TaxTMI 
TaxTMI 
2026 (4) TMI 1668
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.... under section 37A(3) of the Act of 1999. The Seizure Order, otherwise, gives complete history of the case and the reasons for seizure which is quoted hereunder:- In exercise of the powers conferred by Section 37A(1) of the Foreign Exchange Management Act, 1999 [FEMA], I, Shubham Agrawal, IRS, Deputy Director, Directorate of Enforcement, Chennai Zonal Office-II, have reason to believe that the following foreign exchange/ foreign securities situated outside India are held in Contravention of Section 4 of FEMA by the Indian Company Southern Agrifurane Industries Private Limited [SAIPL] TABLE-A Name of entity in which foreign security / foreign exchange is acquired / held / owned / possessed in contravention of Section 4 of FEMA by SAIPL Value of such Foreign Security / foreign exchange in FC [as on 31.03.2021] Value of such Foreign Security/ Foreign currency in INR [as on 31.03.2021] SAEL Leisure & Entertainment Pte. Limited, Singapore 15,00,000 USD Rs. 985.53 Lakhs Singapore Spirts Pte Limited, Singapore 46,62,824 USD Rs. 2594.67 Lakhs SAFL British Motels Limited, UK 1,99,00,000 GBP Rs. 18059.99 Lakhs TOTAL Rs. 21640.19 Lakhs ....
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....ravention of section 4, he may after recording the reasons in writing, by an order, seize value equivalent, situated within India, of such foreign exchange, foreign security or immovable property: Provided that no such seizure shall be made in case where the aggregate value of such foreign exchange, foreign security or any Immovable property, situated outside India, Is less than the value as may be prescribed". Therefore, as per Section 37A[1] of FEMA, the twin conditions necessary and sufficient for seizure of equivalent value of assets situated within India are; 1. Reason to believe that such foreign exchange/foreign security, situated outside India, is suspected to have been held in contravention of Section 4. 2. Provided that no such seizure shall he made in a case where the aggregate value of such foreign exchange/security etc, situated outside India, is less than the value as may be prescribed. Vide *.V G.S.R. 701(E) dated 16.09.2015 issued by the Ministry of Finance (Department of Revenue), Government of India, the value prescribed is Rs. 1 crore. As per Section 4 of FEMA "Holding of foreign exchange, etc. 4. Sav....
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....s of this Act or of any rule, direction or order made thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager. Secretary or other officer shall also be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly." Since, in the instant case the person committing the contravention of Section 4 of FEMA 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 business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly. Further, where it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty o....
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....sh Hotels Limited 12.05.2017 28.02.2018 13.03.2019 18.11.2019 20.11.2020 12.01.2021 80,00,000 GBP 20,00,000 GBP 19,00,000 GBP 30,00,000 GBP 20,00,000 GBP 30,00,000 GBP 66,11,40,000 18,08,60,000"* 17,38,26,250*** 27,95,02,500 19,69,65,000 29,87,25,000 Total 1,99,00,000 GBP 18059.99 Lakhs TOTAL 21640.19 Lakh [*/**/*** There is a dose proximity between the foreign outward remittances sent to UK subsidiary and foreign inward remittances received from Singapore subsidiary, showing that the ultimately the inward remittances are also for the purposes linked to further outward remittances. It is also considered crucial to discuss the background of the main promoter of the company Mr MGM Maran, holding 90.98% shareholding and also who was also the director of the company up to 26.05.2018. Mr. MGM Maran was the director of Tamilnadu Mercantile Bank Limited [TMB] during the years 2000 to 2008 and became Chairman of the bank during the year 2007. He was under investigation by Enforcement Directorate under FEMA proceedings against TMB and 26 Others (including him] wherein inter-alia statement of Mr. MGM Maran was recorded o....
