Independent compounding applications under FEMA must be decided on merits by a reasoned order within the prescribed time.

An independent compounding application under the Foreign Exchange Management Act, 1999 and the Foreign Exchange (Compounding Proceedings) Rules, 2000 must be considered on its own merits and decided by a reasoned order within the period prescribed by the Rules. The High Court directed that, if such an application is filed, the competent Authority is required to examine it independently and dispose of it within the statutory timeframe, rather than leaving it unattended or deciding it without reasons.

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Issues: Whether the petitioners were entitled to a direction that any independent compounding application filed under the Foreign Exchange Management Act, 1999 and the Foreign Exchange (Compounding Proceedings) Rules, 2000 be considered on its own merits and disposed of by a reasoned order within the statutory period.

Outcome: The petition was disposed of with a direction that, if such an application is filed, the Authority shall consider it on its own merits within the period prescribed under the Rules and pass a reasoned order.

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