The Appellate Tribunal for the Foreign Exchange Management Act (FEMA) has imposed a penalty of ₹50 lakh on singer Adnan Sami for buying eight flats in Mumbai in 2003 without prior permission from the Reserve Bank of India, when he was a Pakistani national.

However, while the Tribunal has quashed the December 2010 order of the Enforcement Directorate Special Director (Mumbai), for confiscation of the properties. it enhanced the penalty amount from ₹20 lakh to ₹50 lakh.

The penalty amount has to be paid within three months of the order, issued on September 12. Mr. Sami had earlier deposited ₹10 lakh.

The Tribunal's directive came on an appeal by Mr. Sami against the Special Director's order for confiscation of the flats and five parking lots and imposition of ₹20 lakh in penalty.

“The impugned order is set aside as far as exercise of discretion under Section 13(2) of the Act. The finding arrived under Section 13(1) shall remain intact. Mr. Sami shall deposit the remaining ₹40 lakh with the respondent [ED] within three months from today. As no case under Section 13(2) (about confiscation of eight flats and five parking space)...the said findings and part of the order is quashed,” said the Tribunal in its judgment.

Mr. Sami had bought the properties in the Oberoi Sky Garden Co-operative Housing Society, at Lokhandwala in Mumbai, on December 29, 2003.

The singer paid a total of ₹2.53 crore for the flats. He later transferred five flats to his then wife, Sabah Galadari, along with some parking spaces, but afterwards his marriage was declared null and void by the Family Court.

He was not aware that Pakistani nationals could not purchase immovable property in India, as submitted by him.

Among those who appeared for the appellant was senior advocate Mahesh Jethmalani, while the ED Special Director was represented by legal consultant Prashant Pandey.

After hearing both sides, the Tribunal noted that "the flats were purchased by Indian Rupees, out of monies earned in India on which Income Tax has been paid, as well as monies loaned from India banks. The loans have been duly repaid".

It observed that Mr. Sami, after purchase of the flats, had also applied for the grant of Indian citizenship and was issued a certificate of naturalization on January 1, 2016.