TaxTMI 
TaxTMI 
2017 (5) TMI 852
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.... from the conclusion of the final arguments. 3. Arguments in the instant appeals were heard & completed on 06.01.2017 and thereafter the judgement was reserved. While, we were perusing the record of the instant appeals for dictation on 13.01.2017, we observed that all the referred judgements, mentioned in the latest written submissions of the appellants, submitted on 06.01.2017 before the Bench had not been placed on record, while some judgements were placed on record at the time of arguments. The appellants were directed to furnish the copies of referred judgements, mentioned in the written submissions within a week, which were earlier not placed on record at the time of arguments. Brief notes pertaining to the instant appeals on behalf of the respondents were also received in the Tribunal on 09.01.2017. The brief notes were placed on record as it was filed within a week as per the interim order of the Bench. Intimation in this regard was given to the appellants as well as their advocates. The matter was listed on 24.01.2017 for compliance & in this regard, both the parties were informed accordingly. File was taken up on 24.01.2017 & it was submitted by both the parties that co....
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....8 to furnish required information. Vide letters dated 04.07.2008, 07.08.2008 and 30.10.2009, BCCI furnished certain details. Subsequently, information was also gathered from the various .sources including print and electronic media pointing to alleged large scale irregularities in the conduct and functioning of the IPL, necessitating comprehensive investigation in respect of IPL and its franchises. 6. It was found from the inspection of the documents submitted by the BCCI that they had floated, a tender called Invitation to Tender (ITT), which was an invitation for all to submit bids for owning and operating a team for participation in the competition. The bidders were required to choose from eight (8) locations to operate their team which were Mumbai, Delhi, Chennai, Kolkata, Bangalore, Hyderabad, Mohali and Jaipur. A bidder was eligible to bid for a franchise in up to 8 locations though one bidder finally would be awarded only one franchise. For the bid to be successful, several criteria with respect to eligibility and fitness of the bidder had been stipulated, which was set out in the ITT. Each bidder was required to submit a performance deposit of US$ 5 Million equivalent to....
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....Mauritius. Thus the total amount remitted to BCCI by appellant, Manoj Badale and M/s. EMSH, Mauritius was Rs. 23,49,27,410.23/- equal to GBP 26,32,026.72 plus US$7,73,480.99. From the documents furnished by JIPL it was revealed that the company was incorporated on 08.03.2008 only, is a wholly owned subsidiary (WOS) of M/s.EMSH, Mauritius, which was incorporated on 05.05.2008. The paid up capital of the company at the time of incorporation was Rs. 1 lakh comprising of 10000 shares. Mr. Ranjeet Barthakur & Mr. Fraser Castillino both were directors of the company were holding 5000 shares each. The 5000 shares of Mr. Barthakur were subsequently sold to M/ i.EMSH, Mauritius (4990 shares) and M/s. EMIPL, U.K. (10 shares) against a receipt of Rs. 50,000/- from M/s. EMSH, Mauritius. The 5000 shares held by Mr. Eraser Castillino were subsequently sold to M/s. E.M. Sporting Holdings Ltd., Mauritius for Rs. 50,000 which was received by Mr. Fraser Castillino by way of inward remittance. JIIPL vide its letter dated 14th October, 2009 had also provided the details of foreign investment in their company and it was found that apart from the three remittances mentioned above, M/s. JIPL had also rec....
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....unities" Thereafter, JIPL filed an application before the RBI on 28-10-2009 seeking their approval for issuing shares to M/s. EMSH, Mauritius against US$ 58,22,366.25 (equivalent of GBF 25,82,026.72 +GBP 50,000 + US$ 7,73,48o.99) which was paid by Mr Manoj Badale and M/s. EMSH, Mauritius to BCCI towards performance deposit and franchise fee. The said application dated 28-10-2009 was rejected by the FBI vide there letter dated 23-12-2009 wherein RBI informing JIPL through Axis Bank, the authorized dealer through whom the application was filed, as under:- "Please refer to your letter No. AXIS/BANKW/fo3Qo/2009 dated November, 24, 2009 on the captioned subject. In this connection, we advise that an Indian company receiving share subscription from a person resident outside India by mode of payment other than that indicated in Para 8 of Schedule I to Notification No. FEMA-20/200-RB dated May 3, 2000 would require the prior approval of the EIPB for issue of shares to the foreign investor. Further, capitalization of pre incorporation expenses incurred by a foreign entity would ale: p; quire the approval of the FIPB. You may, therefore, advise Jaipur IPL Cricket Limited to seek necess....
