Paradigm Corporation Pvt. Ltd

In the RESERVE BANK OF INDIA Foreign Exchange Department Secretariat Road Saifabad, Hyderabad 500 004 Present Ramanath Dash Regional Director Date: November 24, 2016 C.A. HYD 158 In the matter of M/s. Paradigm Corporation Private Limited Plot No. 1292, Road No. 65 Jubilee Hills Hyderabad 500033. (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 filed the compounding application dated September 09, 2016 received on September 14, 2016 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 are (i) neither the equity instruments were issued nor the money refunded to the foreign investor, a person resident outside India, within 180 days of the receipt of the inward remittance and (ii) delay in reporting receipt of foreign inward remittances received towards issue of shares to the Reserve Bank in terms of Paragraph 8 and Paragraph 9 (1) (A) of Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside

FED M/s. Paradigm Corporation Pvt. Ltd. CA No. HYD 158 India) Regulations, 2000 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 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: a) The applicant is a resident company incorporated on 20.09.2007 as a private limited company under the Companies Act, 1956. The company is engaged in the business of healthcare, developing infrastructure facilities in healthcare, running hospitals. b) The applicant had received foreign inward remittances from overseas investors towards advance for subscription to equity shares as indicated below: Sl. Name of Remitter Total Amount (`) Date of Receipt Date of No. Reporting Dr Gurunath Reddy 1 2,50,00,000 14-03-2007 29-10-2007 & Mrs Vasu Reddy 2 -do- 1,50,00,000 10-04-2007 29-10-2007 3 -do- 4,75,000 18-06-2007 29-10-2007 4 -do- 28,00,00,000 21-09-2007 25-10-2007 5 -do- 8,15,25,000 24-09-2007 25-10-2007 6 -do- 30,00,000 01-10-2007 25-10-2007 Total 40,50,00,000

The applicant reported receipt of remittances towards share subscription amounting to ` 40,50,00,000/- to the Regional Office of Reserve Bank of India and remittances amounting to ` 40,20,00,000/- was reported with delay ranging from 1 day to 6 months 15 days approximately as indicated above. Whereas in terms of paragraph 9 (1) (A) of Schedule 1 to Notification No. FEMA 20/2000-RB, an Indian company issuing shares or convertible debentures 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.

FED M/s. Paradigm Corporation Pvt. Ltd. CA No. HYD 158 c) The company obtained approval for allotment of shares beyond the stipulated period of 180 days from the date of receipt of inward remittances and the delay in allotment of shares ranges from 4 months 26 days to 7 years 9 months 21 days approximately as detailed under: share Date of Value of shares Sl Name of application Date of receipt of allotted No Investor Amount allotment funds (`) (`) Dr Gurunath 1 Reddy & Mrs. 14-03-2007 2,50,00,000 14-08-2008 2,50,00,000 Vasu Redddy 2 -do- 10-04-2007 1,50,00,000 14-08-2008 1,50,00,000 3 -do- 18-06-2007 4,75,000 14-08-2008 4,75,000 4 -do- 21-09-2007 5,02,25,000 14-08-2008 5,02,25,000 5 -do- 21-09-2007 16,87,99,925 08-01-2016 16,87,99,925

Total 25,94,99,925 25,94,99,925 d). The company was granted approval vide letter No HY.FE.FID/2044/14.30.004/2008- 09 dated December 30, 2008 for refund of share application money beyond the stipulated period of 180 days. The company however, did not refund the same and refunded the share application money in installments with delay ranging from 9 months 19 days to 2 years 29 days approximately as detailed below:

FED M/s. Paradigm Corporation Pvt. Ltd. CA No. HYD 158 Date of share Amount Sl Date of Name of Investor receipt of application refunded No refund funds (`) (`) Dr Gurunath Reddy & Mrs. 1 Vasu Redddy 06-01-2009 75,00,000 2 -do- 20-01-2009 52,00,000

