Loyalhut Solutions Pvt. Ltd.

In the Reserve Bank of India Foreign Exchange Department Central Vista, Sector 17, P.B.No.2 Chandigarh-160017 Present Dr. Devi Prasad Panda General Manager Date: January 21, 2019 CA No.CHA 26/2018 In the matter of Loyalhut Solutions Private Limited (CIN U45209CH2015PTC035549) 1105, Sector -15 B Chandigarh-160015 (Applicant) In exercise of the powers conferred under Section 15(1) of the Foreign Exchange Management Act, 1999 and the Regulations/Rules/Notifications/Orders made there under, I pass the following

Order The applicant has filed a compounding application dated December 27, 2018 (received at Reserve Bank of India on December 27, 2018) for compounding of contravention of the provisions of the Foreign Exchange Management Act, 1999 (the FEMA) and the regulations issued there under. The contraventions sought to be compounded pertain to (i) delay beyond 30 days in reporting receipt of foreign inward remittance towards subscription to equity shares and (ii) delay beyond 30 days in submission of Form FC- GPR to the Reserve Bank after issue of shares to a person resident outside India; in terms of Paragraph 9(1) (A) and Para 9(1) (B) respectively, of Schedule I to the 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 and as amended from time to time (hereinafter referred to as Notification No. FEMA 20/2000-RB).

2. The relevant facts of the case are as follows:

FED, CEFA Compounding of Contravention under FEMA, 1999 Loyalhut Solutions Private Limited [CA No. CHA 26 /2018] The applicant company was incorporated on May 25, 2015 under the Companies Act 2013. The applicant is acting as a contractor, sub-contractor, quasi-contractor for Government or semi-Government bodies. 3. The applicant had received three foreign inward remittances amounting to ` 42,76,795/-towards investment in equity shares from non-residents as under:

Sr Date of receipt Amount of foreign Date of reporting Delay beyond No. inward remittance in ` to RBI prescribed time of 30 days 1. 23.10.2015 8,64,604.00 09.11.2015 No delay 2. 02.12.2015 7,53,191.00 18.12.2015 No delay 3. 02.07.2015 26,59,000.00 28.04.2016 271 Days

The applicant reported the receipt of three foreign inward remittances, amounting to ` 42,76,795/- to the Chandigarh Regional Office of the Reserve Bank of India. However, out of the three inflows, one inflow amounting to ` 26,59,000/- was reported to the Reserve Bank of India with a delay of 271 days, in contravention of the provisions stipulated in the Paragraph 9(1) (A) of Schedule I to Notification No. FEMA 20/2000-RB dated May 3, 2000, in terms of which an Indian company issuing shares in accordance with these regulations should report to the Reserve Bank of India as per the prescribed procedure not later than 30 days from the date of receipt of the amount of consideration. 4. Against the above, the applicant company issued shares to the non-resident investor but filed the Form FC-GPR with delay as indicated below. Sr. Amount of foreign Date of issue No. of shares Amount of Date of submission Delay beyond No inward remittance of shares issued shares in ` of FC-GPR to RBI prescribed in ` time of 30 days 1. 8,64,600.00 26.10.2015 8646 8,64,600.00 05.02.2018 803 Days 2. 7,53,000.00 08.12.2015 7530 7,53,000.00 05.02.2018 760 Days 3. 26,59,000.00 04.07.2015 26590 26,59,000.00 21.11.2017 841 Days

The applicant reported the allotment of shares to the Reserve Bank with delay ranging from 760 to 841 days. The delay in reporting to the Reserve Bank in Form FC-GPR, beyond the prescribed period of 30 days in respect of allotment of the above shares, is in contravention of the provisions stipulated in the Paragraph 9(1) (B) of Schedule I to FEMA Notification No.20/2000-RB dated May 3, 2000, in terms of which an Indian company

FED, CEFA Compounding of Contravention under FEMA, 1999 Loyalhut Solutions Private Limited [CA No. CHA 26 /2018] issuing shares in accordance with these regulations has to submit to Reserve Bank of India a report in Form FC-GPR along with documents prescribed therein within 30 days from the date of issue of shares to the person resident outside India. 5. The applicant was given an opportunity for personal hearing vide our letter No.FE.CG/FID/496/03.01.485/2018-19 dated January 02, 2019 for further submission in person and/or producing documents, if any, in support of the application. Mr. Neeraj Sood, Director and Miss. Neha Goyal, Director of the company appeared for the personal hearing on January 17, 2019. During the personal hearing, the representatives of the applicant admitted the contravention committed by them for which they have sought for compounding. The representatives submitted that the contraventions were due to lack of awareness of the procedural requirements and not intentional and requested for taking a lenient view in the matter. The application is, therefore, being considered based on the averments made in the application as well as other documents and submissions made in this context by the applicant during personal hearing and thereafter.

6. It has been declared in the compounding application dated December 27, 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 undertaking 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, 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.

7. I have given my careful consideration to the documents on record and submissions made by the applicant. Accordingly, I hold that the applicant has contravened the following FEMA provisions issued in terms of: a. Paragraph 9 (1) (A) of Schedule I to Notification No. FEMA 20/2000-RB dated May 3, 2000 due to delay in reporting of receipt of foreign inward remittance towards subscription of shares as detailed in paragraph 3 above. The contravention relates to an amount of ` 26, 59,000/- with a delay of 271 days.

FED, CEFA Compounding of Contravention under FEMA, 1999 Loyalhut Solutions Private Limited [CA No. CHA 26 /2018] b. Paragraph 9 (1) (B) of Schedule I to Notification No. FEMA 20/2000-RB dated May 3, 2000 due to delay in submission of Form FC-GPR to the Reserve Bank after issue of shares to persons resident outside India as detailed in paragraph 4 above. The contravention relates to an amount of ` 42,76,600/- with the delay ranging from 760 to 841 days.

8. 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 amount of penalty of ` 32,542/- (Rupees Thirty two thousand five hundred forty two only) will meet the ends of justice. 9. Accordingly, in terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000, I compound the admitted contravention committed by the applicant, namely contravention of Paragraph 9(1) (A) and Paragraph 9(1) (B) of Schedule I 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 on the facts discussed above, on payment of an amount of ` 32,542/- (Rupees Thirty two thousand five hundred forty two only) which shall be deposited by the applicant with the Reserve Bank of India, Foreign Exchange Department, Central Vista, Sector 17, Chandigarh-160017 by a demand draft drawn in favour of the “Reserve Bank of India” and payable at “Chandigarh” 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: the 21st day of January 2019.

Sd/-

Dr. Devi Prasad Panda General Manager

FED, CEFA Compounding of Contravention under FEMA, 1999 Loyalhut Solutions Private Limited [CA No. CHA 26 /2018]