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.... RBI in connection with the receipt of the foreign remittances has also not been filed. 14. M/s JIPL has reflected in its balance sheet as on 31-12-2008 the amounts of remittance as share application pending allotment to the extent of Rs. 33,18,20,826/- which includes the amount of Rs. 30,08,81,856/- attributed to M/s EMIPL, UK and an amount of Rs. 3,09,39,240/- to EMSHL, Mauritius. Though these amounts have been received from Sh. Manoj Badale, M/s EMSHL, Mauritius and ND Investments, LLP, they have been reflected in the balance sheet to the account of M/s EMIPL, UK and EMSHL, Mauritius as they have been paid on their behalf by Mr Manoj Badale and ND Investments" LLP and no application has been made to RBI to refund of these amount to the foreign investors. 15. Para 9 of Schedule 1 to Regulation 5(1) of FEM (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 provides that an Indian company should report the receipt of consideration to issue shares to a person resident outside India to the RBI within 30 days. But no report has been filed to RBI in connection with the remittances of GBP 26,32,026.72 from Mr Manoj Badale made to BCCI as performan....
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....of Foreign Exchange Management (Transfer or Issue of security by a Person Resident outside India) Regulations, 2000 to the extent of Rs. 23,49,27,410/-and Rs. 9,73,18,034/.- totaling to Rs. 33,22,45,444/- and Mr Bishwarnath Bachun, Mrs. Samila Sivaramen, Mrs. Barbara Jacqueline Haldi and Mr. Manoj Badale, Director of M/s EM Sporting Holdings Ltd. and Shri Suresh Chellaram, Managing Director & Chief Executive of M/s Chellarams PLC, Nigeria were charged for above contraventions in terms of section 42 (1) of FEMA, 1999. 18. SCN.III was issued to Mr Manoj Badale for contravention of Section 3 (b) of FEMA. to the extent of Rs. 20,19,87,410/- and another amount of Rs. 5,07,25,000/-. 19. SCN.IV was issued to M/s N.D. Investments Ltd. (i) for contravention of Section 3(b) of FEMA to the extent of Rs. 4,65,93,034/- and (ii) to Mr Manoj Badale, Director for the said contraventions in terms of section 42 (1) of FEMA, 1999. The aforesaid notices were issued which are related to the cricket tournament known as the Indian Premier League (in short IPL) organized by the Board of Control for Cricket in India. Replies on behalf of the noticees filed & adjudicating proceedings started. 20. T....
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....ons of FEMA and imposes penalty on them which is without jurisdiction. In support of their arguments, they have relied upon the judgment of the Hon'ble Supreme Court in the case of Fatiraa Bibi Ahmed Patel v. State of Gujarat and Another, 2008 (6) SCC 789 and contended that the extra territorial application of the provision of FEMA shall not be extended to the citizens of foreign country. Further submission is that there is no contravention of the provisions of FEMA, 1999 read with Foreign Exchange Management (Permissible Capital Account Transaction) Regulations, 2000 (PCAT) and Foreign Exchange Management Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 (TISPRO). It is further submitted that a. total penalty of Rs. 98,35,00,000/- (Rs. Ninety eight crores thirty five lakhs) has been imposed against all the appellants for the alleged contravention of the provisions of Foreign Exchange Management Act, 1999 read with Foreign Exchange Management Transfer or Issue of Security by a person Resident outside India) Regulations, 2000 and Foreign Exchange Management (Permissible Capital Account Transaction) Regulations, 2000 mentioned in the Adjudication....
