Issues: (i) Whether the penalty of Rs.10,00,000 and Rs.10,000 imposed on the Appellant under Section 42 of the Foreign Exchange Management Act, 1999 for contraventions by the company is sustainable.

Analysis: The Appellant was the chief financial officer during the relevant period and admitted active participation in the transactions by statements under Section 37 of the Act. The penalty was imposed under Section 42(1) of the Foreign Exchange Management Act, 1999 for contraventions established against the company. The applicable legal framework includes Section 13(1) of the Foreign Exchange Management Act, 1999 which provides for civil penalties where mens rea is not a statutory requirement. The Tribunal applied the principle that once contravention of a statutory civil obligation is established, intention is irrelevant for imposition of penalty, relying on established precedent that civil penalties under regulatory statutes do not require proof of guilty intention. Having found the Appellant's active role and the establishment of contraventions, the Tribunal nevertheless exercised discretion to reduce the penalty to achieve proportionality and adjusted the pre-deposit against the reduced amount.

Conclusion: The penalty imposed on the Appellant is partially set aside by reducing the amount to Rs.1,01,000 and the pre-deposit made shall be adjusted against the reduced penalty; the appeal is partly allowed in favour of the Appellant.

Issues: (i) Whether the appellant contravened the provisions of the Foreign Exchange Management Act, 1999 and the Foreign Exchange Derivative Regulations/RBI directions by engaging in online foreign exchange derivative trading without prior permission; (ii) Whether penalty is imposable for the contraventions and, if so, what is the appropriate quantum of penalty in light of mitigating factors.

Issue (i): Whether unauthorised online forex derivative trading without prior RBI permission constituted contravention of FEMA, 1999 and the Foreign Exchange Derivative Regulations/RBI directions.

Analysis: The material establishes that foreign exchange derivative transactions were effected via an online trading portal using credit/debit cards and that such transactions fall within the definition of foreign exchange derivative contracts under Regulation 2(v) and are prohibited without prior RBI permission under Regulation 3. RBI AP DIR (Series) Nos. 53 and 46 specifically treat overseas electronic/internet forex trading effected by residents as attracting liability under FEMA and related compliance obligations.

Conclusion: The appellant committed contraventions of the Foreign Exchange Management Act, 1999 and the Foreign Exchange Derivative Regulations/RBI directions by entering into foreign exchange derivative contracts without prior permission.

Issue (ii): Whether penalty under Section 13(1) of FEMA is imposable and what reduction, if any, is warranted by mitigating circumstances.

Analysis: Section 13(1) permits adjudicatory penalty up to three times the quantifiable amount involved. The statutory text and judicial authorities establish that mens rea is not a precondition for imposition of civil penalties under such provisions. Mitigating facts (lack of deliberate intent, financial loss suffered by the transactor, present earning capacity) are relevant to calibrate the quantum of penalty but do not preclude liability. Applying the statutory ceiling and mitigation, the penalty was reduced from the impugned amount to a proportionate reduced sum, with adjustment of pre-deposit.

Conclusion: Penalty is imposable under Section 13(1) of FEMA; on application of mitigating factors the imposed penalty is reduced to a proportionate amount and the pre-deposit adjusted accordingly, resulting in partial allowance of the appeal in favour of the assessee.

Final Conclusion: The contraventions are established and civil penalty is authorized under FEMA; however, exercising adjudicatory discretion in view of mitigating circumstances results in a reduction of the penalty and partial allowance of the appeal, producing a net benefit to the assessee.

Ratio Decidendi: For civil penalties under Section 13(1) of the Foreign Exchange Management Act, 1999, mens rea is not an essential element and proven contravention attracts penalty, while mitigating circumstances are relevant only to the quantum and proportionality of the penalty.

Issues: Whether the penalty imposed on the appellant for alleged contravention of the Foreign Exchange Regulation Act, 1973 could be sustained when the impugned order did not discuss the evidence said to support the finding against him.

Analysis: The order recorded a conclusion that the appellant had aided and abetted the alleged transactions and had received and passed on money, but it did not show any discussion of the evidence linking the appellant to the alleged contravention. In the absence of an evidentiary analysis supporting the adverse finding, the conclusion against the appellant could not stand.

Conclusion: The finding and penalty against the appellant were unsustainable and were set aside.

Ratio Decidendi: An adverse penalty order must be supported by a reasoned discussion of the evidence establishing the alleged contravention; a bare conclusion without such analysis cannot be sustained.

Issues: Whether enhancement of the penalty imposed under the Foreign Exchange Management Act, 1999 was warranted in the appeal.

Analysis: The statutory scheme of Section 13(1) of the Foreign Exchange Management Act, 1999 prescribes only the ceiling of penalty and does not fix any irreducible minimum. The quantum of penalty is therefore left to the adjudicating authority's discretion, which must be exercised judiciously on the facts and evidence. The adjudicating authority had already imposed a substantial penalty in relation to the alleged contravention, and the record did not show any perversity or non-application of mind warranting interference. In the circumstances, enhancement was not considered justified.

Conclusion: The request for enhancement of penalty was rejected and the adjudication order was left undisturbed.

