French Bakery Pvt. Ltd.

In exercise of the powers under Section 15(1) of Foreign Exchange Management Act, 1999 and the Regulations/ Rules/ Notifications/ Orders made thereunder, I pass the following Order. ORDER The applicant has filed the compounding application dated April 11, 2019 (received at Reserve Bank of India, New Delhi on April 15, 2019) and addendums dated April 24, 2019 and July 15, 2019 for compounding of contraventions of the provisions of the Foreign Exchange Management Act, 1999 (hereinafter referred to as FEMA) and the regulations issued thereunder. The contraventions sought to be compounded are those of (i) delay in reporting foreign inward remittances received for issue of shares, (ii) delay in filing Form FC-GPR after issue of shares, and (iii) delay in issue of shares beyond 180 days from the date of receipt of inward remittances, in terms of paragraphs 9(1)(A), 9(1)(B) and 8 respectively of Schedule 1 to Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 notified vide Notification No. FEMA 20/2000-RB dated May 3, 2000 (hereinafter referred to as FEMA 20/2000-RB), as amended from time to time, and (iv) issue of shares to persons resident outside India prior to receipt of inward remittance, in terms

French Bakery Private Limited CA No. NDL 432/2019 of paragraph 2(2) of Schedule 1 to Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 notified vide Notification No. FEMA 20(R)/2017-RB dated November 7, 2017 (hereinafter referred to as FEMA 20(R)/2017-RB), as amended from time to time.

2. The relevant facts of the case are as follows: (a) The applicant company, incorporated on October 14, 2008, is engaged in the business of production, distribution and sale of biscuits, cakes, pastries, rusk etc. (b) The applicant had reported receipt of foreign inward remittance on eighty three occasions from February 2010 to May 2018. On fifty occasions, the applicant had reported the remittances received from its foreign investors with delay ranging from 2 days to 4 years, 11 months and 10 days beyond the prescribed period, as detailed below, in contravention of paragraph 9(1)(A) of Schedule 1 to FEMA 20/2000-RB, as then applicable. Sl. No. Date of Receipt Amount (₹) Date of Reporting 1 20.08.2010 17,54,031.00 18.10.2010 2 23.08.2010 11,06,655.00 18.10.2010 3 23.08.2010 11,06,515.00 18.10.2010 4 24.08.2010 14,38,710.00 18.10.2010 5 09.09.2010 27,62,580.00 18.10.2010 6 15.09.2010 27,52,080.00 18.10.2010 7 31.01.2011 45,37,546.20 28.04.2011 8 18.07.2011 37,45,358.68 02.12.2011 9 01.11.2011 38,78,880.00 07.12.2011 10 26.12.2011 7,80,945.00 22.08.2012 11 08.05.2012 40,62,269.16 17.05.2017 12 14.06.2012 8,27,735.97 13.09.2012 13 14.06.2012 10,46,758.89 13.09.2012 14 19.06.2012 8,36,442.96 13.09.2012 15 29.06.2012 75,34,450.00 13.09.2012 16 06.08.2012 10,02,749.72 13.09.2012 17 07.08.2012 7,67,769.39 13.09.2012 18 07.08.2012 11,38,987.55 19.11.2012 19 28.09.2012 53,00,157.53 11.12.2012 20 11.10.2012 51,57,336.24 11.12.2012 21 21.11.2012 6,18,609.50 24.05.2013 22 21.11.2012 10,12,010.93 27.05.2013 23 29.11.2012 7,31,390.38 27.05.2013 24 31.12.2012 27,45,063.75 27.05.2013 25 27.02.2013 38,61,210.00 27.05.2013 26 17.04.2013 24,58,019.28 17.06.2013 27 29.04.2013 16,04,251.93 05.07.2013

