Govt not convinced of PIA reply on office purchase

“The matter has to be probed under Section 7 read with Section 8 of the FEMA and not under Section 5 as the company is claiming,” a finance ministry source told The Indian Express. The matter was referred to the ED by the finance ministry when the Reserve Bank of India (RBI) almost after a decade, brought the matter of purchase of property by the airline to the notice of the ministry.

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PIA had purchased six flats and five parking slots at the Barakhamba Road area in the capital in 2005 for opening its branch office and had informed the RBI.

The source said that while PIA has taken a recourse to Section 5 which talks about citizens, the case has to be probed in view of Section 7, which talks about the “persons” who are prohibited from acquiring immovable property in India.

“The word persons also includes artificial persons. Since PIA is an artificial person, it has to get the approval of the RBI of India before buying the properties,” the source said.

According to Section 7 of FEMA, no person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan without prior permission of the RBI shall acquire or transfer immovable property in India, other than lease, not exceeding five years.

Last month, the ED had summoned PIA to “explain” the purchase of the properties and submit documents pertaining to the case. If found guilty, the ED can either levy financial penalty or cancel the purchase deal. Details have also been sought from agencies who examined the deal.