Ratio Decidendi: Where the statute prescribes only a maximum penalty and no minimum, the quantum of penalty is discretionary and will not be interfered with in appeal if the discretion has been exercised judiciously on the facts of the case.

Issues: (i) Whether a person resident in India can hold, transfer or invest foreign currency acquired while resident outside India under Section 6(4) of the Foreign Exchange Management Act, 1999 and whether that provision applies to the transactions in question; (ii) Whether contravention of Section 3(a) read with Section 4 of the Foreign Exchange Management Act, 1999 is established on the facts and what penalty is appropriate.

Issue (i): Whether Section 6(4) of the Foreign Exchange Management Act, 1999 permitted the Appellant, a person resident in India, to hold and transfer US$1.28 lakhs acquired while he was a non-resident.

Analysis: Section 6(4) allows a person resident in India to hold, own, transfer or invest foreign currency acquired when resident outside India or inherited from such a person. The provision does not protect funds that are illegitimate or unexplained. The material showed the funds were described in transfer messages as proceeds of sale of bonds, were received in cash and in parts, and the explanation that the funds belonged to a third party was found uncorroborated and an afterthought on the record.

Conclusion: Section 6(4) of the Foreign Exchange Management Act, 1999 does not cover the Appellant's transactions on the found facts; the provision is not applicable to protect the transfers in question.

Issue (ii): Whether contravention of Section 3(a) read with Section 4 of the Foreign Exchange Management Act, 1999 is established and what penalty should be imposed.

Analysis: The adjudicating authority's findings that the funds did not originate from the Appellant's salary abroad, that receipts were in cash and in parts, that supporting documents and third-party statements were afterthoughts, and that transfers were routed through the Appellant's non-resident account were accepted. Those factual findings sustain contravention of Section 3(a) read with Section 4. Considering the facts and circumstances and the Appellant's partial pre-deposit, the Tribunal exercised discretion to reduce the monetary penalty.

Conclusion: Contravention of Section 3(a) read with Section 4 of the Foreign Exchange Management Act, 1999 is established against the Appellant; however, the penalty is reduced to Rs. 1.5 lakhs and any pre-deposit shall be adjusted against the reduced penalty.

Final Conclusion: The appeal is partly allowed by upholding the finding of contravention but reducing the penalty to Rs. 1.5 lakhs; the reduced penalty reflects mitigation while affirming the substantive breach of FEMA provisions.

Ratio Decidendi: Section 6(4) of the Foreign Exchange Management Act, 1999 permits holding or transfer of foreign currency acquired while resident outside India only where the funds are legitimately acquired and duly substantiated; unexplained or illegitimate funds are not protected by that provision.

Issues: (i) whether the company and its managing director were liable for contravention under Section 3(b) of the Foreign Exchange Management Act, 1999 and whether the penalty imposed on them required reduction; (ii) whether the two non-executive directors, who were not involved in the day-to-day affairs of the company, were liable for the alleged contravention.

Issue (i): whether the company and its managing director were liable for contravention under Section 3(b) of the Foreign Exchange Management Act, 1999 and whether the penalty imposed on them required reduction.

Analysis: The finding of contravention against the company was maintained. The managing director was not accepted as exonerated from liability. At the same time, Section 13(1) of the Foreign Exchange Management Act, 1999 was treated as conferring a discretionary power as to quantum of penalty, subject to judicially relevant consideration of the facts and mitigating circumstances. The prior deposit made in compliance of the pre-deposit order was treated as a relevant mitigating factor for reducing the penalty.

Conclusion: The company and its managing director remained liable for the contravention, but the penalty was reduced to the extent of the amount already deposited.

Issue (ii): whether the two non-executive directors, who were not involved in the day-to-day affairs of the company, were liable for the alleged contravention.

Analysis: The two directors were found not to have managed the day-to-day affairs of the company, not to have signed any document in relation to the import transactions, and to have functioned only as sleeping directors. On that basis, they were held not to have been shown responsible for the alleged contravention under Sections 3(b) and 42 of the Foreign Exchange Management Act, 1999.

Conclusion: The two directors were exonerated from liability.

Final Conclusion: The decision preserved the finding of contravention against the company and its managing director while granting relief by reducing their penalty, and it fully relieved the two sleeping directors from liability.

Ratio Decidendi: Under Section 13(1) of the Foreign Exchange Management Act, 1999, penalty is discretionary and may be moderated on mitigating circumstances, and non-managing directors cannot be fastened with liability for contravention absent evidence of participation in the company's affairs or the impugned transaction.

Issues: (i) Whether the Appellant exported consignments at understated FOB value by giving discounts to accommodate commissions to overseas protective agents and thereby contravened the disclosure and realization obligations under FEMA and the Export Regulations; (ii) Whether the individual directors are liable for the contraventions of the company; (iii) What is the appropriate quantum of penalty having regard to the findings, the Settlement Commission deposit and the nature of the consignments.

Issue (i): Whether the Appellant under invoiced export value by giving discounts to cover overseas agents' fees and thereby breached the disclosure and realization obligations under FEMA and related regulations.