3 -do- 28-01-2009 85,00,000 4 -do- 29-05-2009 81,00,000 5 -do- 21-09-2007 6,09,75,000 12-06-2009 86,00,000 -do- 6 20-06-2009 65,00,000 -do- 7 08-09-2009 75,00,000 -do- 8 11-09-2009 10,00,000 -do- 9 25-09-2009 26,00,000 -do- 10 05-03-2010 54,75,000 Total 6,09,75,000 Dr Gurunath Reddy & Mrs. 11 Vasu Redddy 05-03-2010 3,45,25,000 -do- 12 10-03-2010 1,10,00,000 24-09-2007 8,15,25,000 -do- 13 12-03-2010 1,40,00,000 -do- 14 16-03-2010 50,00,000 -do- 15 05-04-2010 95,00,000

FED M/s. Paradigm Corporation Pvt. Ltd. CA No. HYD 158 -do- 16 15-04-2010 70,00,000 -do- 17 21-04-2010 5,00,000 Total 8,15,25,000 Dr Gurunath 18 Reddy & Mrs. 01-10-2007 30,00,000 21-04-2010 30,00,000 Vasu Redddy Total 14,55,00,000 14,55,00,000

Whereas in terms of Paragraph 8 of Schedule 1 to Notification No. FEMA 20/2000-RB, if the shares are not issued within 180 days from the date of receipt of the inward remittance, the amount of consideration so received shall be refunded to the person concerned, provided the Reserve Bank may on an application made to it and for sufficient reasons permit to refund the amount of consideration received towards issue of security, if such amount is outstanding beyond a period of 180 days from the date of receipt. The amendment in paragraph 8 of Schedule 1 to Notification No. FEMA 20/20000-RB was introduced by issue of Foreign Exchange Management (Transfer or Issue of Security by a Person outside India) (Third Amendment Regulation, 2007 notified, vide Notification No. FEMA 170/2007-RB dated November 13, 2007 in the official Gazette of the Govt. of India..

3 a) The applicant was given an opportunity for personal hearing vide Reserve Bank’s letter No. HY.FE.FID/924/14.66.003/2016-17 dated November 10, 2016 for further submission in person and/or producing documents, if any, in support of the application. b) The applicant appeared for personal hearing on November 15, 2016 during which CA Venkata Reddy, K, represented the applicant. The applicant admitted the contraventions for which the compounding has been sought. During the personal hearing it was submitted that the delay was due to failure to mobilise further investment and was neither willful nor with a malafide intention. In view of the foregoing, the FED M/s. Paradigm Corporation Pvt. Ltd. CA No. HYD 158 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 as well the submissions made in this context by the applicant during the personal hearing. 4. I have given my careful consideration to the documents on record and submission made by the applicant during the personal hearing.

Accordingly, I hold that the applicant has contravened the following FEMA provisions issued in terms of: (a) Paragraph 8 of Schedule 1 to Notification No. FEMA 20/2000-RB for allotting the shares beyond the stipulated period of 180 days from the date of receipt of foreign inward remittances. The contravention relates to an amount of `. 25,94,99,925/- and the period of contravention ranges from 4 months 26 days to 7 years 9 months 21 days approximately. The company also delayed in refund of share application money beyond the stipulated period 180 days beyond the stipulated period of 180 days from the date of receipt of foreign inward remittances. The contravention relates to an amount of ` 14,55,00,000/- and the period of contravention ranges from 9 months 19 days to 2 year 29 days approximately. (b) Paragraph 9 (1) (A) of Schedule 1 to Notification No. FEMA.20/ 2000-RB due to delay in reporting of receipt of foreign inward remittances towards subscription to equity shares as detailed above. The contraventions relate to an amount of ` 40,20,00,000/-and the duration of contravention ranges from 1 day to 6 months 15 days approximately.

5. In terms of Section 13 of the FEMA, any person contravening any provision of the Act shall be liable to a penalty upto 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 ` 25,34,500 /- (Rupees Twenty Five Lakhs Thirty Four Thousand Five Hundred Only) will meet the ends of justice.

FED M/s. Paradigm Corporation Pvt. Ltd. CA No. HYD 158 6. Accordingly, I compound the admitted contraventions namely, the contraventions of Paragraph 8 and Paragraph 9 (1) (A) 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 of ` 25,34,500 /- (Rupees Twenty Five Lakhs Thirty Four Thousand Five Hundred 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, Rule10 of the Foreign Exchange (Compounding Proceedings) Rules, 2000 dated May 3, 2000 shall apply.

The application is disposed accordingly. Dated this 24th day of November 2016.

Sd/- (Ramanath Dash) Regional Director