Pak born Hindu who took refuge in India amid persecution in Pak gets ED relief
The person received a notice from ED for contravening regulation 7 of the FEMA stating that he had not taken permission from RBI before acquiring properties as he was a Pakistani national at that time
Rajkumar Malhotra, a Pakistan born Hindu, immigrated to India with his family in 1992 seeking political asylum and settle permanently here as they were being persecuted and tortured there.
Indian government granted them citizenship by ‘naturalization’ under citizenship laws – a person can acquire citizenship by naturalization if he/she stayed in India for 12 years – in 2017.
With the help of his relatives, who had also immigrated from Pakistan here, Malhotra did petty businesses for survival and bought two properties in Dehradun, a plot worth ₹13.50 lakh in 2007 and another worth ₹19 lakh in 2012.
After almost 23 years, one fine day, in July 2015, Malhotra received a show cause notice from the Enforcement Directorate (ED) for contravening regulation 7 of the foreign exchange management act (FEMA) stating that he had not taken permission from the Reserve Bank of India (RBI) before acquiring the properties as he was a Pakistani national at that time.
The adjudicating authority under FEMA imposed a penalty of ₹3 lakh on Malhotra, which he deposited as ordered. To be sure, FEMA, which deals with foreign exchange and funding, is a civil offence.
However, unhappy with the penalty amount, ED moved the special director (appeals) under FEMA with a plea that “the amount of penalty imposed does not correspond with the quantum of contravention”, requesting more penalty and confiscation of the properties.
Based on documents and considering the facts put by the ED, the special director (appeals) passed a fresh order imposing a further penalty of ₹4.5 lakh on Malhotra.
Aggrieved by the enhanced penalty, Malhotra approached the appellate tribunal for forfeited property (ATFP) in Delhi in September last year saying when he acquired these properties, “the legal intricacies were not known to him” and that he had already paid ₹3lakh penalty which was imposed on him earlier.
He submitted before ATFP that he is a law-abiding individual who has never been involved in any criminal or anti-social activity.
“He (Malhotra) came to India under very difficult circumstances, with the intention of permanently settling here. He has been leading a precarious existence doing petty business with the help of his relatives here who had also similarly immigrated from Pakistan. He acquired the properties in question, but as the legal intricacies were not known to him, he could not comply with the statutory requirement,” argued his lawyers, Prashant Pandey, Manish Mishra and Nitin Verma before ATFP.
The lawyers informed the court that the family came to India in 1992 “as they were being persecuted and tortured in Pakistan for being Hindus”.
Based on his political asylum plea, Malhotra was granted citizenship of India on February 15, 2017, and a certificate of naturalization was issued by the ministry of home affairs (MHA) under the Citizenship Act.
“In view of this, he submits, the adjudicating authority ought to have considered that the transaction pertaining to the purchase of immovable property has been ‘automatically regularized’ and Malhotra cannot be treated as a Pakistani national for the purpose of FEMA regulations,” the lawyers argued.
They further argued that there was no violation of FEMA because there was no use of foreign funds. Rather, money earned in India was used to buy properties besides his relatives helping him.
“He (Malhotra) had sought political asylum in India on account of facing persecution in Pakistan. He will have to face severe consequences and irreparable loss will be suffered if the improved order is not set aside,” the lawyers said, adding that there was no mens rea on part of Malhotra while buying the properties.
Agreeing with Malhotra’s lawyers, the tribunal, in its order on September 5, set aside the penalty of ₹4.5 lakh further imposed by special director (appeals).
“No doubt ignorance of the law is not a defence and every person is presumed to know the law to which he or she is subject. Nevertheless, in view of the facts mentioned above which are not in dispute, we are of the view that the ends of justice have been met with the penalty of ₹3,00,000 imposed upon the appellant and his father in the first instance which was duly paid, and levy of further penalty of ₹4,50,000 was not justified in his case. Accordingly, the same is hereby set aside,” the tribunal said in the order, a copy of which has been seen by HT.