French Bakery Private Limited CA No. NDL 432/2019

Sl. No. Date of Receipt Amount (₹) Date of Reporting 28 03.05.2013 5,86,254.22 14.03.2018 29 03.05.2013 16,55,590.42 05.06.2013 30 07.05.2013 5,80,491.65 14.03.2018 31 28.06.2013 9,31,408.00 09.03.2018 32 24.07.2013 5,41,506.31 27.02.2018 33 23.08.2013 35,32,484.85 26.09.2013 34 03.09.2013 12,06,209.60 12.06.2017 35 13.09.2013 3,77,850.82 17.02.2018 36 19.09.2013 16,32,710.00 19.03.2018 37 08.01.2014 28,82,201.00 17.05.2017 38 18.02.2014 22,42,647.00 12.06.2017 39 03.04.2014 20,12,565.00 09.03.2018 40 17.04.2014 50,23,500.00 19.05.2014 41 02.06.2014 1,02,72,500.00 22.01.2015 42 19.08.2014 50,54,525.00 07.02.2018 43 07.10.2014 28,65,182.51 14.03.2018 44 17.10.2014 30,56,000.00 22.03.2018 45 06.05.2015 63,02,000.00 26.09.2016 46 23.09.2015 65,68,500.00 26.09.2016 47 23.03.2016 66,47,500.00 30.09.2016 48* 10.05.2016 66,34,000.00 30.11.2018 49 03.02.2017 49,55,700.00 21.03.2017 50* 03.10.2017 20,00,000.00 18.12.2018 Total 14,21,29,840.44 *Reporting of receipt of foreign inward remittance for issue of capital instruments in Advance Remittance Form was dispensed with in terms of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) (Amendment) Regulations, 2018 with effect from September 1, 2018. Delay in reporting of foreign inward remittance has, therefore, been taken up to August 31, 2018. Whereas, in terms of paragraph 9(1)(A) of Schedule 1 to FEMA 20/2000-RB, an Indian company issuing shares or convertible debentures or warrants in accordance with these Regulations shall submit through AD bank to the Regional Office concerned of the Reserve Bank under whose jurisdiction the Registered office of the company operates, not later than 30 days from the date of receipt of the amount of consideration received by Indian company for issue of shares or convertible debentures or warrants, a report in Advance Reporting Form as specified by Reserve Bank from time to time along with documents prescribed therein.

Further, on five other occasions the delays were in contravention of the provisions of Regulation 13.1(1) of FEMA 20(R)/2017-RB, as then applicable, and the applicant paid Late Submission Fee (LSF) for the said contraventions as required in terms of Regulation 13.2 of FEMA 20(R)/2017-RB. (c) The applicant had reported the issue of shares on forty four occasions from March 2010 to May 2018. On thirty four occasions, the applicant had reported the issue of French Bakery Private Limited CA No. NDL 432/2019 shares to its foreign investors with delay ranging from 5 days to 7 years, 10 months and 3 days beyond the prescribed period, as detailed below, in contravention of paragraph 9(1)(B) of Schedule 1 to FEMA 20/2000-RB, as then applicable. Sl. No. Date of Issue Amount (₹) Date of Reporting 1 22.03.2010 11,75,730.00 28.06.2010 2 04.06.2010 64,28,160.00 01.11.2010 3 22.11.2010 1,02,43,950.00 25.10.2018 4 28.04.2011 45,37,530.00 02.06.2011 5 02.01.2012 37,45,350.00 08.02.2012 6 15.04.2012 38,78,865.00 16.06.2017 7 15.06.2012 52,71,435.00 17.06.2017 8 30.10.2012 67,63,295.00 05.04.2018 9 15.11.2012 9,900.00 03.01.2019 10 22.12.2012 1,04,43,840.00 10.03.2018 11 22.03.2013 89,68,180.00 19.09.2016 12 22.03.2013 1,04,57,395.00 11.12.2018 13 01.07.2013 15,17,620.00 04.07.2018 14 01.07.2013 70,33,975.00 02.07.2018 15 31.12.2013 93,71,570.00 26.06.2018 16 31.12.2013 15,84,050.00 22.10.2018 17 31.03.2014 51,24,795.00 08.02.2018 18 10.06.2014 1,52,95,930.00 06.02.2018 19 01.09.2014 50,54,465.00 26.03.2018 20 20.11.2014 59,21,110.00 30.08.2018 21 02.12.2014 20,12,530.00 29.05.2018 22 15.01.2015 63,16,960.00 23.05.2016 23 20.03.2015 62,34,995.00 10.03.2018 24 07.05.2015 63,01,945.00 20.02.2018 25 05.10.2015 65,68,445.00 14.10.2016 26 24.03.2016 66,47,485.00 03.02.2018 27 11.05.2016 66,33,965.00 30.11.2018 28 15.10.2016 56,64,360.00 23.03.2017 29 28.10.2016 49,19,525.00 23.03.2017 30 04.02.2017 49,55,665.00 23.06.2017 31 23.03.2017 35,23,325.00 29.06.2017 32 26.05.2017 50,49,720.00 03.02.2018 33 07.07.2017 64,54,955.00 03.02.2018 34 06.10.2017 19,99,985.00 18.12.2018 Total 19,61,11,005.00 Whereas, in terms of paragraph 9(1)(B) of Schedule 1 to FEMA 20/2000-RB, an Indian company issuing shares or convertible debentures or warrants in accordance with these Regulations shall submit through AD bank to the Regional Office concerned of the Reserve Bank under whose jurisdiction the Registered office of the company operates, not later than 30 days from the date of issue of shares or convertible

