2013 (11) TMI 1815 - AT - FEMA

Tribunal Upholds Penalty for FEMA Violation in Agricultural Land Purchase; Director Found Liable, Properties Confiscated.

Queri Resorts (P.) Ltd. Versus Special Director of Enforcement Directorate

Queri Resorts (P.) Ltd. Versus Special Director of Enforcement Directorate - TMI Issues Involved:1. Whether the company contravened provisions of FEMA by purchasing agricultural land using foreign remittances obtained under the Automatic Route.2. Whether Ms. Yulia Yaskova, as a director, is liable for the contravention by the company under FEMA.3. Whether the properties involved in the contravention are liable to be confiscated to the Central Government under FEMA.Detailed Analysis:Issue I: Contravention by the CompanyThe primary issue revolves around whether the company purchased agricultural land worth Rs. 1,53,17,000/- using foreign remittances obtained under the Automatic Route, thereby contravening the provisions of section 6(3)(b) of FEMA read with item No.6 of List B of Annexure A to Schedule 1 of the Foreign Exchange Management (Transfer or Issue of Security by a person resident outside India) Regulations, 2000. The Tribunal found that the properties purchased were indeed agricultural lands, as corroborated by the statements of Mr. Francisco X Souza, an ex-director, and the lack of conversion sanad from agricultural to non-agricultural purposes. The Tribunal concluded that the company's actions were in contravention of the regulations, and the penalty of Rs. 12,00,000/- imposed was deemed appropriate and within legal limits.Issue II: Liability of Ms. Yulia YaskovaThe second issue concerns the liability of Ms. Yulia Yaskova, a director of the company, under section 42(1) of FEMA. It was established that she was in charge of and responsible for the company's business during the period of contravention. The Tribunal noted that she did not provide evidence to prove that the contravention occurred without her knowledge or that she exercised due diligence to prevent it. Consequently, the Tribunal upheld the penalty of Rs. 1,00,000/- imposed on her, finding her guilty of the contravention alongside the company.Issue III: Confiscation of PropertiesThe final issue pertains to the confiscation of the properties involved in the contravention. Under section 13(2) of FEMA, the Adjudicating Authority has the discretion to confiscate properties in respect of which contraventions have occurred. The Tribunal noted that the properties, amounting to Rs. 1,53,17,000/-, were involved in the contravention and were thus confiscated to the Central Government. The Tribunal found no reason to question the application of judicial discretion by the Adjudicating Authority in this matter, as the appellant did not contest this aspect.Conclusion:The Tribunal dismissed the appeals Nos. 98-99/2011, finding no illegality in the impugned order. The penalties and confiscation were upheld as appropriate under the circumstances, with no order as to costs.