Goodvitamin Foods Pvt. Ltd.
- CitationRBI Compounding Order CA No. NDL 382/2019
Ratio decidendi
The rule this decision rests on
This is a compounding order under Section 15(1) of FEMA, not a judgment deciding contested legal questions; the reasoning present is application of the rules to admitted facts, and it does state principles relied upon. The rules on which the order rests are these: An Indian company that receives foreign inward remittance for issue of shares must report that receipt to the Regional Office of the Reserve Bank, through its authorised dealer bank, within 30 days of receipt, as required by paragraph 9(1)(A) of Schedule 1 to FEMA 20/2000-RB; a report made after that period is a contravention of that paragraph. An Indian company that issues shares to a non-resident investor must file Form FC-GPR with the Regional Office of the Reserve Bank, through its authorised dealer bank, within 30 days from the date of issue, as required by paragraph 9(1)(B) of Schedule 1 to FEMA 20/2000-RB; a filing made after that period is a contravention of that paragraph. The Reserve Bank may compound admitted contraventions under Section 15(1) of FEMA, in lieu of penalty under Section 13, by accepting a sum fixed in its discretion having regard to the facts and circumstances of the case, and the compounding is conditional on the applicant's declarations being true, so that the order is without prejudice to other action if those declarations are later found false.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
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 January 21, 2019 (received at Reserve Bank of India, New Delhi on February 18, 2019) for compounding of contravention 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, and (ii) delay in filing Form FC-GPR after issue of shares, in terms of paragraphs 9(1)(A) and 9(1)(B) 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.
2. The relevant facts of the case are as follows: (a) The applicant company was incorporated on February 5, 2015 and is engaged in Goodvitamin Foods Private Limited CA No. NDL 382/2018 manufacturing of other non-alcoholic beverages n.e.c. (b) The applicant had reported the receipt of five inward remittances from its foreign investors received during the period March 10, 2017 to May 8, 2017 for issue of equity shares with delay ranging from 23 days to 1 year, 3 months and 4 days beyond the prescribed period, as detailed hereunder, 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. 10.03.2017 9,99,104.00 07.06.2017 2. 30.03.2017 9,99,104.00 07.06.2017 3. 31.03.2017 7,70,737.82 03.08.2018 4. 31.03.2017 79,246.18 03.08.2018 5. 08.05.2017 4,99,552.00 30.06.2017 Total 33,47,744.00 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 report in Advance Reporting Form as specified by Reserve Bank from time to time along with the documents prescribed therein.
(c) The applicant had reported the allotment of compulsorily convertible preference shares (CCPS) to its foreign investors on two occasions in Form FC-GPR with delay of 26 days and 1 month & 12 days, 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 No. of CCPS Amount (₹) Date of reporting allotment allotted in Form FC-GPR 1. 29.03.2017 134 9,99,104.00 09.06.2017 2. 09.05.2017 583 43,46,848.00 04.07.2017 Total 53,45,952.00 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 debentures or warrants, a report in the Form FC-GPR as specified by the Reserve
Goodvitamin Foods Private Limited CA No. NDL 382/2018
Bank from time to time together with the documents prescribed therein. (d) Thus, there are contraventions of paragraphs 9(1)(A) and 9(1)(B) of Schedule 1 to FEMA 20 /2000-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. Ms Akansha Singhal, Company Secretary, appeared for personal hearing on May 2, 2019 on behalf of the applicant. The representative of the applicant admitted the contraventions committed by the applicant for which compounding has been sought. During the personal hearing, she submitted that the delays were without any malafide or wilful intention but were mainly due to delay in receipt of FIRC and KYC documents. She 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, due to delay in reporting of foreign inward remittance received towards subscription of shares as detailed in paragraph 2(b) above. The contraventions relate to an amount of ₹33,47,744/- (Rupees Thirty Three Lakh Forty Seven Thousand Seven Hundred and Forty Four only) and the period of delay ranges from 23 days to 1 year, 3 months and 4 days. (b) Paragraph 9(1)(B) of Schedule 1 to FEMA 20/2000-RB, due to delay in filing Form FC-GPR after issue of shares as detailed in paragraph 2(c) above. The contraventions relate to an amount of ₹53,45,952/- (Rupees Fifty Three Lakh Forty Five Thousand Nine Hundred and Fifty Two only) and the periods of delay are 26 days and 1 month &12 days. 5. It has been declared in the compounding application dated January 21, 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 January 21, 2019 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/
Goodvitamin Foods Private Limited CA No. NDL 382/2018 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 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 contraventions are to be compounded and I consider that an amount of ₹23,810/- (Rupees Twenty Three Thousand Eight Hundred and Ten only) will meet the ends of justice. 7. Accordingly, I compound the admitted contraventions of paragraph 9(1)(A) and 9(1)(B) of Schedule 1 to FEMA 20/2000-RB, as then applicable, by the applicant based on the facts detailed above in terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000, on payment of an amount of ₹23,810/- (Rupees Twenty Three Thousand Eight Hundred and Ten 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 3rd day of May 2019.
Sd/- (P S Khual) General Manager
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