ORDER

01.04.2026

By this appeal, a challenge has been made to the order dated 25.07.2022 passed by the Competent Authority under Section 37A(3) of the Foreign Exchange Management Act, 1999 (in short “the Act of 1999”) denying confirmation of the Seizure. The case involves chequered history. Thus, before we deal with the preliminary objectio raised by the respondent about the maintainability of the appeal and application of Section 37A of the Act of 1999, on the facts of this, it would be gainful to refer rather to quote the Seizure Order of the Competent Authority under section 37A(3) of the Act of 1999. The Seizure Order, otherwise, gives complete history of the case and the reasons for seizure which is quoted hereunder:-

In exercise of the powers conferred by Section 37A (1) of the Foreign Exchange Management Act, 1999 [FEMA], I, Shubham Agrawal, IRS, Deputy Director, Directorate of Enforcement, Chennai Zonal Office-II, have reason to believe that the following foreign exchange/ foreign securities situated outside India are held in Contravention of Section 4 of FEMA by the Indian Company Southern Agrifurane Industries Private Limited [SAIPL]

TABLE-A

Therefore, as per the powers conferred under section 37A (1] of FEMA, for the reasons as recorded in writing in the ensuing Paras, I, hereby order the seizure of the following assets situated within India of the Indian Company Southern Agrifurane Industries Pvt Limited and its Directors/shareholders Mr. Nesamanimaran Muthu alias Mr. MGM Maran and Mr. MGM Anand, respectively, being value equivalent to Rs 216,40, 19,000/- of such foreign exchange/foreign security acquired/ held/ owned/ possessed in contravention of Section 4 of FEMA

TABLE- B

Therefore, I hereby order the seizure of all the above Indian Assets owned respectively for the company Southern Agrifurane Industries Pvt Ltd, its directors/shareholders Mr. Nesamanimaran Muthu, Mr. MGM Anand, respectively, within the powers conferred under the provisions of Section 37A(l) of FEMA of the equivalent value to the tune of Rs.216.40 crores

A. Reasons to believe recorded under section 37Af of FEMA:

As per Section 37A [1] of FEMA:

"Special provisions relating to assets held outside India in contravention of section 4.

Upon receipt of any Information or otherwise, if the Authorised Officer prescribed by the Central Government has reason to believe that any foreign exchange, foreign security, or any immovable property, situated outside India, is suspected to have been held in contravention of section 4, he may after recording the reasons in writing, by an order, seize value equivalent, situated within India, of such foreign exchange, foreign security or immovable property:

Provided that no such seizure shall be made in case where the aggregate value of such foreign exchange, foreign security or any Immovable property, situated outside India, Is less than the value as may be prescribed".

Therefore, as per Section 37A [1] of FEMA, the twin conditions necessary and sufficient for seizure of equivalent value of assets situated within India are;

1. Reason to believe that such foreign exchange/foreign security, situated outside India, is suspected to have been held in contravention of Section 4.

2. Provided that no such seizure shall he made in a case where the aggregate value of such foreign exchange/security etc, situated outside India, is less than the value as may be prescribed. Vide '•.V G.S.R. 701(E) dated 16.09.2015 issued by the Ministry of Finance (Department of Revenue), Government of India, the value prescribed is Rs 1 crore.

As per Section 4 of FEMA

"Holding of foreign exchange, etc.

4.Save as otherwise provided in this Act, no person resident in India shall acquire, hold, own, possess or transfer any foreign exchange, foreign security or any immovable property situated outside India.

Therefore, the three conditions necessary and sufficient for contravention of Section 4 of FEMA are:

A. The person is a person 'Resident in India'.

B. Such person acqu