JSD Medical Business Management Services Pvt Ltd
- CitationRBI Compounding Order CA No. HYD 356
Ratio decidendi
The rule this decision rests on
A resident company that has issued shares to a person resident outside India contravenes Paragraph 9(1)(B) of Schedule 1 to Notification No. FEMA 20/2000-RB where it submits Form FC-GPR to the Reserve Bank of India later than thirty days from the date of issue of those shares, and such delay is a contravention of the Foreign Exchange Management Act, 1999 and the regulations made under it. Where a contravention is admitted and the application for compounding is considered on the averments in the application, the amount for compounding under Section 15(1) of the Act is fixed by the Reserve Bank on the basis of the facts and circumstances of the case, taking a lenient view notwithstanding the penalty of up to thrice the sum involved available under Section 13, and the compounding order is conditional on the veracity of the applicant's declarations that it is not under any enquiry, investigation or adjudication, such that it remains without prejudice to any other action if those declarations are later found to be false or incorrect.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
(Applicant) In exercise of the powers conferred under Section 15(1) of Foreign Exchange Management Act, 1999 and the Regulations/ Rules/ Notifications/ Orders made there under, I pass the following Order The applicant has submitted the compounding application dated November 15, 2018 received by us on November 20, 2018 for compounding of contraventions of the provision of the Foreign Exchange Management Act, 1999 (FEMA) and the regulations issued there under. The contravention sought to be compounded is delay in submission of Form FC-GPR to Reserve Bank of India in terms of Paragraph 9(1) (B) 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 3rd May 2000 as then applicable (herein after referred to as Notification No. FEMA 20/2000-RB).
Compounding of contraventions under FEMA 1999 M/s JSD Medical Business Management Services Pvt Ltd CA No. HYD 356 2. The relevant facts of the case are as follows: a) The applicant is a resident company incorporated as a Private Limited company under the Companies Act, 2013 on 25.06.2015 (CIN- U72200TG2015PTC099462). The activity of the company is provision of computer programming, consultancy and related activities. b) The applicant had received foreign inward remittances of ₹ 10,00,330/- from Shri Mahendra R Sanapati on 31.07.2015 towards share subscription and reported the same to the Regional Office of Reserve Bank of India within the prescribed time limit in terms of Paragraph 9(1)(A) of Schedule 1 to Notification No. FEMA 20/2000-RB dated May 03, 2000. c) The company allotted shares and filed form FC-GPR as indicated below: Sl Name of the Date of Number Amount for Date of No. Investor allotment of shares which shares reporting of shares allotted allotted (INR) 1 Mahendra R 25.06.2015 9,800 98000/- 12.01.2016 2 Sanapati 24.09.2015 90,000 9,00,000/- 23.06.2016 Total 99,800 9,98,000/- The applicant filed form FCGPRs for issue of shares amounting to ₹ 9,98,000/- as indicated above and were reported with delays ranging from 5 months 18 days to 8 months approximately beyond the stipulated period of 30 days.
Whereas in terms of Paragraph 9(1) (B) of Schedule 1 to Notification no. FEMA 20/2000-RB, an Indian company issuing shares in accordance with these Regulations has to submit to Reserve Bank of India a report in form FCGPR along with documents prescribed therein within 30 days from the date of issue of shares to person resident outside India. 3. (a) The applicant was given an opportunity for personal hearing vide Reserve Bank’s letter No. HY.FE.FID/1369/14.66.003/2018-19 dated January 10, 2019 for Compounding of contraventions under FEMA 1999 M/s JSD Medical Business Management Services Pvt Ltd CA No. HYD 356 further submission in person and/or producing documents, if any, in support of the application. (b) The applicant appeared for personal hearing on January 17, 2019 during which Shri. T Srinivasulu, Chartered Accountant represented the applicant. The authorized representative of the applicant admitted the contraventions for which the compounding has been sought. In view of the foregoing, the representative of the applicant requested to take a lenient view in disposal of the 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 provisions issued in terms of Paragraph 9(1) (B) of Schedule 1 to Notification No. FEMA 20/2000-RB for delay in submission of Form FC-GPRs to Reserve Bank of India after issue of shares to person resident outside India and the contravention relates to an amount of ₹ 9,98,000/- with delays ranging from 5 months 18 days to 8 months approximately. 5. It has been declared in the compounding application dated November 15, 2018 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 November 15, 2018 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.
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.
Compounding of contraventions under FEMA 1999 M/s JSD Medical Business Management Services Pvt Ltd CA No. HYD 356 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 that an amount of ₹ 11,170/-(Rupees Eleven Thousand One Hundred Seventy Only) will meet the ends of justice. 7. Accordingly, I compound the admitted contraventions, namely, the contraventions of Paragraph 9(1) (B) of Schedule 1 to Notification No. FEMA-20/2000-RB by the applicant on the facts discussed above in terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000 on payment of an amount ₹ 11,170/- (Rupees Eleven Thousand One Hundred Seventy 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 accordingly. Dated this 22nd day of January 2019
Sd/- (Kalyan Chakravarthy P) Assistant General Manager
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