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....ust be commensurate with the gravity of the misconduct and that any penalty disproportion to the gravity of the misconduct would be violative of Article 14 of the Constitution. The point to note, and emphasise is that all powers have legal limits. In the present case the punishment is so strikingly disproportionate as to call for and justify interference, it cannot be allowed to remain uncorrected in judicial review. ♦ (para 10) In the result, for the going reasons, the appeal is allowed, the order of the High Court set aside, the writ petition preferred in the High Court allowed and the impugned proceedings of Summary Court Martial dated 30th March, 1985 and the consequent order and sentenced are quashed. The appellant is entitled to and shall be reinstated with all monetary and service benefits. There will, however, be no order as to costs." 22. Further submission is that the entire matter relates to three remittances; remittance no. 1, total amounting to Rs. 20,19,87,410.23/- i.e (Rs. 19,81,18,910.23/- + Rs. 3868500/-) equivalent to GBP 26,32,026.72(GBP 25,82,026.72 + GBP 50,000) was sent to BCCI directly by Mr Manoj Badale on 21st and 22nd January 200....
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....unt remittance 1 & 3 were sent to the BCCI for the IPL. There is no allegation of misutilization of funds. There is no loss to exchequer. All remittances were received in India through normal banking channel. Further, submission is that there is no breach of the provisions of the Act or of the Regulations made there under. Despite heavy investment having been made by the appellants, they have not been receiving due returns. Breach if any, is unintentional and technical in nature. The appellants acted bonafidely and in support of their submissions, they relied upon the judgements titled as under:- 1. Sunil Engg. Corpn. & Ors v. Union of India & Ors. 2005 SCC Online Del 146, equivalent (2005)117 DLT 525. 2. M/s Hindustan Steel Ltd. v. State of Orissa, 1969(2) S.C.C 627, equivalant AIR 1970 SC 253, 3. Akbar Badrudin Giwani v. Collector of Customs, Bombay [1990] 2 Supreme Court Cases 203 . 4. Commissioner of Income Tax-II v. Rawat Singh & sons, [1979]120 ITR 65. In the case of Sunil Engg. Corpn,, & Ors v. Union of India & Ors. 2005 SCC Online Del 146, equivalent (2005)117 DLT 525, "Hon'ble Delhi High Court inter-alia held that: (Para 7) "In this vie....
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....der is not liable to act in the manner prescribed by the statue. Those in charge of the affairs of the Company in failing to register the Company as a dealer acted in the honest and genuine belief that the Company was not a dealer. Granting that they erred, no case for imposing penalty was made out." In the case of Akfoar Badrudin Giwami v. Collector of Customs, Bombay, (1990) 2 SCC 203, Hon'ble Supreme Court inter-alia held that: ♦ (Para 60) "In the present case, the Tribunal has itself specifically stated that the appellant has acted on the basis of bona fide belief that the goods were importable under OGL and that, therefore, the appellant deserves lenient treatment. It is therefore, to be considered whether in the light of this specific finding of the Customs, Excise & Gold (Control) Appellate Tribunal, the penalty and fine in lieu of confiscation require to be set aside and quashed. Moreover, the quantum of penalty and fine in lieu of confiscation are extremely harsh, excessive and unreasonable bearing in mind the bona fides of the appellant, as specifically found by the Appellate Tribunal." In the case of Commissioner of Income-tax, Rajasthan-II v. Ra....
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....at any question of law has arisen and the Tribunal should be directed to state a case". 23. Ld. Counsel for the appellants further submitted that Section 42 (1) of FEMA 1999 is not applicable in the instant appeals because the role of the individuals /directors have not been fully explained and proved by the respondents and in this regard they miserably failed. There are no details in the SCN or Impugned Order in respect of the independent role of the concerned persons on whom such huge amounts of penalty have been imposed. When such an individual is being fastened with such huge penalty, there ought to be some logical basis and justification which must be established from the records of the case. In support of this version, the appellants relied upon several judgements, which are as under:- 1. Umesh K. Modi v. Deputy Director of Enforcement, MANU/DE/1775/2014, equivalent 2014(3) JCC 2028, 2. Ajay Bagaria v. Union of India & Anr., 2008 SCC Online Del 685, equivalent (2008)103 DRJ 324. 3. Bhupendra V Shah v. Union of India and Others, Manu/DE/4067/2010. 4. Shashank Vyankatesh Manohar v. Union of India and the Directorate of Enforcement, MANU/MH/1132/2013, equivalent 2....