French Bakery Private Limited CA No. NDL 432/2019 debentures or warrants, a report in Form FC-GPR as specified by the Reserve Bank from time to time together with documents prescribed therein. Further, on eight other occasions the delays were in contravention of the provisions of Regulation 13.1(2) of FEMA 20(R)/2017-RB, as then applicable, and the applicant paid Late Submission Fee (LSF) for the said contraventions as required in terms of Regulation 13.2 of FEMA 20(R)/2017-RB. (d) The applicant had issued 30,962 equity shares on December 2, 2014 for a consideration of ₹20,12,530/- against the remittance received from its foreign investor on April 3, 2014 with delay of 2 months and 2 days beyond the prescribed period, in contravention of paragraph 8 of Schedule 1 to FEMA 20/2000-RB, as then applicable. Whereas, in terms of paragraph 8 of Schedule 1 to FEMA 20/2000-RB, a company in India issuing shares or convertible debentures or warrants under this Schedule to a person resident outside India shall receive the amount of consideration for such shares or convertible debentures or warrants by inward remittance through normal banking channels, or by debit to NRE/ FCNR(B) account of the person concerned maintained with an authorised dealer/ authorised bank, or by debit to a non-interest bearing Escrow account (in Indian Rupees) maintained in India with an AD bank in accordance with Foreign Exchange Management (Deposit) Regulations, 2000. Provided that if the shares or convertible debentures or warrants are not issued within 180 days from the date of receipt of the inward remittance or date of NRE/ FCNR(B)/ Escrow account the amount of consideration so received shall be refunded to the person concerned by outward remittance through normal banking channels or by credit to his NRE/ FCNR(B)/ Escrow account, as the case may be.

Provided further that the Reserve Bank may, on an application made to it and for sufficient reasons permit an Indian company to refund the amount of consideration received towards issue of security, if such amount is outstanding beyond a period of 180 days from the date of receipt. (e) The applicant had issued 33,783 equity shares on April 19, 2018 for a consideration of ₹24,99,942/- against the remittance received from its foreign investor on April 20, 2018, in contravention of paragraph 2(2) of Schedule 1 to FEMA 20(R)/2017-RB, as then applicable. Whereas, in terms of paragraph 2(2) of Schedule 1 to FEMA 20(R)/2017-RB, capital instruments shall be issued to the person resident outside India making such investment within sixty days from the date of receipt of the consideration.

French Bakery Private Limited CA No. NDL 432/2019 (f) Thus, there are contraventions of paragraphs 9(1)(A), 9(1)(B) and 8 of Schedule 1 to FEMA 20/2000-RB, as then applicable, and paragraph 2(2) of Schedule 1 to FEMA 20(R)/ 2017-RB, as then applicable.

