M/s Agritrade Power Venture Pvt. Ltd
- CitationRBI Compounding Order CA No. BHU22/2019
Ratio decidendi
The rule this decision rests on
The compounding authority holds that an Indian company which issues shares to a non-resident investor under the automatic route and receives the consideration is contravening the FEMA framework where it fails to report receipt of the foreign inward remittance to the Reserve Bank within thirty days of receipt, as required by para 9(1)(A) of Schedule I to Notification No. FEMA 20/2000-RB, and such delayed reporting is a contravention that may be compounded under Section 15(1) of the Foreign Exchange Management Act, 1999 on the applicant's admission and declarations. A compounding application may be disposed of on the basis of the applicant's admission of the contraventions and the material on record, where the applicant has declined a personal hearing and has stated that it has no further documents to produce; the authority is entitled to decide on the averments in the application and the documents submitted. Compounding is conditional upon the veracity of the applicant's declarations that it is not subject to any pending enquiry, investigation or adjudication and has filed no appeal under Section 17 or Section 19 of the Act; if those declarations prove false, the compounding order does not prevent other action under the extant law. The quantum of the compounding amount is fixed by the authority, having regard to the penalty exposure under Section 13 of the Act (up to thrice the sum involved) and the facts and circumstances of the case, and is payable within the period stated in the order, failing which Rule 10 of the Foreign Exchange (Compounding Proceedings) Rules, 2000 applies.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Present Shri M.K. Mall Regional Director (Odisha) and Chief General Manager (Bhubaneswar) Compounding Authority Date: February 19, 2019 C.A. No. BHU22/2019 In the matter of M/s Agritrade Power Venture Pvt. Ltd. Plot No. 57/1860, Mahadev Nagar Jharpada, Bhubaneswar-751 006 (Applicant) In exercise of the powers under Section 15 (1) of the Foreign Exchange Management Act, 1999 and the Regulations/Rules/Notifications/Orders made thereunder, I pass the following Order The applicant has filed a compounding application dated December 07, 2018 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 reporting receipt of foreign inward remittances towards subscription to equity in terms of para 9(1)(A) 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 and as amended from time to time (hereinafter referred to as Notification No.FEMA 20/2000-RB) read with A.P. (DIR Series) Circular No.20 dated December 14, 2007.
M/s Agritrade Power Venture Pvt. Ltd. CA No. BHU22/2019 2. The relevant facts of the case are as follows: The applicant was incorporated on December 19, 2016 and deals in carrying on the business of electric power generation by coal based thermal power plants. The applicant received the following inward remittances from foreign investor under automatic route and reported the same to Reserve Bank of India with delay. Sr. No. Amount of Foreign Inward Receipt Date Reporting Date to RBI Remittance (₹) 1 32,35,433.00 25.09.2017 16.10.2018 2 12,72,36,848.00 09.10.2017 12.09.2018 Total 13,04,72,281.00
The applicant reported receipt of remittance to the Reserve Bank on date indicated above and with delays of eleven months twenty days and ten months two days beyond the stipulated time of 30 days. Whereas, in terms of para 9 (1) A of Schedule I to Notification No. FEMA 20/2000-RB, an Indian company issuing shares or convertible debentures in accordance with these Regulations should report receipt of foreign inward remittances 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. 3. The applicant was given an opportunity for personal hearing vide the Reserve Bank’s letter FED(Bhu) No.344/08.02.267/2018-19 dated January 30, 2019 for further submission in person and/or producing documents, if any, in support of the application. However, the applicant, vide its letter dated February 04, 2019 has opted out from appearing in personal hearing stating that they have already submitted the documents available with them and they don’t have any further documents to produce during personal hearing and their case may be considered based on materials already submitted.
The applicant, in the compounding application, had admitted the contraventions as stated in para 2 above for which compounding has been sought. The application for compounding is, therefore, being considered on the basis of the M/s Agritrade Power Venture Pvt. Ltd. CA No. BHU22/2019 averments made in the application as well as other documents and submissions made in this context by the applicant. 4. I have given my careful consideration to the documents on record and submission made by the applicant in the compounding application. Accordingly, I hold that the applicant has contravened the FEMA provisions issued in terms of para 9 (1) A of Schedule 1 to Notification No. FEMA 20/2000-RB due to delay in reporting of receipt of inward remittances towards subscription of equity shares as detailed in para 2 above. The contravention relates to an amount of total ₹13,04,72,281.00 and the durations of delay are eleven months twenty days and ten months two days. 5. It has been declared in the compounding application dated December 07, 2018 that the particulars given by the applicant in the application are true and correct to the best of their/his/her knowledge and belief.
It has been declared in the declaration dated December 07, 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/him/her 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, 1999 if any person contravening any provision of the Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorization is issued by the Reserve Bank, he, upon adjudication, shall be liable to a penalty up to thrice the sum involved in such contravention.
However, taking into account the relevant facts and circumstances of the case as stated in the foregoing paras, I am of M/s Agritrade Power Venture Pvt. Ltd. CA No. BHU22/2019 the view that an amount of ₹ 1,04,500/- (Rupees One lakh Four thousand Five hundred only) will meet the ends of justice. 7. Accordingly, I compound the admitted contraventions namely, the contraventions of para 9(1) (A) of Schedule 1 to Notification No. FEMA 20/2000-RB dated May3, 2000 read with AP (DIR Series) Circular No.20 dated December 14, 2007 by the applicant on the facts discussed above in terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000 on payment of an amount of ₹ 1,04,500/- (Rupees One lakh Four thousand Five hundred only) which shall be deposited by the applicant with the Reserve Bank of India, Foreign Exchange Department, Bhubaneswar by a demand draft drawn in favour of the “Reserve Bank of India” and payable at Bhubaneswar 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 19th day of February, 2019.
Sd/- (M.K. Mall) Regional Director (Odisha) and Chief General Manager (Bhubaneswar)
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