Analysis: The Tribunal examined the recorded statement of the company director admitting negotiated prices lower than initial offers for the 18 disputed consignments, the Settlement Commission's finding and the company's voluntary deposits of differential duty, interest and penalty. The Tribunal analysed the commercial nature of FOB valuation (expenses up to loading on board inclusive of commissions for services at load/discharge ports) and the RBI-prescribed method for declaring full export value and showing commission as permissible deduction. The Tribunal considered appellants' submissions on long term formulaic pricing and spot contract bidding records for some consignments and balanced these against admissions and the conduct of voluntarily depositing sums with the Settlement Commission.

Conclusion: The Tribunal held that for 12 of the 18 consignments the export value was understated and that the arrangement effectively kept part of the consideration offshore, resulting in contravention of the disclosure and realization obligations; charges relating to 6 consignments executed under long term contracts were dropped.

Issue (ii): Whether the individual directors (the managing director and the director/CFO) are liable for the company's contraventions.

Analysis: The Tribunal applied the statutory principle that where a company commits a contravention its officers in charge are deemed liable unless they prove lack of knowledge or exercise of due diligence. The Tribunal reviewed the appellants' pleadings, the absence of evidence showing due diligence or lack of knowledge, and the director's admitted role in finalizing negotiated prices.

Conclusion: The Tribunal held both individual appellants liable under the statutory provisioning and not entitled to exoneration on the facts; penalties were therefore maintainable against them.

Issue (iii): What penalty is appropriate having regard to the nature of contravention, prior Settlement Commission deposit and mitigating considerations.

Analysis: The Tribunal considered the statutory ceiling for penalty in civil contraventions, the absence of mens rea as a prerequisite for penalty, the voluntary payment to the Settlement Commission (treated as admission by conduct), and the limited scope for price variation under long term contracts. The Tribunal exercised discretion to reduce the quantum from that imposed by the Adjudicating Authority, taking into account prior deposits and proportionality.

Conclusion: The Tribunal reduced the penalties to Rs. 30,00,000 on the company and Rs. 3,00,000 on each of the two individual appellants and directed adjustment of any pre deposits against the imposed penalty; the appeals were partly allowed to this extent.

Final Conclusion: The Tribunal affirmed contraventions in respect of selected consignments, imposed reduced penalties on the company and its directors, and disposed of the appeals partly in favour of the appellants while dismissing other reliefs sought.

Ratio Decidendi: Where an exporter's declarations omit integral components of FOB value and the omissions are corroborated by admissions and conduct (including voluntary deposits), a civil penalty under FEMA is payable irrespective of mens rea, though the quantum of penalty is subject to proportionality and mitigating considerations such as prior settlement and limited scope of contractual price variation.

Issues: Whether the impugned order imposing penalties under Section 7(1)(a) and Section 7(1)(b) of the Foreign Exchange Management Act, 1999 and related Regulations can be sustained when a resolution plan effecting change of management of the corporate debtor was approved and implemented prior to the impugned order, thereby invoking the immunity provisions arising from the approved resolution plan and Section 32A of the Insolvency and Bankruptcy Code, 2016.

Analysis: The Tribunal examined the timing and effect of the corporate insolvency resolution process (CIRP) initiated on 17.08.2017, the approval of the resolution plan by the NCLT (25/27 June 2019), the restoration of that approval by the Hon'ble Supreme Court on 28.02.2020, and implementation of the approved resolution plan in March 2020. The Tribunal relied upon the legal framework that an approved resolution plan which effects change of management freezes and extinguishes claims not part of the resolution plan against the corporate debtor, and noted the relevance of Section 32A of the Insolvency and Bankruptcy Code, 2016 (as introduced by amendment) and related Supreme Court authorities addressing the effect of approved resolution plans on pre plan claims and proceedings. The Tribunal observed that the impugned order was passed on 28.08.2020 after the resolution plan had been restored and implemented, that the new management had taken effective control, and that there was no material placed on record to show that the new management were promoters, were related to previous promoters, or had abetted the alleged offences. Applying the principles in JSW Ispat and Ghanashyam Mishra regarding the freeze and extinguishment of pre plan claims and the immunity afforded to the corporate debtor pursuant to an approved resolution plan, the Tribunal concluded that the penalties and proceedings imposed by the impugned order could not be sustained.

Conclusion: The impugned order imposing penalties is set aside and the appeal is allowed in favour of the appellant, M/s Orchid Pharma Ltd.

Issues: (i) Whether the strike off of the company extinguished the liability arising from the FEMA adjudication and whether the legal representatives remained answerable for the penalty proceedings; (ii) Whether the penalties imposed on the individual appellants warranted reduction on the ground of proportionality.

Issue (i): Whether the strike off of the company extinguished the liability arising from the FEMA adjudication and whether the legal representatives remained answerable for the penalty proceedings.

Analysis: The applicable provisions on removal of a company's name from the register make it clear that dissolution under the Companies Act, 2013 does not wipe out subsisting liabilities. Liability continues after strike off, and enforcement may proceed against persons who remain legally answerable. In the FEMA framework, the adjudicating authority treated the deceased noticee as the person in charge of the company's affairs and proceeded against the legal representatives under the statutory scheme governing continuation of adjudication after death.

Conclusion: The liability was not extinguished by the company's strike off, and the proceedings against the legal representatives were maintainable.

