2025 (10) TMI 1040

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ed Order) passed by the Joint Director, Directorate of Enforcement, Chandigarh Zonal Office. Penalty of Rs. 40,00,000/- was imposed upon M/s. KPH Dream Cricket Pvt. Ltd. Respondent No. 1 for the contravention of the provisions of Section 6(3)(b) of Foreign Exchange Management Act 1999 (FEMA) r/w Regulation 5(1) terms and conditions provided in its Schedule-I to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulation 2000, for not reporting the FDI received, to Reserve Bank of India (RBI) within stipulated time period, to the tune of US $ 12,85,572.84 equivalent to Rs. 5,12,58,773.69 and for issuing shares to M/s Colway Investment Ltd., Mauritius without fair valuation of shares to the tu....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....he contraventions have occurred and for imposition of the penalty amounts. 4. We have considered the rival submissions and the material on record including the pleadings made in the Appeal, the reply of the Respondents and the Impugned Order. We find that the Foreign Direct Investment (FDI) of US $ 12,85,572.84 was received in three tranches from M/s Colway Investment Ltd., Mauritius for the purpose of taking equity in M/s. KPH Dream Cricket Pvt. Ltd. These three tranches were received through Banking channels between April, 2008 and June, 2008. In accordance with the provisions of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulation 2000 the FDI was to be reported to the RBI within 30....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ity indulged in arbitrariness in imposing penalties of Rs. 40,00,000/- and Rs. 10,00,000/- by clubbing the contravention relating to delay in reporting the FDI with that of not issuing the shares at fair value. We also note that 4,47,700 shares which were issued were in accordance with the provision for fair valuation. Merely 10,000 shares which were issued at Rs. 10 per share though issued at par should have been issued at Rs. 25 per share, so as to be in accordance with the Regulation. The contravention was merely of amount Rs. 1,50,000/-. Thus, the amount of contravention of Rs. 1,50,000/- is merely and insignificant percentage of the amount of contravention of Rs.5,12,58,773.69 Therefore, we are not convinced that the Adjudicating Autho....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....avention involved. From the language of the Section, it is clear that the Section has not prescribed either a fixed amount of penalty or minimum amount of penalty. It therefore, follows that the amount of the penalty which is to be imposed by the Adjudicating Authority is a matter of discretion which, of course, is necessarily required to be exercised judiciously after taking into account the facts of the case and the evidence placed before it. Given the facts of the case and the evidence placed before the Adjudicating Authority, we do not find that the Impugned Order is indiscreet. In fact, it is well reasoned and speaking. 8. The question as to when a penalty is to be regarded as either low or high is at best answered subjectively. In ....