Section 37A of FEMA : Section 37A: Special Provisions Relating To Assets Held Outside India In Contravention Of Section 4

Explanation using Example

Imagine a businessman, Mr. Sharma, who has a property in Switzerland that he acquired without adhering to the regulations under Section 4 of the Foreign Exchange Management Act (FEMA) 1999. The Enforcement Directorate (ED) receives a tip-off about this illegal acquisition. An Authorized Officer from the ED, upon investigation, believes that Mr. Sharma's property in Switzerland is indeed held in contravention of FEMA.

The Authorized Officer, after recording the reasons, issues an order to seize assets of equivalent value that Mr. Sharma holds within India, such as his bank accounts or other properties, to the extent of the value of the Swiss property.

This seizure order is then reviewed by a Competent Authority within 30 days. Mr. Sharma is given the opportunity to be heard, and the Competent Authority has 180 days (excluding any stay period by a court) to confirm or revoke the seizure.

If Mr. Sharma decides to disclose the details of his Swiss property and repatriates the asset back to India, he can apply to have the seizure order set aside. If he is dissatisfied with the Competent Authority's decision, he has the right to appeal to the Appellate Tribunal.