Issue (ii): Whether the penalties imposed on the individual appellants warranted reduction on the ground of proportionality.

Analysis: Penalty under FEMA is attracted on proof of contravention and does not require proof of mens rea unless the statute so indicates. At the same time, the quantum of penalty must fit the nature and gravity of the contravention. On that basis, the adjudicated penalties on the individual appellants were found excessive and the ends of justice were considered satisfied by reducing them to the amount already deposited.

Conclusion: The penalties were reduced to Rs. 30,000 each.

Final Conclusion: The appeals succeeded to the limited extent of reducing the individual penalties, while the underlying FEMA liability was not set aside.

Ratio Decidendi: Liability under FEMA remains enforceable despite the company's strike off, and penalty for statutory contravention is a civil consequence that may be moderated on proportionality even though mens rea is not required.

Issues: (i) Whether a penalty imposed on a company continues to be payable after the company has been struck off the register; (ii) Whether the directors are liable for penalties imposed under FEMA and whether the penalty on the individual directors should be reduced.

Issue (i): Whether a penalty imposed on a company continues to be payable after the company has been struck off the register.

Analysis: Section 248(6) and Section 250 of the Companies Act, 2013 preserve the continuity and enforceability of liabilities of a company even after its name is struck off and require sufficient provision for discharge of liabilities. Section 19(1) of the Foreign Exchange Management Act, 1999 mandates deposit of penalty at the time of filing an appeal unless the Appellate Tribunal dispenses with the deposit to avoid undue hardship. The statutory framework thus contemplates continued liability and procedural pre-deposit obligations despite dissolution by striking off.

Conclusion: The penalty imposed on the company remains payable notwithstanding that the company has been struck off; failure to make the statutory pre-deposit warranted dismissal of the company's appeal.

Issue (ii): Whether the directors are liable for penalties imposed under FEMA and whether the penalty on the individual directors should be reduced.

Analysis: Section 42(1) of FEMA preserves liability of directors where the corporate contravention is established. Section 13(1) of FEMA provides for civil penalties without language requiring mens rea. Judicial authorities cited support that mens rea is not essential for imposition of civil fines for statutory contraventions; however, the Tribunal retains the power to temper penalties for proportionality and equity. The adjudicatory finding that the directors were responsible for conduct of the company was sustained, but equitable reduction was considered appropriate on the facts.

Conclusion: The individual directors are liable for the contraventions; their penalties are reduced to Rs. 30,000 each, with pre-deposits adjusted accordingly.

Final Conclusion: The appeal by the company is dismissed for non-compliance with the statutory pre-deposit requirement and the directors' appeals are partly allowed limited to reduction of individual penalties; overall the decision upholds continuing enforceability of corporate liabilities after striking off while permitting equitable mitigation of director penalties.

Ratio Decidendi: A penalty under FEMA is a civil consequence enforceable against a company even after striking off pursuant to Sections 248(6) and 250 of the Companies Act, 2013, directors remain liable for corporate contraventions under Section 42(1) of FEMA, and mens rea is not a prerequisite for imposing civil penalties under Section 13(1) of FEMA while the Appellate Tribunal may moderate penalties on equitable grounds.

Issues: (i) Whether a company struck off the Register of Companies is relieved of liabilities imposed by an Adjudicating Authority under FEMA and whether failure to make the statutory pre-deposit under Section 19(1) of FEMA warrants dismissal of the company's appeal; (ii) Whether the penalty imposed on the individual director under Section 13(1) and Section 42 of FEMA should be reduced.

Issue (i): Whether a company struck off from the Register remains liable to pay penalties imposed under FEMA and whether failure to comply with the pre-deposit requirement under Section 19(1) of FEMA mandates dismissal of its appeal.

Analysis: The Tribunal examined Chapter XVIII of the Companies Act, 2013, including Section 248(6) and Section 250, which preserve the continuance and enforceability of liabilities of a company even after its name is struck off and require that sufficient provision be made for discharge of liabilities. Section 19(1) of FEMA prescribes a statutory pre-deposit of penalty at the time of filing an appeal, subject to the Tribunal dispensing with the deposit in cases of undue hardship on conditions to safeguard realisation. The Appellant Company did not make the required pre-deposit and did not obtain dispensation under Section 19(1).

Conclusion: In favour of Respondent.

Issue (ii): Whether the penalty imposed on the individual director should be moderated.

Analysis: The Tribunal reviewed Section 13(1) of FEMA and authoritative precedents establishing that mens rea is not an essential element for imposing civil penalties for statutory contraventions; penalties attach upon establishment of contravention. The Tribunal considered the gravity and circumstances of the contraventions and the appellant's submissions seeking proportionality and reduction of penalty.

Conclusion: In favour of Appellant.

Final Conclusion: The Tribunal dismissed the appeal by the struck-off company for non-compliance with the pre-deposit requirement and partly allowed the appeal of the individual director by reducing his penalty; thus one appeal is dismissed and the other is partly allowed.

