE ACCOUNT OPENING FORM SUBMITTED BY THE PETITIONER IN UTI BANK DATED 04.12.2002. EXT.R2(c) - TRUE COPY OF THE LETTER DATED 10.02.2004 ISSUED BY THE SUB REGISTRAR, KOTTAYAM ADDITIONAL DT. 09.02.2004. EXT.R2(e) - TRUE COPY OF THE LETTER DATED 24.12.2004 ISSUED BY THE 1ST RESPONDENT TO THE 2ND RESPONDENT. EXT.R2(f) - TRUE COPY OF THE LETTER DATED 16.12.2004 ISSUED BY THE 1ST RESPONDENT TO THE 2ND RESPONDENT. EXT.R2(g) - TRUE COPY OF THE LETTER DATED 09.09.2005 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXT.R2(h) - TRUE COPY OF THE TAX SENT BY THE PETITIONER DATED 20.09.2005. EXT.R2(i) - TRUE COPY OF THE FIRST PAGE OF THE PASSPORT NO. 500229384 OF THE PETITIONER DT. NIL. EXT.R2(j) - TRUE COPY OF THE 1ST PAGE OF THE PASSPORT NO. 740163256 OF THE PETITIONER DATED NIL. EXT.R2(k) - TRUE COPY OF THE LETTER DATED 02.09.2005 RECEIVED BY THE 2ND RESPONDENT FROM THE REGISTRAR OF COMPANIES, ERNAKULAM. EXT.R2(l) - TRUE COPY OF THE LETTER OF THE SOFTWARE TECHNOLOGY PARKS OF INDIA DT. 28.09.2005. EXT.R2(m) - TRUE COPY OF THE LETTER DATED 30.03.2005 ISSUED BY THE 1ST RESPONDENT TO THE 2ND RESPONDENT. EXT.R4(a) - TRUE COPY OF THE AGREEMENT DATED 10.06.2004 BETWEEN THE 1ST RESPONDENT AND THE PETITIONER. EXT.R4(b) - PLAN OF THE PROPERTY IN SURVEY NO. 325 OF KUMARAKOM VILLAGE. /TRUE COPY/ PA TO JUDGE S.SIRI JAGAN, J ================== W.P(C)No.28846 of 2004 ================== Dated this the 16th day of July, 2008. J U D G M E N T The petitioner is a company registered in India, but managed by a Foreign national as its Chief Executive Officer and Chairman. The Company acquired certain lands in India by purchase from various individuals. When the same was presented for registration before the Additional Sub Registrar's Office, Kottayam, the Sub Registrar informed the advocate of the petitioner by Ext.P3 that the enforcement authorities have prohibited registration of the sale of the properties to the company, which is represented by a foreign national. Along with the same, Ext.P4, copy of the communication from the Directorate of Enforcement, issued to the Sub Registrar of the Additional Sub Registrar's Office, Kottayam was also supplied to the petitioner. The petitioner is challenging Ext.P3 and Ext.P4. According to the petitioner, the Foreign Exchange Management Act, W.P(C)No.28846 of 2004 - 2 - 1999, allegedly based on which Ext.P4 has been issued, does not proscribe an Indian company, even if the Chief Executive Officer of the company is a foreign national from acquiring properties in India. The petitioner would also submit that by Ext.P5, communication, Reserve Bank of India has informed the Chief Executive Officer of the company to that effect. The petitioner would also contend that in so far as the Directorate of Enforcement has not initiated any proceedings against the Company or its Chairman or Directors in respect of this transaction nor was the communication to the Sub Registrar prohibiting registration of sale deeds in respect of the said transactions after a notice and hearing to the petitioner such action is certainly in violation of the principles of natural justice. 2. A counter affidavit has been filed by the Reserve Bank of India, the 1st respondent herein as also the 2nd respondent - the Assistant Director, Directorate of Enforcement. The Reserve Bank of India does not W.P(C)No.28846 of 2004 - 3 - categorically say that what the petitioner has done is in any way against the provisions of the Foreign Exchange Management Act. The 2nd respondent would in his counter affidavit say that the activities of a Chief Executive Officer and the management are suspicious. But they do not refer to any proceedings as against the company or the Chief Executive Officer or the Directors of the company. 3. I am satisfied that without passing a speaking order after complying with the principles of natural justice, which would include a notice and hearing, no orders like Ext.P4 could have been issued to the Sub Registrar which affects the rights of the company to acquire property. If the 2nd respondent has a case that such acquisition of property by the company is in any way against laws of India, he has a duty to issue a notice to the petitioner - company, hear them and pass a speaking order against which the petitioner could have sought legal remedies. Such a procedure does not appear to have been done in this case. Without such a W.P(C)No.28846 of 2004 - 4 - procedure Ext.P3 and P4 cannot be sustained. Accordingly, Ext.P3 and Ext.P4 are liable to be quashed. I do so. I do not express any opinion as to whether respondents 1 and 2 can, at this distance of time, take appropriate proceedings after hearing the petitioner in the matter. Accordingly, Ext.P3 and Ext.P4 are quashed and the writ petition is disposed of as above. S.SIRI JAGAN, JUDGE rhs