Meetapp India Pvt. Ltd.
- CitationRBI Compounding Order CA No. CHA 53/2019
Ratio decidendi
The rule this decision rests on
This is a compounding order under Section 15(1) of FEMA, not an adjudicatory judgment resolving a contested question of law. The reasoning on the page is a finding of contravention on the applicant's own admissions, followed by a penalty determination. The following principles are what the order rests on: A contravention of a FEMA provision may be compounded by the Reserve Bank, under Section 15(1), where the applicant admits the contravention and the Reserve Bank holds the admitted contravention to be made out on the documents and submissions before it, without the matter going to adjudication. Where the applicant's declarations in a compounding application (as to accuracy, absence of pending enquiry or investigation, and absence of any appeal under Sections 17 or 19) are made, the compounding order is conditional on the veracity of those declarations and is without prejudice to any other action if they are later found to be false or incorrect. Under Section 13, the penalty for a contravention may be up to three times the sum involved, but the Reserve Bank may, having regard to the relevant facts and circumstances of the case, take a lenient view and fix a lesser amount as meeting the ends of justice, which the Reserve Bank did in fixing the compounding amount at a sum far below the statutory maximum.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
In the Reserve Bank of India Foreign Exchange Department Central Vista, Sector 17, P.B.No.2 Chandigarh-160017 Present Shri Vikramjit Singh Randhawa Assistant General Manager Date: October 17, 2019 CA No. CHA 53/2019 In the matter of M/s MeetApp India Private Limited CIN-U72900PB2017FTC046310 Quark City, Atrium Plot No. A-45 Industrial Area Phase – VIII B Mohali – 160059 (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 September 12, 2019 (received at Reserve Bank of India on September 17, 2019) for compounding of contravention of the provision of the Foreign Exchange Management Act, 1999 (the FEMA) and the regulations issued there under. The contravention sought to be compounded is (i) delay in reporting of inward remittance against issue of equity shares and (ii) delay in submission of FC-GPR to the Reserve Bank after issue of shares (iii) delay in receiving of the inflow amount beyond stipulated days after issue of shares to a person resident outside India which are in FED, CEFA Compounding of Contravention under FEMA, 1999 M/s MeetApp India Pvt. Ltd. [CA No. CHA 53 /2019] contravention of Para 9(1) (A), Para 9(1) (B) and Para 8 respectively of Schedule 1 to Foreign Exchange Management (Transfer or issue of Security by a person Resident outside India) Regulation, 2000 notified vide Notification No. 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: The applicant company, M/s MeetApp India Private Limited. is a private Limited company incorporated on March 31, 2017 under the Companies Act 2013. The applicant is engaged in providing software support and maintenance to the clients. 3. The applicant company received foreign inward remittances towards investment in equity shares from non-resident and reported to RBI with delay as under:
Sr. Date of inflow Amount Date of reporting of RBI Delay beyond 30 Days
1. 28.07.17 50,300 10.09.18 379 days
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 with delay of 379 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. The applicant company issued shares for the undermentioned remittances and reported the same to RBI with delay as under:
Sr. Date of Amount Shares Share Date of Delay beyond 30 Days No. inflow issued on Amount reporting to RBI 1. 28.07.17 50,300 31.03.2017 51,000 31.05.2019 761 Days
FED, CEFA Compounding of Contravention under FEMA, 1999 M/s MeetApp India Pvt. Ltd. [CA No. CHA 53 /2019] The applicant reported the allotment of shares to Reserve Bank with delay of 761 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.
5. The applicant had received foreign inward remittance with delay beyond stipulated days after issue of MoA shares to a person resident outside India as indicated below. Sr Share issue Amount Share Date of Delay in receiving of inflow Date Amount inflow 1 31.03.2017 50,300.00 51,000.00 28.07.2017 59 Days As mentioned above, there was delay of 59 days in receiving of inflow beyond stipulated time. This is contravention of para 8 of schedule 1 to FEMA Notification No.20/2000RB dated May 3, 2000.
6. The applicant was given an opportunity for personal hearing vide letter No.CHD.FE.CG/FID/385/03.01.011/2019-20 dated September 24, 2019 for further submission in person and/or producing documents, if any, in support of the application. However, the applicant vide its e-mail dated October 01, 2019 had informed that it was opting out of personal hearing and requested to proceed with the compounding. The application for compounding is, therefore, being considered on the basis of the averments made in the application along with the documents produced. 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 FED, CEFA Compounding of Contravention under FEMA, 1999 M/s MeetApp India Pvt. Ltd. [CA No. CHA 53 /2019] equity as detailed in paragraph 3 above. The contravention relates to an amount of Rs. 50,300.00 with delay of 379 days. (b) Paragraph 9 (1) (B) of schedule 1 to Notification No. FEMA 20/2000-RB due to 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. 51,000.00 with delay of 761 days.
(c) Paragraph 8 of schedule 1 to Notification No. FEMA 20/2000-RB due to delay in receiving of the inflow amount beyond stipulated days as detailed in paragraph 5 above. The contravention relates to an amount of 51,000.00 /- with a delay of 59 days.
8. It has been declared in the compounding application dated September 12, 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 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.
9. 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 FED, CEFA Compounding of Contravention under FEMA, 1999 M/s MeetApp India Pvt. Ltd. [CA No. CHA 53 /2019] the contravention is to be compounded and I consider that an amount of Rs. 9,074.00 (Rs Nine Thousand Seventy Four only) will meet the ends of justice.
10. 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), Para 9(1) (B) and Para 8 of schedule 1 to Notification No. FEMA 20/2000RB dated May 3, 2000 on the facts discussed above, on payment of an amount of Rs. 9,074.00 (Rs Nine Thousand Seventy Four 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 17th day of October 2019.
Sd/- Vikramjit Singh Randhawa Assistant General Manager
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