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....103 BRJ324, Hon'ble Delhi High Court inter-alia held that: ♦ (para 18) "The decision in Girban Lal Gupta in relation to Section 23-C of the erstwhile FERA1947 is instructive on the presumption to be drawn and the need for construing such a provision strictly. The earlier Section 23-C is no different from Section 68(1) FEKA. Interpreting the said provision, the Supreme Court Girdhari Lal Gupta held (SCC@190): "5. It seems to us quite clear that Section 23C(i) is a highly penal section as it makes a. person who was in-charge and responsible to the company for the conduct of its business vicariously liable for a offence committed by the company. Therefore, in accordance with well-settled principles this section should be construed strictly. 6. What then does the expression "a person in-charge and responsible for the conduct of the affairs of a company mean?" It will be noticed that the word 'company' includes a firm or other association and the same test must apply to a director in-charge and a partner of a firm in-charge of a business. It seems to us that in the context a person 'in-charge' must mean that the person should be in over all....
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....ng that they ceased to be Directors of JTS from 14th November, 1997 onwards. If the export proceeds were to be realized by JTS for the year ending 31st March 1998, the contravention would be only thereafter, by which time these two Petitioners ceased to be Directors of JTS. Moreover, there is nothing in the complaint to explain how they could said to be in charge of the affairs of JTS and responsible to it for conduct of its basis at the time :Thereforethe contravention. Therefore, even on this ground, these two Petitioners are entitled to succeed." In the case off Shashamk Vyankatesh Manohar v. Union off India & The Directorate off Enforcement, MAMU/MH/1132/2013, equivalent 2013(5) ALL MR 551, Hon'ble High Court of Bombay inter-alia held; ♦ (Para 29) "It was submitted by learned Counsel for the petitioner that from all the statements recorded by the Assistant Director of Enforcement, it is clear that the petitioner had no role to play in the matter of opening bank account or obtaining Reserve Bank of India approvals or clearances. It is, therefore, submitted that the petitioner cannot be held responsible for any alleged violations of FEMA merely on the ground....
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....M.P. Pandove. The Working Committee had accepted the above suggestion and the resolution in that regard was to be framed by Mr. N. Srinivasan. Mr. N. Srinivasan, Honorary Secretary of BCCI and Mr. M.P. Pandove, Honorary Treasurer of BCCI were also present at the said meeting apart from Mr. Lalit Modi who was the Chairman of the Governing Council for IPL, as would be relected in the minutes of the said meeting. ♦ (Para 31). The learned Additional Solicitor General has invited our attention to the following observations in paragraphs 8 and 9 of the decision of the Supreme Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and another, MANU/SC/0622/2005: (2005) 8 SCC 89, in relation to para material provisions of Section 141 of the Negotiable Instruments Act, 1881:- 8. The off sets responsible: for conducting (he affairs of companies, are generally referred to as directors, managers, secretaries, managing directors, etc. What is required to be considered is: It is sufficient: to simply state in a complaint that a particular person was a director of the company at the time the offence was committed and nothing more is required to be said .......... ............
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....f the company. Every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for the conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this that firm director of a company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable under the provision. The liability arises from being in charge of and responsible for the conduct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation of office in a company. Commonly a person not holding any office or designation in a company may be liable if be satisfies the main requirement of being in charge of and responsible for the conduce of business of a company at the relevant time. Liability depends on the role one plays in the affairs of a company and not on designation or status. If being a director or manager or secretary was enough to cast criminal liability, the section would have said so. Instead of "every person" ....
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....ion of FEMA at the relevant time have been subjected to action. That is why even in case of a person holding the position of a managing director, he will not be liable if he had no knowledge of the contravention when the contravention took place or if he had exercised all due diligence to prevent the contravention of the Act. The liability is thus cast on persons who had something to do with the transactions companied of. ♦ (para 35). Having further considered the rival submissions, we are of view that since the material on record was sufficient to take the view that the petitioner himself was not in charge of and responsible for opening and operating the bank accounts involving receipts and remittances of foreign exchange to parties outside India, it would be necessary for the adjudicating authority to form an opinion whether the petitioner could at all be considered as covered by the substantive part of section 42(1) of the Act and further, even if the answer is in the affirmative, whether the petitioner should be called upon to prove that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention. In fac....
