Danlaw Technologies India Limited
- CitationRBI Compounding Order CA No. HYD 435
Ratio decidendi
The rule this decision rests on
The compounding authority holds that a resident company which receives, in respect of a transfer of shares from a resident to a non-resident under the foreign direct investment route, excess share application money that is refunded beyond the sixty-day period prescribed by Regulation 13.1(4) of Schedule 1 to Notification No. FEMA 20(R)/2017-RB contravenes that regulation, and that such a delayed refund is a contravention amenable to compounding. The authority holds that a compounding application may be disposed of on the basis of the averments in the application where the applicant, having been given an opportunity of personal hearing, declines to appear and asks that the matter be decided on the papers. The authority holds that, under Section 15 of FEMA, the grant of compounding is conditional on the veracity of the applicant's declarations that it is not under enquiry, investigation or adjudication and has filed no appeal under Section 17 or 19, and that the order is without prejudice to other action if those declarations prove false or incorrect.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
In the matter of M/s. Danlaw Technologies India Limited 43, Sagar Society, Road No.2, Banjara Hills, Hyderabad-500 034 (Applicant) In exercise of the powers conferred under sub-section (1) of Section 15 of Foreign Exchange Management Act, 1999 and the Regulations/ Rules/ Notifications/ Orders made thereunder, I pass the following Order The applicant has filed the compounding application dated June 18, 2019 received on June 26, 2019 for compounding of contraventions of the provisions of the Foreign Exchange Management Act, 1999 (the FEMA) and the regulations issued thereunder. The contravention sought to be compounded is delay in refund of excess share application money received with respect to transfer of shares from Resident to Non- Resident under Foreign Direct Investment beyond 60 days in terms of Regulation 13.1(4) of Schedule 1 to FEMA 20(R) dated November 07, 2017 (hereinafter referred to as Notification No. FEMA 20(R)/2017-RB) as amended from time to time. 2. The relevant facts of the case are as follows:
Compounding of contraventions under FEMA 1999 M/s Danlaw Technologies India Limited CA No. HYD 435 a) The applicant is a resident company incorporated as Limited Company under the Companies Act, 1956 on December 03, 1992 (CIN: L72200TG1992PLC015099). The company is engaged in the businesses of “Writing, modifying, and testing of computer program to meet the needs of a particular client excluding web-page designing” and “Providing software support and maintenance to the clients”. b) The applicant had received inward remittance from a foreign investor viz, M/s.Danlaw Inc. as indicated below: Name of Name of Total amount Excess Date of Date of Transferor Transferee of amount receipt of request for consideration received funds refund (INR) Danlaw Danlaw Inc. 5,55,00,000 8,36,294.11 19.09.2018 08.04.2019 Technologi es India Limited The applicant reported receipt of remittance of ₹ 563, 36,294.11 to the Regional Office of Reserve Bank of India, towards transfer of shares held in M/s Danlaw Electronics Assembly Limited amounting to ₹ 5,55, 00,000/-, hence there was an excess share application money of ₹ 8, 36,294.11 which was refunded with a delay of 4 months 20 days approximately beyond the stipulated period in contravention of Regulation 13.1 (4) of Schedule 1 to Notification No. FEMA 20 (R) /2017-RB dated November 07, 2017 as amended from time to time. 3. (a) The applicant was given an opportunity for personal hearing vide Reserve Bank’s letter No. HY.FE.FID/764/14.66.003/2019-20 dated September 27, 2019 for further submission in person and/or producing documents, if any, in support of the application.
Compounding of contraventions under FEMA 1999 M/s Danlaw Technologies India Limited CA No. HYD 435 (b) The applicant vide mail dated September 27, 2019 stated that they are foregoing appearing for the personal hearing and requested that the compounding application may be disposed of on the basis of merits in terms of the facts/submission made therein along with the compounding application. The application for compounding is, therefore, being considered on the basis of the averments made in the application. 4. I have given my careful consideration to the documents on record. Accordingly, I hold that the applicant has contravened the following FEMA provision issued in terms of: - (a) Regulation 13.1(4) of Schedule I to Notification No. FEMA 20(R)/2017-RB for delay in refund of excess share application money received with respect to transfer of shares from Resident to Non-Resident and the period of contravention is 4 months 20 days approximately. 5. It has been declared in the compounding application dated June 18, 2019 that the particulars given by the applicant in the application are true and correct to the best of their knowledge and belief. It has been declared in the declaration dated June 18, 2019 that the applicant was not under any enquiry/investigation/adjudication by any agency as on the date of the application and has, in this regard, not informed of initiation of any such enquiry/investigation/adjudication proceedings against it thereafter. It has further been declared that the applicant has not filed any appeal under section 17 or section 19 of FEMA, 1999. Accordingly, the above contraventions which are being compounded in this Order are subject to the veracity of the above declarations made by the applicant and this order is without prejudice to any other action which may be taken by any authority under the extant laws if the said declarations are subsequently discovered to be false and/or incorrect. 6. In terms of Section 13 of the FEMA, any person contravening any provision of the Act shall be liable to a penalty up to thrice the sum involved in such contravention upon adjudication. However, taking into account the relevant facts and circumstances of the case as stated in the foregoing paragraphs, I am persuaded to take a lenient view on the amount for which the contravention is to be compounded and I consider
Compounding of contraventions under FEMA 1999 M/s Danlaw Technologies India Limited CA No. HYD 435 that an amount of ₹ 54,181/-(Rupees Fifty Four Thousand One Hundred Eighty One Only) will meet the ends of justice. 7. Accordingly, I compound the admitted contravention, namely, the contravention of Regulation 13.1(4) of Schedule 1 to Notification No. FEMA 20(R)/2017-RB by the applicant on the facts discussed above in terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000 on payment of an amount of ₹ 54,181/-(Rupees Fifty Four Thousand One Hundred Eighty One Only) which shall be deposited by the applicant with the Reserve Bank of India, Foreign Exchange Department, 1st Floor, Saifabad, Hyderabad - 500004 by a demand draft drawn in favour of the "Reserve Bank of India" and payable at Hyderabad within a period of 15 days from the date of this order. In case of failure to deposit the compounded amount within the above mentioned period, Rule 10 of the Foreign Exchange (Compounding Proceedings) Rules, 2000 dated May 3, 2000 shall apply.
The application is disposed of accordingly. Dated this 30th day of September 2019
Sd/- (P Kalyan Chakravarthy) Assistant General Manager
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