Ratio Decidendi: A company struck off under Sections 248 and 250 of the Companies Act, 2013 remains liable for its obligations and penalties imposed under FEMA and failure to comply with the statutory pre-deposit under Section 19(1) of FEMA warrants dismissal of the company's appeal; however, penalties on individuals may be moderated on assessment of proportionality despite absence of mens rea being immaterial for civil penalties under Section 13(1) of FEMA.

Issues: (i) Whether the officers of the Directorate of Enforcement were competent to adjudicate contraventions under FEMA; (ii) whether FEMA could be applied to activities in the Exclusive Economic Zone; (iii) whether the movement of fishing vessels and fish catch from the Exclusive Economic Zone to destinations abroad constituted export under FEMA and its Regulations.

Issue (i): Whether the officers of the Directorate of Enforcement were competent to adjudicate contraventions under FEMA.

Analysis: Section 16 of FEMA empowers the Central Government to appoint as many officers as it thinks fit as adjudicating authorities and to specify their jurisdictions. The notification appointing Customs and Central Excise officers did not exclude Enforcement Directorate officers, and the later notification expressly appointed officers of the Enforcement Directorate as adjudicating authorities under Section 13 of FEMA. The existence of multiple appointing notifications did not create any jurisdictional bar.

Conclusion: The officers of the Directorate of Enforcement were competent to adjudicate the matter.

Issue (ii): Whether FEMA could be applied to activities in the Exclusive Economic Zone.

Analysis: The Exclusive Economic Zone Act permits extension of enactments by notification, but the Tribunal held that FEMA operates on its own scheme and that its foreign exchange consequences extend beyond territorial India under Section 1(3). In the facts of the case, the fishing operations, import of vessels, and subsequent foreign exchange transactions had sufficient nexus with India, and a separate notification extending FEMA to the Exclusive Economic Zone was held unnecessary for invoking FEMA.

Conclusion: FEMA was held applicable to the transactions arising from the Exclusive Economic Zone operations.

Issue (iii): Whether the movement of fishing vessels and fish catch from the Exclusive Economic Zone to destinations abroad constituted export under FEMA and its Regulations.

Analysis: The Tribunal held that once the vessels had been imported into India and later taken out and handed over to a foreign entity, the transaction amounted to export for FEMA purposes. No declaration under Regulation 3 of the Export Regulations was filed. As to the netting off of export receivables against amounts spent on diesel, bait, crew salaries, and related services, the Tribunal held that Regulation 14C required prior RBI approval for such adjustment and that a loan registration number was not a substitute for such approval. The plea based on absence of mens rea was rejected in view of the civil nature of the penalty regime under Section 13 of FEMA.

Conclusion: The contravention under Section 7(1) read with Regulation 3 and the contravention of Regulation 14C were upheld, but the penalties were reduced.

Final Conclusion: The appeals succeeded only to the extent of reduction of penalty, while the findings of contravention under FEMA and its Regulations were sustained.

Ratio Decidendi: Where foreign exchange transactions arising from operations in the Exclusive Economic Zone have a direct nexus with India, FEMA can be applied without a separate extension notification; export formalities and prior RBI approval for netting-off of export receivables remain mandatory, and penalty under FEMA is attracted upon proof of contravention without proof of mens rea.

Issues: (i) Whether the retracted statement dated 19.03.2012 could be treated as admissible and relied upon despite subsequent retraction; (ii) Whether the confiscation of Rs.56,25,000/- and the penalty imposed under Section 3(c) of the Foreign Exchange Management Act, 1999 should be upheld or modified.

Issue (i): Whether the retracted statement dated 19.03.2012 is admissible and can be relied upon despite subsequent retraction.

Analysis: The statement was in the declarant's handwriting; supporting statements from other witnesses and recovery of cash provided corroboration; competent authority examined and rejected the retraction after inquiries; relevant precedents permit reliance on a retracted statement when independently corroborated and when voluntariness is established.

Conclusion: The retracted statement is admissible and may be relied upon as corroborated evidence.

Issue (ii): Whether the confiscation of Rs.56,25,000/- and the monetary penalty under Section 3(c) of the Foreign Exchange Management Act, 1999 should be upheld or modified.

Analysis: Independent evidence failed to establish lawful import or provenance of the alleged gold sale proceeds; corroborative witness statements and recovery of the cash supported contravention under Section 3(c) of the Foreign Exchange Management Act, 1999; however, the monetary penalty amount was reconsidered in light of the confiscation already effected and procedural relief previously directed regarding pre-deposit.

Conclusion: The confiscation of Rs.56,25,000/- to the Central Government is upheld; the monetary penalty is reduced to Rs.2,01,000/-.

Final Conclusion: The appeal is partly allowed by upholding the confiscation while reducing the penalty, reflecting a split outcome on evidentiary admissibility versus quantum of penalty.

Ratio Decidendi: A statement retracted by its maker may be acted upon if it is shown to be voluntary and is substantially corroborated by independent and cogent evidence; where confiscation of alleged illegally obtained foreign exchange is supported by corroboration and recovery, confiscation may be upheld while penalty may be moderated on equitable grounds.

Issues: (i) Whether service of the show cause notice and hearing notices by affixation at the last known address was valid and whether the appellant suffered any prejudice from the alleged delayed receipt of the adjudication order. (ii) Whether the appellant's involvement in the contravention of Section 8(1) of the Foreign Exchange Regulation Act, 1973 warranted maintenance of the original penalty or justified reduction of the penalty imposed on her.