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....e State." In the case of Commissioner of Income Tax, West Bengal-I & Anr. v. Anwar AM, [1970] MANU/SC/0247/1970, Hon'ble Supreme Court inter-alia held that: ♦ (para 4) "The first point which falls for determination is whether the imposition of penalty is in the nature of a penal provision. The determination of the question of burden of proof will depend-largely on the penalty proceedings being penal in nature or being merely meant for imposition of an additional tax, the liability to pay such tax having been designed as penalty under Section 28. One-line of argument which has prevailed particularly with the Allahabad High Court in Lal Chand Gopal Das case is that there was no essential difference between tax and penalty because the liability for payment of both was imposed as a part of the-machinery of assessment and the penalty was merely an additional tax imposed in certain circumstances on account of the assessee's conduct. The justification of this view was founded on certain observations in C.A. Abraham v. Income-tax Officer, Kottayam and Anr. MANU/SC/oi24/i96o:[l96i]4lITR425(SC). It is true that penalty proceedings under s 28 are included in the expr....
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....w Cause Notice, no action can ensue. Accordingly, it leaves no room for doubt that double standards have been applied qua the same portion of foreign exchange inflow . The appellants cannot be treated by a different yardstick when the inflow of foreign exchange, as lying with BCCI, by the same Impugned Order, is held to be not liable for any action (which must then by necessary implication be held to be without any breach of the provisions and consequentially not required to be brought within the ambit of any of the provisions of FEMA). It is important to highlight that it would not serve the ends of justice to allege violation and penalize one of the parties to the transaction, while no action is taken against the other party. 25. Ld. Advocates for the appellants further contended that the imposition of penalty in the present case suffers from non-application of mind and the quantum of penalties are disproportional to the alleged contraventions. In determining the quantum of penalty, the Ld. Adjudicating Authority has not considered the circumstances of the case. Hence, it is prayed that the Impugned Order dated 30.01.2013, passed by the Special Director, Enforcement Directorat....
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....lation to the said transaction. However, till date no special permission has been granted and admittedly no general permission exists for allowing the nature of transaction in the present case as stated by RBI in its letter dated 14.06.2010. FIPB has categorically disapproved the remittance vide its letter dated 24.05.2010. It is also submitted that no legal remedy against the said opinion of FIPB has been claimed by the appellants. It is also noted that FIPB vide its letter dated 23.11.2009 has made a categorical finding that the company could not provide satisfactory proof of receipt of foreign exchange despite -ample opportunities given to them, which is clearly mentioned in-the Impugned Order. Further submission is that the approval of Foreign Investment Promotion Board (FIPB) is mandatory as the transaction does not fall under the automatic route. 27. With regard to first remittance, it is submitted that contravention of the provisions of FEMA read with FEM (Transfer or Issue of Security by a Person Resident outside India), Regulations, 2000 and FEM (Permissible Capital Account Transaction) Regulations, 2000 have been made. It is submitted that payment was not made by the I....
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.... 15 of FEMA refrains further proceedings only if the contravention has been compounded, the Special Director at para 79 and 95 of the Impugned Order is in line with the above and allowed such investment from third party subject to payment of penalty under the present proceedings which has not been complied with. 29. With regard to third remittance, it is submitted that the remittance was made by EMSH to BCCI directly on 20.06.2008, whereas the JIPL was incorporated on 08.03.2008. The appellants have not provided any satisfactory explanation as to why the said remittance was made to BCCI in spite of the legal existence of the JPIL. It is further submitted that issue of shares for payment made to any third party is not permitted under the provisions of FEMA. 30. Further submission is that Ld Advocates for the appellants relied upon the decision of Hindustan Steels v. State of Orissa (1972 83ITR 26) and stated that Department has to prove the willful misconduct of the appellants to impose penalty under criminal and quasi-criminal proceedings. It is submitted that section 13(1) of FEMA imposes only monetary penalty and' does not possess the character of criminal or quasi-crim....
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....e amount of consideration for such issue of shares. In the present case, remittance 1 and remittance 3 has been made to BCCI directly which has been claimed to be made on behalf of the JIPL, which is issuing its shares and the same is permissible in light of the above provision. The proviso to Regulation 8 of Schedule 1 of FEM (TISPRO) provides that where shares are not issued within 180 days from the date of receipt of inward remittance, the amount so received shall be refunded to the person concerned. Hence, the payment made to BCCI for consideration for issuance of share is in direct violation of Regulation 8 of Schedule 1 of FEM (TISPRO), Regulations, 2000. Regulation 9(1) of Schedule 1 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000(TISPR0) demands reporting ol issuance of shares by Indian company within 30 days from the receipt of the amount of consideration which has not been done in the present case which is mentioned in the Impugned Order. Regulation 9(1) mentioned (supra) has not been complied by the JIPL and no satisfactory explanation was given for such non-compliance and hence, violates Regulation 9(1)....
