Power of RBI to withhold remittance to be made under Automatic route to Wholly owned Subsidiary- cannot be used to reject the remittance on whimsical and arbitrary reasons

Court- Delhi High court
Date -26th March 2021

Citation-Reserve Bank of India Vs Jindal STeel and Power Limited.

In this era of globalisation where the global trade is on the rise, the Delhi High court division bench adorned by CJ in a land mark judgement held that simply pending investigation and/or at the behest of Enforcement directorate, the remittances which are available under the automatic route can not be withheld without giving due and proper reasons. While dismissing the appeal of RBI, the court upheld the single bench decision and also refused to allow the Enforcement directorate to be joined as a party in the Writ interalia on the pretext that ED was not needed in order to decide the present suit and moreover ED did not intervene before the Single Bench.

This judgement will definitely come in handy for all corporates who are facing remittance issues on flimsy investigations by ED which goes on for years.

Ramesh Patodia
31-03-2021