Issue (i): Whether service of the show cause notice and hearing notices by affixation at the last known address was valid and whether the appellant suffered any prejudice from the alleged delayed receipt of the adjudication order.

Analysis: The notices were stated to have been served by affixation at the last known address in accordance with Rule 10(c) of the Adjudication and Appeal Rules, 1974 read with Section 49(3) and Section 49(4) of the Foreign Exchange Management Act, 1999. The record also indicated that the appellant continued to own the property at that address, and no convincing prejudice was shown from the late receipt of the adjudication order, especially when the delay had been condoned.

Conclusion: The service was treated as valid and no prejudice was accepted on account of delayed communication.

Issue (ii): Whether the appellant's involvement in the contravention of Section 8(1) of the Foreign Exchange Regulation Act, 1973 warranted maintenance of the original penalty or justified reduction of the penalty imposed on her.

Analysis: The repeated and frequent deposits in the joint NRE accounts over the relevant period established contravention of the foreign exchange law. At the same time, the material did not establish that the appellant was the active participant in the violation, although her status as a joint account holder and the use of the accounts for the deposits could not be ignored. The adjudication also reflected that the banks had been penalized for lack of due diligence, and the overall circumstances justified moderation of the appellant's penalty.

Conclusion: The penalty on the appellant was reduced to Rs. 3,00,000/-.

Final Conclusion: The appeal was allowed only to the extent of reduction of the appellant's penalty, while the finding of contravention was not disturbed.

Ratio Decidendi: Service effected by affixation at the last known address may be treated as valid where the recipient continues to control the premises and no real prejudice is shown, and a penalty for foreign exchange contravention may be moderated where the person is only a joint account holder and active participation is not established.

Issues: (i) Whether the data retrieved from the seized pen drive was admissible and could be relied upon without a certificate under Section 65B(4) of the Indian Evidence Act, 1872; (ii) Whether the appellants' conduct fell within Section 3(d) of the Foreign Exchange Management Act, 1999 and attracted liability under Section 42(1) and (2) of that Act; (iii) Whether the penalty imposed required reduction.

Issue (i): Whether the data retrieved from the seized pen drive was admissible and could be relied upon without a certificate under Section 65B(4) of the Indian Evidence Act, 1872

Analysis: The pen drive was seized from the business premises and treated as the original electronic record. The contents were opened in the presence of the concerned persons, printouts were taken, and the entries were confirmed by the persons associated with the transactions. The Tribunal also applied the statutory presumption under Section 39 of the Foreign Exchange Management Act, 1999 to documents seized from a person's custody or control and noted the supporting presumption reflected in Section 132(4A) of the Income-tax Act, 1961. On that basis, the objection that a Section 65B certificate was mandatory was rejected.

Conclusion: The electronic material was held admissible and reliable against the appellants.

Issue (ii): Whether the appellants' conduct fell within Section 3(d) of the Foreign Exchange Management Act, 1999 and attracted liability under Section 42(1) and (2) of that Act

Analysis: The arrangement involved payment of Indian currency in India for securing foreign exchange abroad to meet the under-invoiced component of imports. The Tribunal held that such payments constituted a financial transaction in India in consideration of acquisition of an asset outside India, namely foreign exchange, and therefore fell within the scope of Section 3(d). It further found that the managing director and the other directors were involved in or responsible for the arrangement, and the requirements for fastening liability under Section 42(1) and (2) were satisfied on the facts found.

Conclusion: The contravention under Section 3(d) was upheld and liability under Section 42 was sustained against the concerned appellants.

Issue (iii): Whether the penalty imposed required reduction

Analysis: Although the contraventions were affirmed, the Tribunal considered the penalty excessive in the circumstances and exercised appellate discretion to bring the monetary liability to a lower figure consistent with the findings recorded.

Conclusion: The penalties were reduced to the extent directed by the Tribunal.

Final Conclusion: The appeals succeeded only to the limited extent of reduction in penalty, while the findings on admissibility of the electronic evidence and commission of contravention were maintained.

Ratio Decidendi: A seized electronic record can be relied upon as primary evidence without a Section 65B certificate where its custody, contents, and authenticity are otherwise established, and a payment arrangement in India to secure foreign exchange abroad for settling import liabilities falls within Section 3(d) of FEMA.

Issues: (i) Whether acceptance of export proceeds from third parties for export consignments made before 08.11.2013 contravened Regulation 3(2) of the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2000; (ii) Whether the two individual directors are liable under Section 42(1) of the Foreign Exchange Management Act, 1999 for the contraventions.

Issue (i): Whether receipt of export payments from third parties for consignments made prior to 08.11.2013 violated Regulation 3(2) of the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2000.

Analysis: Regulation 3(2) requires payment for exports to be received in a currency appropriate to the place of final destination as declared in the export declaration form and contemplates receipt from the buyer as indicated in the declaration form. The RBI circular dated 08.11.2013 expressly permitted third-party payments only thereafter and subject to specified conditions, with further procedural relaxation by Circular No.100 dated 04.02.2014 while retaining AD bank safeguards. The temporal sequence shows no regulatory provision allowing third-party receipts without conditions prior to 08.11.2013.