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....rson who has been awarded the right to operate a franchise as a result of having made a successful bid is called as "franchisee". Each bidder was required to submit a performance deposit of US$ 5 Million equivalent to Rs. 20 crores at a fixed rate of 1 US$ = Rs. 40. In case of successful bidders, the performance deposit was to be adjusted against the franchise fee. The bid by M/s Emerging Media IPL Ltd. UK (EMIPL), who submitted a bid for US$ 67 million (Rs. 268 crores) for Jaipur was announced as the winning bid on 24.01.2008. This amount of Rs. 268 crores was to be paid over a period of 10 years in 10 equal installments. The Franchise for the Jaipur location was named as "Rajasthan Royals" and the franchise agreement for this bid was signed between M/s Jaipur IPL Cricket Pvt. Ltd. (JIPL) and BCCI. Mr Fraser Castellino, then CEO of JIPL signed the agreement on behalf of IPL on 02.04.2008 and Mr Lalit Modi, Vice-President of BCCI and Chairman of IPL signed the agreement on behalf of BCCI on 14.04.2008. For the purpose of said franchise, 3 remittances were made into India against which four Show-Cause Notices were issued as the remittances were considered beyond the scheme of FEMA. ....
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..... 9,73,18,034/- totaling to Rs. 33,22,45,444/- and Mr Bishwarnath Bachun, Mrs. Samila Sivaramen, Mrs. Barbara Jacqueline Haldi and Mr, Manoj Badale, Director of M/s EM Sporting Holdings Ltd. and Shri Suresh Chellaram, Managing Director & Chief Executive of M/s Chellarams PLC, Nigeria were charged for above contraventions in terms of section 42 (5) of FEMA, 1999. 40. SCN.II1 was issued to Mr Manoj Baclaie for contravention of Section 3 (b) of FEMA to the extent of Rs. 20,19,87,410/- and another amount of Rs. 5,07,25,000/-. 41. SCN.IV was issued to M/s N.D. Investments Ltd. (i) for contravention of Section 3(b) of FEMA to the extent of Rs. 4,65,93,034/- and (ii) to Mr Manoj Badale, Director for the said contraventions in terms of section 42 (1) of FEMA, 1999. 42. The Adjudicating Authority vide Adjudication Order No. ADJ/01-04/B/SDE/BK/2013/FEMA, dated 30thJanuary, 2013, passed by Special Director, Enforcement Directorate, Mumbai, has imposed a total penalty of Rs. 98,35,00,000/- ( Rs. Ninety eight crores thirty five lakhs) against all the appellants namely; M/s Jaipur IPL Cricket Pvt. Ltd. as Rs. 32,30,00,000/-(Rs. Thirty two crores thirty lakhs), Mr. Ranjit Barthakur as Rs....
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....y class or classes of capital account transactions which are permissible; (b) the limit up to which foreign exchange shall be admissible for such transactions; Provided that the Reserve yank shall no'impose any restriction on the drawl of foreign exchange for payments due on account of amortization of loans or for depreciation of direct investments in the ordinary course of business. (3) Without prejudice to the generality of the provisions of sub section(2),the Reserve Bank may, by regulations, prohibit, restrict or regulate the following- (a) transfer or issue of any foreign security by a person resident in India; (b) transfer or issue of any security by a person resident outside India." ♦ Section 42 (1) of FEMA, 1999 deals with contravention by companies which reads as under:- "Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be gu....
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....nnels or by credit to his NRE/FCNR (B) account, as the case may be: Provided further that the Reserve Bank may, on an application made to it and for sufficient reasons permit an Indian company to refund the amount of consideration received towards issue of security, if such amount is outstanding beyond a period of 180 days from the date of receipt." ♦ Regulation 5 of the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000, reads as under:- "The payment for investment shall be made by remittance from abroad through normal banking channels or by debit to an account of the investor maintained with an authorized person in India in accordance with the regulations made by the Reserve Bank under the Act." And ♦ Para 9 (1) (A) of schedule 1 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 is that the Indian Company has to file a report to the RBI within 30 days of the date of receipt of the amount of consideration for issuance of shares. 44. The contention of Ld Advocates for the appellants that provisions of FEMA are not applicable ....
