TaxTMI 
TaxTMI 
2026 (3) TMI 921
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....rder No. JD/AG/05/HYZO/2020 dated 27.10.2020 (Impugned Order), passed by the Joint Director, Enforcement Directorate, Government of India, Hyderabad. The Ld. Adjudicating Authority (AA) imposed the penalty of Rs. 5,20,00,000/- on the Appellant for the contraventions of Section 47(2)(h) of the Foreign Exchange Management Act, 1999 (FEMA) read with Regulation 3 of Foreign Exchange Management (Foreign Exchange Derivatives Contracts) Regulations, 2000, further read with Reserve Bank of India (RBI) AP DIR (Series) No. 53 dated 07.04.2011 and RBI AP DIR (Series) No. 46 dated 17.09.2013, vide the Impugned Order. 2. Ld. Counsel for the Appellant challenged the Impugned Order of the grounds that since the website of Easy Market is accessible to a....
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....k. Ld. Counsel stated that the Appellant used to remit US $ from his cards in the process of Forex Trading on Easy Market. Profit and losses were accumulated in the wallet account of the Appellant. These transactions, he alleged, where in violation of the provisions of FEMA, Regulation thereunder and RBI instructions. Ld. Counsel for the Respondent cited the following findings made in the Impugned Order: "Though it has been submitted by the Noticee that there had been no intention to violate the provisions of FEMA, 1999, and also that he had not derived any profits from the said online forex trading, I find that the Noticee is guilty of involving himself into a prohibited activity as per AP DIR (Series) no.46 dated 17.09.2013. Thus....
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....ke regulations.- The Reserve Bank of India may, by notification, make regulations to carry out the provisions of this Act and the rules made there under. (2) Without prejudice to the generality of the foregoing power, such regulations may provide for - h. Any other matter which is required to be, or may be, specified." (II) Regulation 2(v) of the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000. 2. Definitions. - In these regulations, unless the context requires otherwise,- (v) 'Foreign Exchange Derivative Contract' means a financial transaction or an arrangement in whatever form and by whatever name called, whose value is derived from price movement i....
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....ed have occurred. Ld. Counsel for the Appellant has cited the Judgment of M/s Hindustan Steel Ltd. (supra) to plead that since the contravention are venial in nature no penalty is imposable. 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 amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and....
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....breach of a civil obligation which would attract penalty irrespective of the fact whether the contravention was made with any guilty intention or not. The Judgment (supra) in the matter of SEBI, also cited a number of previous Judgments wherein it was held that mens rea is not an essential element for imposing penalty for breach of civil obligations. The Judgment (supra) has clarified that the case of Hindustan Steel Ltd. vs. State of Orissa [1969 (2) Supreme Court Cases 627] pertained to criminal/quasi criminal proceeding as the provisions of the Act under consideration in that case imposed a punishment of imprisonment and fine as well. The present appeal deals with provisions which are strictly civil obligations and penalty for the contra....