United States Pharmacopeia India Private Limited
- CitationRBI Compounding Order CA No. HYD 305
Ratio decidendi
The rule this decision rests on
The Reserve Bank, exercising its compounding power under Section 15(1) of the Foreign Exchange Management Act, 1999, may compound admitted contraventions of the reporting requirements in Paragraph 9(1)(A) and Paragraph 9(1)(B) of Schedule 1 to Notification No. FEMA 20/2000-RB, namely delay in reporting receipt of foreign inward remittances towards share subscription and delay in submitting Form FC-GPR after issue of shares to a non-resident, where the contravening party has admitted the contraventions, the applications and declarations are found to be true, and a monetary sum is paid in lieu of penalty. Where a compounding order is passed on the basis of the applicant's declarations that the particulars furnished are true and that no enquiry, investigation or adjudication is pending against it, the compounding is expressly subject to the veracity of those declarations, and the order is without prejudice to any other action under the extant laws should the declarations later be found false or incorrect.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
(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 submitted the compounding application dated April 16, 2018 received by us on April 30, 2018 for compounding of contraventions of the provision of the Foreign Exchange Management Act, 1999 (FEMA) and the regulations issued there under. The contraventions sought to be compounded are (i) delay in reporting of receipt of foreign inward remittances towards subscription of equity and (ii) delay in submission of Form FCGPR to the Reserve Bank after issue of shares to a person resident outside India in terms of Paragraph 9(1)(A) and Paragraph 9(1)(B) of Schedule 1 to Foreign Exchange Management (Transfer or Issue of Security by a Compounding of contraventions under FEMA 1999 M/s United States Pharmacopeia India Private Limited CA No. HYD 305 person resident outside India) Regulations, 2000 notified vide Notification no. FEMA. 20/2000-RB dated 3rd May 2000 (herein after referred to as Notification no. FEMA 20/2000-RB) as then applicable. 2. The relevant facts of the case are as follows: a) The applicant is a resident company incorporated as Private Limited Company under the Companies Act, 1956 on May 27, 2005 (CIN: U24230TG2005PTC046362). The company is engaged in the provision of services to its holding company M/s USP Holding LLC, USA, which includes rendering Research and Development of Standards for Pharmaceuticals, Chemicals, Biologics, Dietary Supplements and Foods, testing and analysis of such samples. b) The applicant had received foreign inward remittances from single foreign investor as indicated below: Sl Name of Remitter Amount (INR) Date of Date of No Receipt Reporting 1 USP Holding LLC 99705000 04.08.2005 25.08.2005 2 USP Holding LLC 44750000 05.05.2010 21.05.2010 3 USP Holding LLC 44185000 15.10.2010 11.11.2010 4 USP Holding LLC 44982500 19.05.2011 01.06.2011 5 USP Holding LLC 53826000 17.06.2011 01.07.2011 6 USP Holding LLC 7227290 29.06.2011 24.07.2012 7 USP Holding LLC 19648000 23.02.2012 07.05.2012 8 USP Holding LLC 51640000 19.04.2012 22.05.2012 9 USP Holding LLC 55400000 29.05.2012 29.06.2012 10 USP Holding LLC 55300000 27.07.2012 10.08.2012 11 USP Holding LLC 53160000 27.09.2012 15.10.2012 Total 52,98,23,790
Compounding of contraventions under FEMA 1999 M/s United States Pharmacopeia India Private Limited CA No. HYD 305
The applicant reported receipt of remittances towards share subscription amounting to ₹ 52,98,23,790/- to the Regional Office of Reserve Bank of India, out of which remittances amounting to ₹ 13,39,15,290/- were reported with a delay ranging from 1 day to 11 months 26 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. c) The company allotted equity shares and filed form FC-GPRs as indicated below:
Sl Name of investor Date of Number of Amount for Date of No allotment shares/CCP which shares reporting of shares S allotted allotted (INR) 1 USP Holding LLC 14.09.2005 9970500 99705000 10.10.2005 2 USP Holding LLC 06.05.2010 3729166 44749992 02.06.2010 3 USP Holding LLC 21.10.2010 3682083 44184996 11.11.2010 4 USP Holding LLC 19.05.2011 3748542 44982504 13.08.2012 5 USP Holding LLC 20.06.2011 4485500 53826000 10.08.2012 6 USP Holding LLC 17.08.2011 602274 7227288 10.08.2012 7 USP Holding LLC 01.03.2012 1637334 19648008 07.05.2012 8 USP Holding LLC 07.05.2012 4303333 51639996 22.05.2012 9 USP Holding LLC 25.06.2012 4616667 55400004 19.07.2012 10 USP Holding LLC 11.12.2012 4608333 55299996 08.01.2013 11 USP Holding LLC 11.12.2012 4430000 53160000 08.01.2013 Total 45813732 52,98,23,784
Compounding of contraventions under FEMA 1999 M/s United States Pharmacopeia India Private Limited CA No. HYD 305 The applicant filed form FCGPRs for the allotment of shares amounting to ₹ 52,98,23,784/- out of which shares amounting to ₹ 12,56,83,800/- were reported with a delay ranging from 1 month 6 days to 1 year 1 month 25 days approximately beyond the prescribed limit. Whereas in terms of Paragraph 9(1)(B) of Schedule 1 to Notification no. FEMA 20/2000-RB, an Indian company issuing shares in accordance with these Regulations has to submit to Reserve Bank a report in form FCGPR along with documents prescribed therein within 30 days from the date of issue of shares to person resident outside India.
3. (a) The applicant was given an opportunity for personal hearing vide Reserve Bank’s letter No. HY.FE.FID/2083/14.66.003/2017-18 dated May 28, 2018 for further submission in person and/or producing documents, if any, in support of the application. (b) The applicant appeared for personal hearing on May 30, 2018 during which Shri. S. Vijayakumar, Director (Finance & Accounts), Shri. Rohit Gargeshwari, Director (Legal & Compliance) and Shri. B. Jayaraman, Vice President (Operations) represented the applicant. The authorized representatives of the applicant admitted the contraventions for which the compounding has been sought. During the personal hearing it was submitted that the delay was not wilful or with a malafide intention but was on account of administrative reasons. In view of the foregoing, the representative of the 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.
4. I have given my careful consideration to the documents on record. Accordingly, I hold that the applicant has contravened the following FEMA provisions issued in terms of:-
Compounding of contraventions under FEMA 1999 M/s United States Pharmacopeia India Private Limited CA No. HYD 305 (a) Paragraph 9(1)(A) of Schedule 1 to Notification No. FEMA 20/2000-RB for delay in reporting the receipt of consideration towards issue of shares amounting to ₹ 13,39,15,290/- and the delay ranges from 1 day to 11 months 26 days approximately.
(b) Paragraph 9(1)(B) of Schedule 1 to Notification No. 20/2000-RB for delay in submission of Form FC-GPR to Reserve Bank of India after issue of shares to persons resident outside India and the contravention relates to an amount of ₹12,56,83,800/- and the delay ranges from 1 month 6 days to 1 year 1 month 25 days approximately.
5. It has been declared in the compounding application dated April 16, 2018 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 declaration dated April 16, 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 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.
6. 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
Compounding of contraventions under FEMA 1999 M/s United States Pharmacopeia India Private Limited CA No. HYD 305 and I consider that an amount of ₹ 1,70,940 /- (Rupees One Lakh Seventy Thousand Nine Hundred Forty Only) will meet the ends of justice.
7. Accordingly, I compound the admitted contraventions, namely, the contraventions of Paragraph 9(1)(A) and Paragraph 9(1)(B) 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 ₹ 1,70,940 /- (Rupees One Lakh Seventy Thousand Nine Hundred Forty 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 06th day of June 2018
Sd/- (R Subramanian) Regional Director
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