TaxTMI 
TaxTMI 
2020 (8) TMI 30
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.... Application." 2. As is evident from the above prayer in the aforenoted application the petitioner seeks permission for remission of USD 54.99 Million on or before 31st July, 2020 on the same facts and grounds on the basis of which this Court had passed an interim order on 19.06.2020. The said order also gives the factual background of this case. The same reads as follows:- W.P.(C) 3601/2020 & CM No.12827/2020 1. This writ petition is filed seeking the following relief: A. Issue a writ, order or direction including a writ in the nature of Mandamus, directing Respondent to permit Petitioner to make additional commitments and payments of USD 300 Million to its wholly owned subsidiary namely Jindal Steel and Power (Mauritius) Limited by way of equity subscription or loan or corporate guarantee or bank guarantee or through other permitted mode from Indian Bank for meeting its debt obligations; 2. The case of the petitioner is that it has wholly owned subsidiaries (WOS) including Jindal Steel & Power (Mauritius) Ltd. (JSPML), Sky High Overseas Limited and Jindal Steel Bolivia S.A. The petitioner states to have made overseas direct investment and has also un....
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....tigation is going on by the Law Enforcement Agencies. He further submits that as investigation by agencies are going on the petitioner has chosen to approach the RBI under Regulation 9. Under Regulation 9 it is pleaded that no such permission is required. He further states that unless urgent permission is granted by this court to pay the agreed instalment of loans noted above, namely, total of 90 million US dollars by 30.06.2020, the petitioner would be in default of the guarantees given and also the credit rating of the petitioner would drastically fall making it very difficult for the petitioner to carry on business. 7. Learned counsel appearing for the RBI has pointed out that the permission has been declined on the saying of the Enforcement Directorate. He has in Court shown the communications dated 14.08.2019 and 03.12.2019 from the Directorate of Enforcement. He relies upon the communication dated 14.08.2019 which mentions a fresh inquiry. 8. I may first look at the relevant regulations issued by RBI being notification no. FEMA 120/RB-2004 dated 17.07.2004 which reads as follows:- "6. Permission for Direct Investment in certain cases (1) Su....
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....al. It is Regulation 6 which states that permission cannot be given in case the investigations are pending by the Law Enforcement agencies. Regulation 9 does not provide any such stipulation. Hence, prima facie the petitioner was correct in having approached RBI under Regulation 9. 10. I also cannot help noticing that the petitioner has filed a chart showing that permissions have been given by RBI on 24.03.2015, 20.04.2018, 14.09.2018 and 10.12.2018. The corporate guarantee, hence, for 865 million USD has been given after prior permission of RBI. These permissions have been given as late as in 2018. Learned senior counsel for the petitioner has vehemently argued that no FEMA or any other investigation has been initiated by the law enforcement agencies after 2015. 11. Learned counsel for RBI has pointed out to some inquiry initiated recently as mentioned in communication dated 14.08.2019 by Enforcement Directorate. The petitioner refutes this. I cannot help noticing that the corporate guarantee and the loans have prima facie been taken with the prior permission of RBI. It would hardly be appropriate for the RBI to now let the petitioner go in default and dishonour ....
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....eign Exchange Department, Central Office, Overseas Investment Division in Mumbai. (ii) There is non-joinder of necessary and proper parties as Enforcement Directorate ('ED') is a necessary and proper party for the adjudication of the dispute. It is pleaded that respondent has declined the petitioner's application seeking permission to carry out outward remittances to its Overseas Wholly Owned Subsidiary Jindal Steel and Power (Mauritius) Limited (hereinafter referred to as 'JSPML') due to the objections of the Enforcement Directorate on the petitioner's proposal on the ground that certain investigations and enquiries are pending against the petitioner, including investigations relating to petitioner's offshore investment in JSPML. Reliance is sought to be placed on communications from the ED dated 03.12.2019 and 28.02.2020 which states that petitioner's proposal may result in non-availability of properties for attachment and may jeopardise the ongoing investigations by the ED. It is stated that the respondent had refused permission to the petitioner in view of the aforesaid letters issued by the ED and hence, ED is a necessary and a proper party. (iii) It is plead....
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....in investigations/enquiries have been initiated regarding the transactions between the petitioner and JSPML, the very entity to which the petitioner No.1 is to remit a sum of USD 300 Million. It is claimed that the pendency of this enquiry was concealed by the petitioner in its application to the respondent dated 03.09.2019. It is admitted that the petitioner made the application in view of Regulation 6(2)(iii) read with Regulation 9(1) of FEMA ODI Regulations which require an entity/party which is under investigation/enforcement of an agency or regulatory body to obtain prior approval of RBI for any transaction falling under aforesaid regulations. The approval of the respondent is required since petitioner is admittedly under investigation and facing prosecution of various offences under Indian Penal Code, 1860, Prevention of Corruption Act, 1988, Prevention of Money Laundering Act, 2002 and FEMA Act, 1999. It is further pleaded that Enforcement Directorate had pointed out its objection to the petitioner's application on 3.12.2019 and hence respondent did not grant permission and informed the petitioner accordingly on 30.12.2019. 5. I have heard learned counsel for the parties.....
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.... communication giving no reasons whatsoever why the permission sought for has been rejected. This aspect is more apparent, given the background in which the permission was being sought. 9. Reference in this context may be had to the original permission granted by respondent/RBI to the petitioner on 24.03.2015 where permission was granted to the petitioner for carrying out the following transactions:- "a) Issuance of SBLC by IndusInd Bank for an amount of USD 59.575 milliom; b) Issuance of Corporate Guarantee of USD 45 million in favour of Axis Bank, DIFC Branch, Dubai to enable the WOS to avail a term loan of USD 45 million; c) ODI of USD 100 million by way of equity/loan/corporate guarantee to/on behalf of the WOS." 10. Similarly, on 20.04.2018 the RBI/respondent again gave its approval for utilising balance amount of USD 37 Million out of the approved limit of USD 100 Million which was sanctioned on 24.03.2015. Thereafter on 14.09.2018 RBI gave its no objection to roll over the corporate guarantee of USD 440 Million and USD 165 Million and to issue fresh guarantee worth Rs. 17 Million and USD 6 Million on behalf of its overseas WOS. A permission w....
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....e date of commencing of these investigations are not stated. It has been pointed out by learned senior counsel for the petitioner that these are mere investigations being carried out and not even a Show Cause Notice or even a notice under Rule 4(1) of The Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 have been initiated. 13. Annexure B of the aforenoted communication refers to three cases against the petitioner. Again the date of commencement of these investigations are not mentioned. Learned senior counsel for the petitioner has stressed that there are no new investigations or matters pending and all details of pending matters have been duly stated in paragraph 23 of the Writ Petition none of which are new cases and have been pending even prior to the approvals given on 20.04.2018, 14.09.2018 and 10.12.2018. 14. What prima facie appears is that based on a communication written by Directorate of Enforcement containing cryptic information the RBI/respondent has chosen to withhold permission to the petitioner. The discretion under clause 9 of the abovenoted Regulations has to be exercised by RBI the respondent based on cogent facts and materials ....