Court Upholds RBI Penalty for FEMA Violation: Rs. 41,04,675 Penalty Found Fair and Justified; Petition Dismissed.

The HC dismissed the writ petition, upholding the penalty imposed by the RBI for violating FEMA provisions. The court found that the penalty of Rs. 41,04,675 was computed fairly and in accordance with FEMA guidelines. The petitioner, given an opportunity to be heard, did not opt for a personal hearing, and the court concluded that the penalty imposition was justified and within legal limits, with no grounds for challenging the computation or fairness of the penalty.

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Issues:
Violation of FEMA provisions, Quashing of compounding order, Computation of penalty, Fairness of penalty imposition, Opportunity of being heard.

Violation of FEMA provisions:
The petitioner, a US citizen and OCI cardholder, purchased agricultural property in India without RBI permission, violating FEMA regulations. RBI directed transfer to an Indian citizen within six months, which was complied with. Subsequently, a compounding fee of Rs. 41,04,675 was imposed by RBI.

Quashing of compounding order:
The petitioner challenged the compounding order, arguing he acted in good faith and complied with RBI directives. However, RBI justified the penalty citing FEMA guidelines and computation matrix, calculating the penalty based on contraventions related to property purchase and payment mode.

Computation of penalty:
The penalty computation considered the period of contravention, value of property paid, unfair advantage gained, and contraventions A and B. The penalty was calculated as Rs. 1,49,50,723.38 but limited to Rs. 41,04,675, not exceeding 300% of the contravention amount, as per Master Directions.

Fairness of penalty imposition:
The court found the penalty imposition fair, as the computation was in line with prescribed guidelines. The petitioner was given an opportunity of being heard but did not opt for a personal hearing. The court upheld the penalty imposition within legal limits and noted the petitioner was dealt with fairly.

Opportunity of being heard:
The petitioner was granted an opportunity of being heard but chose not to avail it. The court emphasized that the decision was made after considering the application and documents submitted. The petitioner was informed about the Master Directions and Guidance Note during the hearing.

In conclusion, the court dismissed the writ petition, upholding the penalty imposition as per FEMA guidelines and finding no legal grounds to challenge the computation or fairness of the penalty.

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