TaxTMI 
TaxTMI 
2026 (3) TMI 922
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....(1) (iv) of Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993 to the extent of Rs. 297.07 Crores. Further penalty of Rs. 2,70,000/- was imposed on M/s Plethico Pharmaceuticals Ltd. for the contraventions of Section 6(3)(d) of the Foreign Exchange Management Act, 1999 (FEMA) read with Para (1) (vi) & Para (1) (xi) of Schedule 1 to Regulation 6 (1) of Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations 2000 further read with AP (DIR Series) Circular No. 5 dated 1st August, 2005 as amended by RBI's AP (DIR Series) Circular No. 60 dated 21st May 2007 to the extent of Rs. 79,81,875/-. For the aforementioned contraventions Rs. 10,00,000/- and Rs. 10,000/- penalties were imposed among others on the Appellant Shri Sanjay Pai in terms of Section 42 of FEMA, vide the Impugned Order. The Appeals No. FPA-FE-56/MUM/2015 filed by M/s Plethico Pharmaceuticals Ltd., FPA-FE-62/MUM/2015 filed by Shashikant Patel and FPA-FE-63/MUM/2015 filed by Shri Chirag Patel respectively have already been dismissed either for non-prosecution and/or for non-compliance of the statutory provisions of FEMA. 2. Ld. Coun....
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....d a detailed meeting with the Company's personnel on 24.12.2007. The points discussed in the said meeting were reduced into writing by the Company in their letter dated 24.12.2007 bearing Reference No. PPL/ACCTS/1133/ 07-08, a copy whereof in annexed to the Complaint itself which is available at Page No. 132 of the Complaint. The said letter was addressed to the Chief General Manger, RBI. The Foreign Exchange Department of RBI also sought certain clarification from the BOB, being the Authorized Dealer of the Client Company, regarding the issuance of FCCB prior to allotment of the LRN. The RBI satisfying themselves of the genuineness of the instant case, vide its letter dated 28th December, 2007 bearing Reference No. FED.CO.ECBD.03.02.802/14996 granted a formal approval and directed the Authorized Dealer of the Client Company, to accordingly approach the Director, BPSD, Department of Statistical Analysis & Computer Services ("DESACS") for obtaining the LRN. 4. Ld. Counsel for the Appellant stated that actual remittance of funds from the FCCB account with Bank of Baroda, Dubai had taken place between 24.12.2007 and 24.08.2008. The entire proceeds of the FCCB was all along park....
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....attributable to RBI itself and there being no fault on the part of the Appellant Company, the allegations of the aforesaid violations of the provisions of FEMA r/w. Section 42(1) FEMA by illegally roping in the Director, Ex-CEO and Ex-CFO of the Appellant Company, is nothing but a mere figment of imagination on the part of the Respondent, which is solely based on mere conjectures, surmises and hypothesis and hence deserves to be disregarded and rejected outright by this Hon'ble Tribunal. Further, it is also submitted that all the ingredients of the said violation under different Sections of FEMA and the Regulations have not been proved up to the satisfactory level by the Respondent, as he has failed to substantiate with legal evidence. In the aforestated circumstances, the Appellant humbly prays that the Impugned Order be quashed and set aside by this Tribunal. Ld. Counsel for the Appellant therefore pleaded to allow the Appeal. 7. Ld. Counsel for the Respondent Directorate submitted that, in his statement dated 13.07.2012 Shri Sanjay Pai stated, inter alia, that he was the Chief Financial Officer of the company since the year 2006, that he had initiated the process of issua....
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....(YTM) Conversion premium demanded; that YTM is normally calculated as LIBOR plus Spread allowed by RBI for such issuances under the ECB guidelines amended from time to time; that in respect of YTM in 2007, the guidelines stated "LIBOR plus 250 basis spread"; that during the time when their FCCB was getting priced, prior to 10th the LIBOR was steadily rising: that on 10.10.2007 they had completed the marketing and the negotiations were completed with bondholders by Citi, the LIBOR was at 5.22125", hence the pricing eligible was 7.72125; that therefore they had decided to fix the YTМ at 7.7%; that on 10th October, 2007 when they received the information that the marketing is over, on 12th October, 2007 they filed Form 83 with their Authorised Dealer, Bank of Baroda, Indore; that they got the LRN much later i.e. in December, 2007; that the FCCB was raised on 12th October, 2007, Reference price on 15th October, 2007 and drawdown was done on 23rd October 2007. 8. Ld. Counsel cited paragraph 6.10 of the Impugned Order: "As regards the charges framed against noticee No. 2, 3 & 4 (Appellant herein) in terms of section 42(1) of FEMA 1999, it was submitted by the advocate o....
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.... Appellant Shri Sanjay Pai is sustainable or not. 10. The penalty on the Appellant is in terms of Section 42(1) of FEMA for the contraventions made by the Company. We find that the Appellant was the CFO of the Company during the relevant period. It is also noted that the Appellant was an active participant in the transactions which were in contravention of the aforementioned provisions of the Act, Regulations thereunder and the Guidelines. The Appellant has also tendered statements under Section 37 of the Act admitting his active role in the said transactions. 11. The argument of the Appellant that no penalty is liable on him, in view of the Judgment of M/s Hindustan Steel vs. State of Orissa cannot be accepted. In this regard, the provisions of Section 13(1) of FEMA are reproduced below: "If any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorisation is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amo....