Conclusion: Receipt of export proceeds from third parties for exports made before 08.11.2013 contravened Regulation 3(2) of the aforementioned Regulations.

Issue (ii): Whether the two individual directors are liable under Section 42(1) of the Foreign Exchange Management Act, 1999 for the contraventions in respect of the export consignments.

Analysis: The individual directors admitted signing commercial invoices and participated in the export processes for the consignments in question. There was no satisfactory evidence that the contraventions occurred without their knowledge or despite exercise of due diligence. The impugned order applied Section 42(1) to fix liability on directors responsible for day-to-day affairs where contravention by the company is proved.

Conclusion: The two individual directors are liable under Section 42(1) of FEMA, 1999 for the contraventions.

Final Conclusion: The appeal by the company is partly allowed by reducing the penalty to Rs.15,00,000; the appeals by the two individual directors are dismissed and their penalties are maintained. The tribunals disposition reflects that third-party receipts for exports prior to 08.11.2013 were not permitted under the then applicable regulatory regime, and directors who participated in the relevant export process can be held liable under Section 42(1).

Ratio Decidendi: Third-party receipt of export proceeds without compliance with conditions introduced by RBI circulars is inconsistent with Regulation 3(2) prior to 08.11.2013, and directors involved in the companys day-to-day export activities can be held liable under Section 42(1) FEMA where company contraventions are established and due diligence is not shown.

Issues: (i) Whether penalties imposed for contravention of the FEMA regulations relating to transfer/issue of shares can be sustained where the transaction subsequently received ex-post-facto approval from the competent authority; (ii) Whether penalty under Section 3(c) of the FEMA can be sustained against the shareholder who failed to explain the source of funds for acquisition of a portion of shares.

Issue (i): Whether penalties for contravention of Regulation 10(A)(b) / Clause 3 to Schedule 4 read with Regulation 5(3)(2) and Regulation 4 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 can be sustained in view of subsequent ex-post-facto approval by the competent authority (FIPB/Ministry).

Analysis: The transaction involving issuance/transfer of shares was presented to RBI and then to the competent authority; ex-post-facto approval for the transfer/issue to the non-resident was granted and is on record. The competent authority's subsequent regularisation by way of ex-post-facto approval dispensed with the requirement of prior approval in respect of the same transaction and was relied upon in determining whether the regulatory contravention subsists.

Conclusion: The penalties imposed for the alleged contraventions of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 cannot be sustained in respect of the transfer/issue of shares that have been regularised by ex-post-facto approval; appeal in this respect is allowed.

Issue (ii): Whether the penalty under Section 3(c) of the Foreign Exchange Management Act, 1999 can be sustained against the shareholder who failed to explain the source of funds for acquisition of 44,350 shares.

Analysis: The ex-post-facto approval does not relieve parties of other statutory or regulatory requirements under FEMA. The shareholder failed to satisfactorily explain the source of funds for the specified 44,350 shares; this lack of explanation was treated as establishing contravention under Section 3(c).

Conclusion: The penalty imposed under Section 3(c) of the Foreign Exchange Management Act, 1999 in respect of the unexplained source of funds for 44,350 shares is sustainable; the appeal in this respect is partly allowed only to adjust pre-deposit against the penalty.

Final Conclusion: The appeal of the first appellant is partly allowed and the appeal of the second appellant is allowed; penalties relating to the transfer/issue of shares regularised by ex-post-facto approval are set aside, while the penalty for unexplained source of funds is maintained and subject to adjustment of the pre-deposit.

Ratio Decidendi: Ex-post-facto approval by the competent authority, when recorded for the same transaction, regularises the failure to obtain prior approval and precludes sustaining penalties for that regulatory non-compliance, but does not absolve parties from other statutory obligations such as explaining the source of funds under Section 3(c) of FEMA.

Issues: (i) Whether the appellants contravened Section 3(b) of the Foreign Exchange Management Act, 1999 by effecting differential payments to persons outside India through hawala and personal carriage and whether Section 42 of FEMA applies to the directors of M/s Prism for liability; (ii) If contravention is established, what is the appropriate quantum of penalty under Section 13(1) of FEMA.

Issue (i): Whether appellants committed contraventions of Section 3(b) of FEMA by sending differential amounts abroad through hawala or personal carriage and whether Section 42 applies to the directors of M/s Prism and others associated with the proprietorship.

Analysis: The Tribunal examined statements recorded under Section 37 of FEMA, corroborating material seized from appellants' custody (pen-drive) and documents/statements produced in DRI proceedings; applied Section 39 presumptions for documents seized under another law; considered authority permitting use of Customs investigation material in FEMA adjudication; evaluated jurisprudence on retracted confessions and the standard of proof in adjudication proceedings; and analysed the explanation to Section 42 which includes firms and associations of individuals, finding that the directors of M/s Prism were de-facto running the proprietorship and that the evidence collectively supports contravention findings.

Conclusion: The Tribunal held that the appellants contravened Section 3(b) of FEMA and that Section 42 is attracted to the directors of M/s Prism; findings on contravention are upheld against the appellants.

