Skip to content

CA Intermediate · Corporate and Other Laws · The Foreign Exchange Management Act, 1999

Under FEMA, 1999, the Directorate of Enforcement officers are empowered to investigate contraventions. Mr. Sanjay Iyer is a person resident in India who has acquired immovable property outside India without any permission or applicable exemption. If such property was acquired in contravention of the Act, what power does the Act give to the authorities?

FEMA lets the authorities act through value-equivalent recovery: if a resident holds foreign assets in contravention and they cannot be reached, assets of equivalent value in India can be seized, following the prescribed procedure and confirmation, so overseas location does not give immunity.

  1. ANothing can be done because the property is located outside India
  2. BThe Central Government may, by seizure alone, sell the property without any order
  3. CThe Adjudicating Authority may in specified cases only give a warning, with no recovery of equivalent value
  4. DThe authorities may take action for recovery of equivalent value of foreign exchange, security or property held in India if the foreign asset cannot be reachedCorrect

Explanation

Section 4 restricts a resident from acquiring or holding foreign exchange, security or immovable property outside India unless permitted. Under section 37A, where such assets are held outside India in contravention, the Authorised Officer can seize value-equivalent assets situated in India, subject to the procedure and confirmation by the Competent Authority. The location abroad therefore does not prevent action, and seizure alone is not a final sale without due process.

Did you get it right without looking?

One question tells you little. A timed set on The Foreign Exchange Management Act, 1999 shows your real accuracy, how long you take and where you lose marks.

Practise The Foreign Exchange Management Act, 1999Free diagnostic mock

More The Foreign Exchange Management Act, 1999 questions