M/s Angular Technologies Pvt. Ltd.
- CitationRBI Compounding Order CA No. CHA 21/
Ratio decidendi
The rule this decision rests on
The Regional Director, in exercising the power under section 15(1) of the Foreign Exchange Management Act, 1999 to compound contraventions, holds that a compounding application may be disposed of ex parte where the applicant, having been given a personal hearing opportunity, fails to seek an appointment within the stipulated seven days, and the application is then considered on the averments made and documents produced. A compounding order is made subject to the veracity of the declarations in the application, and it is without prejudice to any other action under the extant laws should those declarations later be found false or incorrect. Delay in reporting inward remittances against the issue of equity shares, beyond thirty days from receipt, contravenes paragraph 9(1)(A) of Schedule I to Notification No. FEMA 20/2000-RB, and delay in submitting Form FCGPR beyond thirty days from issue of shares to a person resident outside India contravenes paragraph 9(1)(B) of the same Schedule; such contraventions may be compounded on payment of a sum fixed by the Regional Director, who, taking a lenient view having regard to the applicant's submissions, may fix that sum below the penalty of up to three times the amount involved that section 13 permits.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
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 June 25, 2018 (received at the Reserve Bank on June 26, 2018) for compounding of contraventions of the provisions of M/s Angular Technologies Pvt. Ltd. CA No. CHA 21/ 2018 the Foreign Exchange Management Act, 1999 (The FEMA) and the regulations issued there under. The contraventions sought to be compounded pertain to (i) delay in reporting of inward remittance against issue of equity shares(ii) delay in submission of FC-GPR to the Reserve Bank after issue of shares which are in contravention of Para 9(1) (A) and Para 9(1) (B) of schedule I to Foreign Exchange Management (Transfer or issue of Security by a person Resident Outside India) Regulation, 2000 notified vide Notification No. 20/2000RB 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: The applicant Company, Angular Technologies Private Limited is a private Limited company incorporated on November 22, 2013 under the Companies Act 2013. The applicant is engaged in the business of developing, importing, exporting computer software and providing software, web designing and web hosting etc.
3. The applicant company received foreign inward remittances towards investment in equity shares from non-residents as under:
S. Date of inflow Amount Date of reporting to Delay beyond 30 days No RBI 1 07.07.2015 6281000.00 01.09.2016 392 2 31.07.2015 9532500.00 10.10.2016 407 3 31.07.2015 9532500.00 10.10.2016 407 4 31.08.2015 6573000.00 01.03.2016 153 5 24.09.2015 206619.38 01.03.2016 129 6 06.10.2015 321.4 01.03.2016 117 7 07.07.2015 2942805.52 01.03.2016 208 8 06.10.2015 321.4 01.03.2016 117 9 24.09.2015 206619.38 01.03.2016 129
The above remittance was not reported to Reserve Bank of India within the prescribed time period. The applicant reported the receipt of remittances to Reserve Bank of India
M/s Angular Technologies Pvt. Ltd. CA No. CHA 21/ 2018 with delay ranging from 117 days to 407 days, in contravention of Para 9(1) (A) of Schedule 1 to Notification No.FEMA 20/2000RB 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 remittances the applicant company issued shares and reported the same to RBI as under: S. Date of Amount Amount of Shares Date of Delay No inflow received share issued issued on reporting to beyond RBI 30 days 1 07.07.2015 6281000.00 6281001.00 04.09.2015 01.03.2016 149 2 31.07.2015 9532500.00 19064996.70 28.09.2015 29.01.2018 824 3 31.07.2015 9532500.00 4 31.08.2015 6573000.00 6573000.00 26.10.2015 01.03.2016 97 5 24.09.2015 206619.38 3149740.35 08.10.2015 03.03.2016 117 6 06.10.2015 321.4 7 07.07.2015 2942805.52 8 0 6. 1 0. 2 0 1 5 3 2 1. 4 3 1 58635.24 03.07.2015 03.03.2016 214 9 24.09.2015 206619.38 10 18.05.2015 2951707.50
The applicant reported the allotment of shares to Reserve Bank with delay ranging from 97 to 824 days. The delay in reporting to Reserve Bank of India in form FCGPR, beyond the prescribed period in respect of allotment of the above shares is in contravention of paragraph 9(1) (B) of Schedule 1 to FEMA Notification No.20/2000RB dated May 3, 2000,in terms of which 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 a person resident outside India.
M/s Angular Technologies Pvt. Ltd. CA No. CHA 21/ 2018
5. The applicant was given an opportunity for personal hearing vide letter No.CHD.FE.CG/FID/5/03.01.470/2018-19 dated July 03, 2018 for submission in person and/or producing documents, if any, in support of the application. The company did not approach for appointment of the personal hearing within the stipulated period of seven days from receipt of the letter. The application is, therefore, disposed off ex-parte and is considered on the basis of the averments made in the application, and documents produced.
6. It has been declared in the compounding application dated June 25, 2018 that the particulars given by the applicant in the application were true and correct to the best of their/his/her knowledge and belief. It has been declared in the declaration dated June 25, 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. 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:
a. Paragraph 9 (1) (A) of schedule 1 to Notification No. FEMA 20/2000-RB due to delay in reporting of receipt of foreign inward remittance towards subscription to equity as detailed in paragraph 3 above. The contravention relates to an amount of Rs 3,52,75,687.08 with delay ranging from 117 days to 407 days.
b. Paragraph 9 (1) (B) of schedule 1 to Notification No. FEMA 20/2000-RB due to M/s Angular Technologies Pvt. Ltd. CA No. CHA 21/ 2018 delay in submission of Form FCGPR to Reserve Bank after issue of shares to persons resident outside India as detailed in paragraph 4 above. The contravention relates to an amount of Rs 3,82,27,394.58 with delay ranging from 97 to 824 days.
8. 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 per applicant’s submissions, 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 Rs.1,75,270.00 (One lakh Seventy Five Thousand Two hundred Seventy only) will meet the ends of justice. 9. Accordingly, in terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000, I compound the admitted contraventions committed by the applicant namely, Para 9(1) (A) and Para 9(1) (B) of schedule I to Foreign Exchange Management (Transfer or issue of Security by a person Resident Outside India) Regulation,2000 notified vide Notification No. 20/2000RB dated May 3, 2000 read with AP(Dir Series) Circular No 73 dated June 8, 2007 on the facts discussed above, on payment of an amount of Rs. 1,75,270.00 (One lakh Seventy Five Thousand Two hundred Seventy 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 this the 27th day of July 2018.
Sd/-
M/s Angular Technologies Pvt. Ltd. CA No. CHA 21/ 2018 (Rachna Dikshit) Regional Director
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