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....s. The first remittance includes two transactions which is transfer of funds from Mr. Badale to BCCI and issue of share by JIPL to EMSH which are two different transactions in the eye of law. The claim of the appellants that the funds have been transferred by Mr.Badale on behalf of EMSH to BCCI (instead of JIPL) for the reason that JIPL was not formed during the period does not find force under the provisions of law except for general or special permission given by RBI in this regard. In the present case no such approval has been granted rather the applications made by the appellant were rejected being beyond the scope of FEMA. The appellants have not explained ay to why remittence was directly made to.BGCI even when JIFL was in existence dining the third remittance. With regard to the second remittance, it has been made in 4 tranches by Mr. Manoj Badale and ND Investments to JIPL, however, the shares are proposed to be issued to EMSH by JIPL. In other words, the remitter of funds is different from the investor to whom the shares are being sought to be issued as mentioned in the Impugned Order. It is also clear that RBI took cognizance of the above deviation and accepted the reques....
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....ting Authority on this point. The appellants failed to prove that the contraventions took place without their knowledge or due diligence was done. Legal position of law is discussed in the authorities submitted by Ld. Advocates for the appellants regarding section 42(1) FEMA,1999, but the authorities submitted by Ld. Advocates for the appellants pertaining to section 42(1) FEMA,1999, are not applicable in the instant appeals as the facts are different. Section 42 of FEMA, 1999 is applicable in the instant appeals and all the individuals, including Directors and Managing Directors are liable u/s 42(1) of FEMA,1999. 48. There is also violation of Regulation 5 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) as the payment was made by Mr. Badale on behalf of EMSH even when it was not incorporated is beyond the scope of the Act and hence, contravenes the provisions of FEMA. 49. Regulation 8 of Schedule 1 of FEM (TISPRO) makes it clear that shares can only be issued to a person by whom the funds have been remitted. Hence, as per the provision, only the company issuing the shares shall be eligible to receive the amount of considerati....
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....hority expressed in para nos. 73 to m of the Adjudication Order. SCNs 1 to 4 were rightly issued. SCN I was issued to M/s Jaipur IPL Cricket Pvt. Ltd. and who are held liable for contraventions: (i) under section 6(3) (b) of FEMA read with Regulation 5 (1) of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 and para 8 of Schedule 1 thereto read with Regulation 5 of Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 issued under Section 6(2) of FEMA to the extent of Rs. 23,49,27,410.23/- and (ii) for the contravention of section 6(3) (b) of FEMA read with regulation 5 (1) of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 and para 8 of Schedule 1 thereto and also read with Regulation 5 of Foreign Exchange Management (Permissible Capital Account Transactions) Regulations. 2000 issued under section 6 (2) of FEMA to the extent of Rs. 9,73,18,034/- and (iii) for contravention of section 6(3) (b) of FEMA read with Regulation 5(1) of Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside I....
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....0,000/-(Rs. Three crores seventy lakhs), M/s N.D. Investments LLP as Rs. 2,00,00,000/- (Rs. Two crores) and Mr. Manoj Badale as Rs. 16,20,00,000/-( Rs. Sixteen crores twenty lakhs) respectively, for contravention of the provisions of Section 3 (b),Section 6(2), 6(3)b & Section 42 (1) of FEMA., 1999 read with Regulation 5 (1) of Foreign Exchange Management (Transfer or issue of security by a Person Resident outside India), Regulations, 2000, Paragraph 8 of schedule l of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, Regulation 5 of the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000, and Para 9 (1) (A) of schedule 1 to the Foreign Ex change Management (Transfer and Issue of Security by a Person Resident outside India) Regulations, 2000 as mentioned in the SCN & the Impugned Order. The order of the Adjudicating Authority pertaining to all the appellants regarding the contravention of the provisions of FEMA, 1999 read with Foreign Exchange Management (Permissible Capital Account Transaction) Regulations, 2000 (PCAT) & Foreign Exchange Management(Transfer or Issue of Security....