Issue (ii): Appropriate quantum of penalty to be imposed under Section 13(1) of FEMA in light of established contraventions and payments already made.

Analysis: The Tribunal considered the payments of differential customs duty and interest made before the Settlement Commission, appellants' financial condition, and principles governing penalty assessment; it exercised discretion to mitigate the originally imposed penalty amounts while upholding liability.

Conclusion: The Tribunal reduced the penalties imposed by the Adjudicating Authority to the following amounts: M/s Osho Organics (proprietor T. Ravi Kumar) Rs. 6,75,000; Shri Rajasekhar Rs. 10,00,000; Mr. G. Yugendhar Rao Rs. 10,00,000; Shri P.V. Sambasiva Rao Rs. 10,00,000; pre-deposits adjusted against the reduced penalties.

Final Conclusion: The appeals are partly allowed contraventions under Section 3(b) (and liability under Section 42) are upheld, but the quantum of penalty is reduced as specified and amounts deposited adjusted accordingly.

Ratio Decidendi: Where documents and statements seized from the custody of an accused under one statute are tendered in FEMA adjudication and Section 39 conditions are satisfied, such material may be presumed and relied upon; on a preponderance standard in adjudication proceedings, corroborated statements and seized documentary evidence can sustain a finding of contravention under Section 3(b), and Section 42's explanation including firms/associations permits attributing liability to persons controlling a proprietorship established and operated by them.

Issues: (i) Whether contraventions under Section 3(b) of the Foreign Exchange Management Act, 1999 (FEMA) were made out in respect of the transactions described and confirmed by the Special Director (Appeals); (ii) Whether the quantum of penalty imposed by the Adjudicating Authority and affirmed by the Special Director (Appeals) is disproportionate and requires interference.

Issue (i): Whether contraventions under Section 3(b) of FEMA, 1999 were established for the transactions described in the adjudication and appeal records.

Analysis: The Tribunal considered the recital of facts in the impugned order and the Special Director (Appeals)'s findings (paras 6.2.1 and 6.2.2) describing adjustments and transfers of foreign-exchange-linked payments among parties without routing through authorised dealers or obtaining RBI permission. The record showed transactions involving set-off of amounts and transfers of rough diamonds resulting in alleged dealing in foreign exchange outside authorised channels. The appellants did not press for a reversal of the contravention findings before the Tribunal, instead seeking reduction in penalty.

Conclusion: The findings of contravention under Section 3(b) of FEMA, 1999 as recorded by the Adjudicating Authority and affirmed by the Special Director (Appeals) are treated as established for the purposes of these appeals.

Issue (ii): Whether the penalty quantum imposed required interference on grounds of disproportionality.

Analysis: Having regard to the age of the matters, partial payment already made by appellants pursuant to pre-deposit directions, inability of the respondent to recover the balance in the intervening period, and the appellants' election before the Tribunal to seek relief only on proportionality of penalty, the Tribunal examined the fitness of reducing the monetary sanction. The Tribunal did not re-adjudicate the merits of contravention but focused on quantum and equity in disposal.

Conclusion: The Tribunal interfered with the penalty quantum only and reduced the penalty to 50% of the amount imposed by the Adjudicating Authority (equivalent to the amount already paid pursuant to pre-deposit) for the appellants, while maintaining the established contraventions.

Final Conclusion: The appeals are disposed of by confirming the contraventions under Section 3(b) of FEMA, 1999 and by moderating the monetary sanction; interference is limited to reducing the penalty quantum to 50% of the originally imposed amount in the interests of equity and final settlement.

Ratio Decidendi: Transactions constituting dealing in foreign exchange without routing through authorised dealers or without RBI permission fall within Section 3(b) of FEMA, 1999, and where contraventions are treated as established but equitable considerations (age of matter, pre-deposit paid, and recovery failure) apply, a Tribunal may lawfully moderate the penalty quantum to achieve proportionality.

Issues: Whether the seizure of two Demat accounts under Section 37A of the Foreign Exchange Management Act, 1999 may be substituted by furnishing a Fixed Deposit (FD) of equivalent value, with lien in favour of the respondent, pending adjudication and subject to any compounding by the Reserve Bank of India.

Analysis: The Tribunal examined the limited relief sought by the appellants without adjudicating the merits of the alleged contravention under Section 4 of the Act. The competent authority below had confirmed the seizure but observed that it lacked jurisdiction to order substitution of seized items; it nonetheless recommended sympathetic consideration of substitution. The Tribunal noted the purpose of seizure under Section 37A is to secure an equivalent sum in India and that a Fixed Deposit existing for equivalent value would serve the same protective purpose while preserving parties' rights in pending adjudication and any RBI compounding process. The Tribunal considered potential volatility in share values and the equitable interests of both parties, and restrained from pronouncing on substantive guilt or penalty which remain for adjudication under Sections 13 and 16 of the Act.

Conclusion: The seizure of the two Demat accounts is substituted by an FD of equivalent value of Rs. 30,60,11,193/- furnished by the appellants with a lien in favour of the respondents; the seizure of the Demat accounts is lifted subject to the final outcome of the adjudication proceedings and any order on compounding by the Reserve Bank of India.