Sanovita India Pvt. Ltd.

In the Reserve Bank of India Foreign Exchange Department Central Vista, Sector 17, P.B.No.2 Chandigarh-160017 Present Vikramjit Singh Randhawa Assistant General Manager Date: March 05, 2019 CA No. CHA 32/2019 In the matter of SANOVITA INDIA PRIVATE LIMITED (CIN U01409PB2016FTC045299) #279-C, Bhai Randhir Singh Nagar, Ludhiana, Punjab-141012 (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 February 05, 2019 (received at Reserve Bank of India on February 07, 2019) 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, (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 and (iii) delay in refund of excess share application money to the foreign investor; in terms of Paragraph 9(1) (A), Paragraph 9(1) (B) and Paragraph 8 respectively 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).

FED, CEFA Compounding of Contravention under FEMA, 1999 SANOVITA INDIA PRIVATE LIMITED [CA No. CHA 32 /2019]

2. The relevant facts of the case are as follows: The applicant company was incorporated on May 13, 2016 under the Companies Act 2013.The applicant is engaged in Research and experimental development on natural science and engineering. 3. The applicant company received following foreign inward remittances towards investment in equity shares from non-residents and reported the receipt of inward remittances to the Reserve Bank of India with delay as under:

Sl. Amount of Date of receipt Date of reporting to RBI Delay beyond No. foreign inward prescribed time of 30 remittance in days INR 1. 93,550.00 18.08.2016 17.01.2017 122 days 2. 7,83,970.00 31.01.2017 28.02.2018 363 days The above two inflows amounting to INR 8,77,520 were reported to the Reserve Bank of India with the delay ranging from 122 to 363 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. Further, the applicant issued shares to the non-resident investors but filed the Form FC- GPR for issue of shares with delay as indicated below.

Sr. Amount of Date of No. of shares Amount of Date of Delay beyond No foreign inward issue of issued shares in INR submission prescribed time remittance in shares of FC-GPR of 30 days INR to RBI 1 93,550.00 29.08.2016 7500 75,000.00 26.04.2017 210 Days 2 7,83,970.00 05.02.2017 75,000 7,50,000.00 22.06.2017 107 days The applicant reported the allotment of shares to the Reserve Bank with delay ranging from 107 to 210 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 the Notification No. FEMA 20/2000-RB dated May 3, 2000.

FED, CEFA Compounding of Contravention under FEMA, 1999 SANOVITA INDIA PRIVATE LIMITED [CA No. CHA 32 /2019] 5. The applicant has delayed refund of excess share application money to the non-resident investor beyond the stipulated period of 180 days from the date of receipt of remittance, as per the details given below.

Date of Amount of foreign Refund Date of seeking Delay beyond receipt inward remittance amount approval from RBI prescribed time of (In INR) 180 days 18.08.2016 93,550.00 18,550.00 22.06.2017 128 days 31.01.2017 7,83,970.00 33,970.00 05.03.2018 218 days

Whereas in terms of Paragraph 8 of Schedule I to Notification No. FEMA 20/2000- RB dated May 3, 2000 read with A.P (DIR Series) Circular No. 20 dated December 14, 2007, 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 I to Notification No. FEMA 20/2000-RB was introduced by issue of Foreign Exchange Management (Transfer or Issue of Security by A Person Outside India) (Third Amendment) Regulations, 2007 notified, vide Notification No. FEMA 170/2007-RB dated 13th November 2007 in the official Gazette of the Govt. of India.

6. The applicant was given an opportunity for personal hearing vide our letter No.CHD.FE.CG/FID/35/03.01.510/2018-19 dated February 20, 2019 for further submission in person and/or producing documents, if any, in support of the application. Mr. V P Chhabra, Practising Company Secretary and Mr. Rajesh K Bansal, Chartered Accountant of the company appeared for the personal hearing on March 01, 2019. During the personal hearing, the representatives of the applicant admitted the contravention committed by them for which they have sought compounding. The representative submitted that the contraventions were due to lack of awareness of the procedural requirements and were not intentional and requested for taking a lenient view in the matter. The application is, therefore, being considered on the basis of the averments made in the application, documents produced, and submissions made in this context by the applicant during personal hearing and thereafter.

7. It has been declared in the compounding application dated February 05, 2019, that the particulars given by the applicant in the application are true and correct to the best of their

FED, CEFA Compounding of Contravention under FEMA, 1999 SANOVITA INDIA PRIVATE LIMITED [CA No. CHA 32 /2019] 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 contravention which is 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.

8. 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 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 to equity to the Reserve Bank as detailed in paragraph 3 above. The contravention relates to an amount of INR 8,77,520.00 with the delay ranging from 122 to 363 days 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 INR 8,25,000.00 with delay ranging from 107 to 210 days. c. Paragraph 8 of Schedule I to Notification No. FEMA 20/2000-RB dated May 3, 2000 due to delay in refund the excess amount as detailed in paragraph 5 above. The contravention relates to an amount of INR 52,520.00 with delay of ranging from 128 to 218 days. 9. 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 INR 26,492/- (Rupees Twenty Six Thousand Four Hundred Ninety Two only) will meet the ends of justice.

FED, CEFA Compounding of Contravention under FEMA, 1999 SANOVITA INDIA PRIVATE LIMITED [CA No. CHA 32 /2019] 10. Accordingly, in terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000, I compound the admitted contraventions committed by the applicant, namely contravention of Paragraph 9(1)(A), 9(1)(B) and 8 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 INR 26,492/- (Rupees Twenty Six Thousand Four Hundred Ninety 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 the 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 05th day of March 2019.

Sd/- Vikramjit Singh Randhawa Assistant General Manager