Chairperson omits opinions from FEMA case majority opinion, follows Mudgil's approach on penalty deposit.

The Chairperson in a FEMA case concluded that certain paragraphs expressing opinions should be omitted from the majority opinion. The Chairperson agreed with Dr. H.K. Mudgil's approach, directing the appellants to deposit 40% of the penalty and furnish a bank guarantee for the remaining 60%. The matter was listed for compliance and final hearing on 4th February 2015.

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Issues Involved:
1. Contravention of Sections 3(b) and 6(2) of FEMA 1999 and related regulations.
2. Imposition of penalties under Section 13(1) of FEMA.
3. Applications for stay and waiver of pre-deposit.
4. Disagreement between tribunal members regarding pre-deposit conditions.
5. Scope of Chairperson's powers under Section 31 of FEMA 1999.

Detailed Analysis:

1. Contravention of Sections 3(b) and 6(2) of FEMA 1999 and Related Regulations:
The appellants were held liable for contravening Sections 3(b) and 6(2) of FEMA 1999, read with Regulation 5 of the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations 2000, and Paragraph 8 of Schedule I to Regulation 5(1) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulation 2000. The adjudicating authority imposed a total penalty of Rs. 98.35 crores on the appellants.

2. Imposition of Penalties under Section 13(1) of FEMA:
A penalty of Rs. 23.50 crores was imposed for Remittance 1 and 3, and Rs. 4.80 crores for Remittance 2, for violations of Section 6(3)(b) of FEMA 1999. Additionally, a penalty of Rs. 4 crores was imposed for alleged violations of Para 9(1)(A) of Schedule 1 of TISPRO. The appellants argued that all remittances were made as per the conditions of the tender invitation by BCCI, and no foreign exchange was sent out of India, thus no contravention occurred.

3. Applications for Stay and Waiver of Pre-deposit:
The appellants filed applications for stay and waiver of pre-deposit of penalties. The Special Division Bench, after hearing the arguments, reserved the order. One member, Dr. S.D. Singh, directed the appellants to deposit 70% of the penalty and furnish a bank guarantee for the remaining 30%. The other member, Dr. H.K. Mudgil, disagreed, suggesting a deposit of 40% and a bank guarantee for 60%.

4. Disagreement Between Tribunal Members Regarding Pre-deposit Conditions:
Dr. H.K. Mudgil disagreed with Dr. S.D. Singh's findings in paragraphs 35 to 37, which expressed opinions on the merits of the case at the preliminary stage. Dr. Mudgil emphasized the principles of natural justice and suggested a more pragmatic approach considering the financial hardship claimed by the appellants. The matter was referred to the Chairperson under Section 31 of FEMA 1999.

5. Scope of Chairperson's Powers under Section 31 of FEMA 1999:
The Chairperson noted that the scope of reference under Section 31 is narrow and limited to agreeing with one of the members' findings. The Chairperson cannot rewrite the judgment but must decide based on the majority opinion. The Chairperson agreed with Dr. H.K. Mudgil's view that expressing a final opinion at the interim stage is inappropriate. The Chairperson found the order directing a 40% deposit and a 60% bank guarantee more appropriate.

Conclusion:
The Chairperson concluded that Paragraphs 35 to 37 of Dr. S.D. Singh's order should be omitted from the majority opinion. The Chairperson adopted Dr. H.K. Mudgil's approach, directing the appellants to deposit 40% of the penalty and furnish a bank guarantee for the remaining 60%. The Registrar was directed to inform the parties, and the appeal was listed for compliance and final hearing on 4th February 2015.

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