CAN A FOREIGN CITIZEN OWN PROPERTY IN INDIA?
Can a foreign citizen hold any immovable property in India? This is the question often raised by Non Resident Indians. Several Indians owning property in India and desirous of settling their property in favour of their sons, daughters and grand children who are citizens of another country also raise this question quite often.
Section 31 (1) of the Foreign Exchange Regulation Act, 1973 categorically states that no person who is not a citizen of India shall, except with the previous general or special permission of the Reserve Bank of India, acquire or hold or transfer or dispose of by sale, mortgage, lease, gift, settlement or otherwise any immovable property situate in India. The only exception is acquisition or transfer of any such immovable property by way of lease for a period not exceeding five years. The dictionary meaning of the word “hold” as given in The Shorter Oxford English Dictionary is “ to have or keep as one’s own; to own as property; to be in possession or enjoyment of”. Therefore it is clear that a foreign national cannot hold any immovable property situate in India whatever is the means by which the said property comes to him.
Now the question is: If some one purchases any property in India in contravention of the said statutory provision, will he acquire a valid title to the property? The above said Section 31 (1) does not provide that if some one purchases any property the title therein does not pass to him. What the Act provides is that if a person contravenes Section 31 and some other Sections, he can be penalized under Section 50 and can also be prosecuted under Section 56. However there is no provision in the Act which makes transaction void or says that no title in the property passes to the purchaser in case there is a contravention of the provision of Section 31 (1). Section 63 contains a proviso regarding confiscation of certain properties but it does not contain any provision for confiscation if there is a breach of Section 31 (1). Therefore the property purchased or acquired in any manner whatsoever in contravention of Section 31 (1) is also not liable to confiscation. It is therefore clear that if a person contravenes the provisions of Section 31 he can be penalized under Sections 50 and 56, but it will not invalidate the passing of title to the purchaser of the property and he can have a valid title to the property even if there is a violation of the provisions of the Foreign Exchange Regulation Act and it is for the concerned authorities to take action against him if there is any violation of the said Act.
- P.Rajendran