3. The applicant was given an opportunity for personal hearing for further submission in person and/ or by producing documents, if any, in support of the application. Shri Raman Oberoi, Manager, Finance and Ms. Durga, Company Secretary, appeared for personal hearing on September 6, 2019 on behalf of the applicant. The representatives admitted the contraventions committed by the applicant for which compounding has been sought. During the personal hearing, they submitted that contraventions were without any malafide or wilful intention but were mainly due to delay in receipt of FIRC and KYC from their AD bank, procedural issues and inadvertence. They requested for a lenient view in the matter. The application for compounding is, therefore, being considered on the basis of averments made in the application as well as other documents and submissions made during the personal hearing.

4. I have given my careful consideration to the documents on record and submissions made by the applicant during the personal hearing. Accordingly, I hold that the applicant has contravened the following FEMA provisions: (a) Paragraph 9(1)(A) of Schedule 1 to FEMA 20/2000-RB, as then applicable, on account of delay in reporting foreign inward remittance received for issue of shares as detailed in paragraph 2(b) above. The contraventions relate to an amount of ₹14,21,29,840.44 (Rupees Fourteen Crore Twenty One Lakh Twenty Nine Thousand Eight Hundred Forty and Paise Forty Four only) and the period of delay ranges from 2 days to 4 years, 11 months and 10 days. (b) Paragraph 9(1)(B) of Schedule 1 to FEMA 20/2000-RB, as then applicable, on account of delay in filing Form FC-GPR after issue of shares as detailed in paragraph 2(c) above. The contraventions relate to an amount of ₹19,61,11,005/- (Rupees Nineteen Crore Sixty One Lakh Eleven Thousand and Five only) and the period of delay ranges from 5 days to 7 years, 10 months and 3 days. (c) Paragraph 8 of Schedule 1 to FEMA 20/2000-RB, as then applicable, on account of delay in issue of shares beyond 180 days from the date of receipt of inward remittance, as detailed in paragraph 2(d) above. The contravention relates to an French Bakery Private Limited CA No. NDL 432/2019 amount of ₹20,12,530/- (Rupees Twenty Lakh Twelve Thousand Five Hundred and Thirty only) and the period of delay is 2 month and 2 days. (d) Paragraph 2(2) of Schedule 1 to FEMA 20(R)/2017-RB, as then applicable, on account of issue of shares to persons resident outside India prior to receipt of inward remittance as detailed in paragraph 2(e) above. The contravention relates to an amount of ₹24,99,942/- (Rupees Twenty Four Lakh Ninety Nine Thousand Nine Hundred and Forty Two only) and the period of contravention is 1 day.

5. It has been declared in the compounding application dated April 11, 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 also been declared in the declaration furnished with the compounding application 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. 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 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. After considering the submissions made by the applicant and the entire facts and circumstances of the case I am persuaded to compound the contraventions, in line with the Guidance Note on Computation Matrix prescribed as part of Master Direction – Compounding of Contraventions, framed in accordance with the Foreign Exchange (Compounding Proceedings) Rules 2000. Accordingly, it stands to reason that payment of an amount of ₹18,73,642/- (Rupees Eighteen Lakh Seventy Three Thousand Six Hundred and Forty Two only) will meet the ends of justice in the circumstances of this case.

7. Accordingly, I compound the admitted contraventions of paragraphs 9(1)(A), 9(1)(B) and 8 of Schedule 1 to FEMA 20/2000-RB, as then applicable, and paragraph 2(2) of Schedule 1 to FEMA 20(R)/ 2017-RB, as then applicable, by the applicant

French Bakery Private Limited CA No. NDL 432/2019 based on the facts detailed above in terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000, on payment of an amount of ₹18,73,642/- (Rupees Eighteen Lakh Seventy Three Thousand Six Hundred and Forty Two only) which shall be deposited by the applicant with the Reserve Bank of India, Foreign Exchange Department, 6, Sansad Marg, New Delhi - 110001 by a demand draft drawn in favour of the “Reserve Bank of India” and payable at New Delhi 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 accordingly.

Dated this the 9th day of September 2019.

Sd/- (V.G. Sekar) Chief General Manager