In a detailed judgment delivered on October 14, 2025, the Delhi High Court dismissed the appeal of Arjun Patil, who had challenged the confiscation of ₹12.31 lakh and a penalty imposed by the Enforcement Directorate (ED) under the Foreign Exchange Regulation Act (FERA). The bench of Justice Subramonium Prasad and Justice Vimal Kumar Yadav ruled that the findings of the adjudicating authority and appellate tribunal "withstand judicial scrutiny" and found no reason to interfere.
Background
The case dates back to February 1997, when ED officials raided Patil’s business premises in Karol Bagh, New Delhi, after receiving information about illegal forex transactions. During the search, investigators recovered ₹12.31 lakh in Indian currency, USD 6,371, and several gold biscuits.
Two Nepali nationals, Dukal Bhattarai and Ram Nath Dhukal, were also caught at the spot carrying large sums of US dollars. According to the agency, they were part of an ongoing illegal trade of foreign currency and gold that Patil had been running.
Patil was later accused of purchasing gold brought from Nepal using foreign exchange and was charged with contravening Sections 8(1), 8(2), and 64(2) of FERA. In 2003, the Deputy Director of ED imposed a penalty of ₹40,000 and ordered the confiscation of the seized money. His appeal before the Appellate Tribunal for Foreign Exchange failed in 2006.
Court's Observations
Before the High Court, Patil argued that his confession had been obtained under duress and torture, and that the Indian currency could not legally be confiscated. His counsel maintained that the money was meant for "lawful business dealings" and that no evidence showed any attempt to illegally purchase foreign exchange.
The bench, however, disagreed. Justice Prasad noted that the adjudicating authority had considered all evidence, including statements of co-accused, seizure records, and recovered documents, before concluding that Patil was engaged in unlawful forex activity.
"The appellant has not been able to demonstrate that his statement was obtained under duress or coercion," the court observed.
Citing the Supreme Court's precedents, the bench emphasized that a retracted confession can still be relied upon if found voluntary and corroborated. It said, Even if the statement of the appellant is not considered, the statements of the two Nepalese nationals and documentary evidence clearly establish the prosecution's case.
The judges also clarified that Indian currency falls within the scope of ‘property’ under Section 63 of FERA, empowering authorities to confiscate it when used in contravention of the law.
"The argument that ED lacked the power to seize Indian money is devoid of substance," the bench held.
Decision
After reviewing the record, the court held that Patil’s challenge raised no "question of law", which is a necessary ground for appeal under Section 35 of the Foreign Exchange Management Act (FEMA)-the successor to FERA.
The bench concluded:
"The appellant has been unable to explain the source of ₹12,31,000 recovered from his premises. It is evident that the amount was intended for illegal purchase of foreign exchange."
Accordingly, the High Court dismissed the appeal, affirming both the adjudicating officer's and the tribunal’s findings. The confiscation of cash and the penalty of ₹40,000 remain in force.
With this ruling, the court effectively brought an end to a 28-year-old dispute rooted in India’s pre-liberalization foreign exchange laws-underscoring that even decades later, illegal dealings in currency and gold continue to face strict judicial scrutiny.
Case Title: Arjun Patil v. Union of India & Others
Case Number: CRL.A. 407/2007
Date of Judgment: 14th October, 2025
Appellant's Counsel:
Mr. Jaspreet Singh Kapur, Mr. Wasim Ansari, and Ms. Shweta, Advocates
Respondent's Counsel:
Ms. Bharathi Raju (Senior Panel Counsel) with Ms. Divyangi, Advocates for Union of India
Mr. Vivek Gurnani, Panel Counsel with Mr. Kanishk Maurya, Advocate for Enforcement Directorate