Pakistan International Airlines (PIA) has justified its purchasing of a few flats in Central Delhi by saying that the Indian law prohibits only Pakistani nationals not companies to own immobile assets in India.
PIA, which is already the under ED scanner for alleged violation of the Foreign Exchange Management Act (FEMA) for purchase of the flats in 2005, has sent a clarification to ED.
Dissatisfied with PIA’s response, the ED may soon serve it a Show Cause Notice, a source told HT. The ED had in January served a notice to PIA, pointing out that its purchase of the flats and parking spaces in a building located at Barakhamba Road for office use was against FEMA.
“FEMA laws stipulate that no person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, China, Nepal and Bhutan without prior permission of the Reserve Bank of India (RBI) can acquire or transfer immovable property in India other than lease, not exceeding five years, said the source.
The source said that the RBI is clear that FEMA’s use of the words “no person being a citizen of Pakistan” covered both its nationals as well as companies.
“The PIA, in its response to our notice has incorrectly stated that the FEMA does not prohibit its acquisition of the immovable assets as it is a company, not a Pakistani individual. That’s not a correct interpretation,” said the source. PIA informed ED that its action had not violated the FEMA as it had allegedly fulfilled all the formalities in connection with the acquisition. The source, however, said that the PIA had not completed the formalities as it had “informed” the RBI but did not have the mandatory approval.
Despite attempts, HT could not contact PIA’s Delhi office for their comment.