TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) whether the civil miscellaneous second appeals were maintainable under Section 35 of the Foreign Exchange Management Act, 1999 on the basis that a question of law arose from the Tribunal's order; (ii) whether the appellants contravened the statutory conditions governing overseas investment, including Regulation 15(iii) of the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2000 and the connected sanction conditions; and (iii) whether the penalties imposed on the company and its Managing Director called for interference.
Issue (i): whether the civil miscellaneous second appeals were maintainable under Section 35 of the Foreign Exchange Management Act, 1999 on the basis that a question of law arose from the Tribunal's order.
Analysis: Section 35 permits an appeal to the High Court on any question of law arising out of the Tribunal's order. The scope is wider than the requirement of a substantial question of law. Where the Tribunal has considered and answered the issue of violation, the resulting challenge raises a question of law. The record showed that the legality of the alleged contravention had been considered by the adjudicating authority and affirmed by the Tribunal.
Conclusion: The appeals were maintainable.
Issue (ii): whether the appellants contravened the statutory conditions governing overseas investment, including Regulation 15(iii) of the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2000 and the connected sanction conditions.
Analysis: The Regulations were framed under statutory powers and therefore had binding force. The sanction letter and the regulatory scheme required submission of annual performance reports and audited accounts within the stipulated period, or within six months where the host country prescribed no statutory period. The appellants admittedly did not comply within time and sought to justify the default on the ground that local law in the USA did not compel audit. That explanation did not displace the obligation undertaken under the RBI sanction and the Regulations. The failure to furnish the required reports and accounts amounted to contravention of the regulatory conditions and the sanction conditions.
Conclusion: The appellants were in breach of the statutory and sanction conditions.
Issue (iii): whether the penalties imposed on the company and its Managing Director called for interference.
Analysis: Contravention of the Act, the Regulations, and the conditions of authorisation attracts penalty under Section 13(1). Penalty is not automatic in every case of default, but the authorities are entitled to consider the nature and duration of the breach. Here, the default persisted for years, the documents were not furnished in time, and the imposed amounts were found to be reasonable in the circumstances. No ground was made out for reducing or setting aside the penalties.
Conclusion: The penalties were upheld.
Final Conclusion: The judgment confirms the regulatory breach, upholds the maintainability of the appeals on a question of law, and leaves intact the monetary penalties imposed on both appellants.
Ratio Decidendi: Under Section 35 of the Foreign Exchange Management Act, 1999, an appeal lies on any question of law arising from the Tribunal's order, and non-compliance with binding RBI-sanctioned conditions and statutory foreign exchange regulations constitutes a penal contravention warranting confirmation of penalty.
TaxTMI 
TaxTMI 
