HC directs ED to return with interest Rs 7.95 L seized from travel agency owner in 1995

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The Delhi High Court has directed the Enforcement Directorate (ED) to return with interest the sum of Rs 7.95 lakh "illegally" seized from a travel agency owner nearly 25 years ago for alleged violation of foreign exchange law.

Justice Vibhu Bakhru said the man has been deprived of his funds for a considerable period of time and held that confiscation of the amount was "wholly illegal and unsustainable".

The court directed the ED to return the seized amount along with an interest of six per cent per annum from the date of seizure, that is October 4, 1995, till the date of payment.

On calculating the amount to be paid based on six per cent simple interest per annum, the total sum comes to around Rs 20 lakh.

The man, Manak Kala who runs a travel agency, had challenged the February 2014 order of the Adjudicating Authority of ED which had imposed a penalty of Rs 75 lakh on him and directed confiscation of Rs 7.95 lakh, seized from his office, under Section 63 of Foreign Exchange Regulations Act (FERA).

He had challenged the order before Special Director (Appeals) which reduced the penalty. He again challenged it before the Appellate Tribunal for Foreign Exchange which dismissed his appeal and later he approached the high court.

As per details of the case, a sum of Rs 7.95 lakh along with various documents were seized from the office of a tour and travels agency in October 1995.

A statement was made by one of the employees of Kala's travel agency that he was instructed by Kala to receive payments, which came from Dubai, and distribute them under the instructions of some persons residing there, it was alleged.

He had alleged that he had received a total of 68.6 lakh from some unknown persons. However, he retracted his statement the next day.

The ED's counsel submitted before the court that there was no infirmity in the tribunal's order.

The high court said confiscation of Rs 7.95 lakh from Kala's office was unsustainable and upheld his appeal while setting aside the tribunal's order.

"The amount seized from the premises of the appellant (Kala) are liable to be returned to him," it said.

The court said neither the adjudicating authority nor the appellate authority had applied their minds on the question of whether the statement made by the employee was voluntary in view of its retraction on the very next day.

In fact, the tribunal had proceeded on the basis that it was accepted by the appellate authority that the statement of the employee had no evidentiary value, it noted.