2013 (5) TMI 604

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....declaration containing untrue particulars in respect of the amount representing the full value of goods exported, to the Reserve Bank of India in an amount of US $ 1,44,63,233.56. Moreover, it was alleged that the Petitioners had failed to repatriate export proceeds to the extent of Rs.24.18 Crores from overseas buyers within the stipulated period of one year. A second notice to show cause was issued to the Managing Director of the Petitioner on 3 February 2012 alleging a contravention of the provisions of Section 4 of the Foreign Exchange Management Act as a result of the acquisition of an amount of Rs.24.18 Crores outside India without the permission of the Reserve Bank. A third notice to show cause was issued on 3 February 2013 to the Ma....

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....013. 4. These proceedings have been instituted seeking inter alia -    (i) A direction to the Special Director of Enforcement not to proceed with the adjudication proceedings;    (ii) For quashing the communications of the Reserve Bank of India dated 5 November 2012 returning the compounding applications on the ground that an investigation is being conducted by the Directorate of Enforcement; and    (iii) For a direction to the Reserve Bank to reconsider and decide the compounding application submitted on 20 February 2013; 5. The provisions in regard to compounding are governed by Section 15 of the Foreign Exchange Management Act 1999 which provides as follows :    "15. Power to compound contrav....

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....e and in the circular issued by the Reserve Bank of India. There is no absolute right to claim a compounding of contraventions. An application for compounding in fact does postulate that a breach has taken place. It is for the Competent Authority to decide as to whether the contravention is of a technical nature or whether it is of a sensitive nature involving broader issues of national security or money laundering or a serious infringement of the regulatory framework in which case a compounding cannot be allowed. In fact, even this is not an exhaustive list of factors since the facts of each case will have to be considered by the Competent Authority when it decides whether the application for compounding should be granted. There is a publi....

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....etitioners states that the Petitioners have no objection to pursuing the compounding applications in the manner as indicated by the communications of the Reserve Bank. The letters issued by the Reserve Bank on 28 March 2013 intimate to the Petitioners that they would in the first instance have to apply through the Panaji Regional Office of the bank to the Foreign Exchange Department of the Bank upon which, a decision would be taken. The learned Senior Counsel appearing on behalf of the Reserve Bank states that in the event that the Petitioners submit a complete set of documents within a period of one week from today to the Panaji Regional Office, a decision thereon shall be taken by the Foreign Exchange Department within a period of four we....