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....on proceedings, he surrendered his Indian passport and obtained Cyprus passport to become "Cyprus Citizen" on 21.12.2016. It is also interesting to note that, immediately after his statement recorded by ED on 14.03.2012, the company started making huge foreign outward remittances starting from 28.06.2012 up to 12.01.2021 of total value of Rs. 216.40 crores. Considering that the total reserves of the company as on 31.03.2021 is Rs. 257.76 crores, such 216.40 crores comprise of 84% of entire reserves of the company. Thereby Mr MGM Maran has siphoned off almost entire reserves and net worth of the company to outside India with the intention to never return the same back to the Indian company. Further, as soon as he surrendered his Indian Citizenship and obtained "Cyprus Citizenship" on 21.12.2016, he and his company started diverting almost entire reserves as well as year-on-year profits out of India to the UK subsidiary, SAFL British Hotels Limited, wherein the two of the directors are his son Mr. Gkevin Muthu Maran and his daughter Mrs. Monicca Nivetha Maran [as evident from Annua! Report of the company for 31.03.2021]. The fact that Mr. Maran has taken ou....
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..../filings etc which are relied upon are attached as Annexure B of this order. It is noted that in each of these 13 remittances, 'False Declarations' were made by the company to its AD Bank, to that effect that none of the promoters/directors etc. of the company are under any investigation etc. by any Law Enforcement Agency, whereas the fact is that its own main promoter Mr. MGM Maran (91% shareholder even till date; as well as director upto 2018) was under ED investigation/adjudication through out this entire period of outward remittances. Under Section E of FORM ODI (Part 1) i.e. "Whether the applicant party, its promoters, directors etc. are under any investigation by any investigation/enforcement or regulatory body. If yes, the brief details thereof, including present stage of investigation/adjudication/ manner of disposal of the case", the company has given the Declaration as NO. Similarly, under company's ODI Remittance application, in Point^0l^lardtion has been given by the company that "We confirm that our company or the promoters^ directors etc. are NOT...under investigation by any investigation/enforcement or regulatory body as per ins....
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....ocedures of the banking system.) Secondly, the company further submitted that the company was fully compliant with the conditions for 'Automatic route' since 'only investigation of the Indian Party is to be notified, and not promoters/ directors etc.' and 'company did not make any wrong declaration to go under the Automatic route'. Such a statement by the company is also found to be grossly FALSE, since as narrated above, company has in-fact made wrong declaration concealing the fact that its main promoter was under ED investigation and that too through out the entire period of such 13 outward remittances. They have mentioned 'No'/'Nil' against columns on ' Whether the applicant party, its promoter, directors etc. are under any investigation by any investigation/enforcement or regulatory body'. Further, Section 6 of FEMA provides powers to the Reserve Bank to specify, in consultation with the Government of India, the classes of capital account transactions and limits up to which foreign exchange is admissible for such transactions and any conditions which may be placed on such transactions. In exercise of th....
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....itors of the India Party • Part II: Reporting of remittances • Part III: Annual Performance Report (APR] • Part IV: Report on closure/ disinvestment/ voluntary liquidation/ winding up of JV/WOS • A copy of said ODI Form, as downloaded from RBI website dated Aug 7, 2015 is attached with this order. On perusal of Section E of Part I of ODI, it can be clearly noted that the very first column of the said declaration is "Whether the applicant party, its promoter, directors etc, are under any investigation by any investigation/enforcement or regulatory body. If yes, the brief details thereof, including present stage of investigation/adjudication/manner of disposal of the case." Similarly, under ODI application to the ADBank, under Point No. 6, Declaration has been given by the company that "We confirm that our company or the promoters, directors etc. are NOT... under investigation by any investigation/enforcement or regulatory body as per instructions contained in extant ODI guidelines." Therefore, from the combined reading of the ODI Form by RBI with the RBI Master Directions on ODI. It is evident that for op....
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....refore, here it Is noted that on one hand, the company has done 'Fraud' with its own AD Bank by way of FALSE Declaration and on the other hand now before ED, is taking a baseless stand that "only investigation of the Indian Party is to be notified^ and not promoters/directors etc.' and 'company did not make any wrong declaration to go under the Automatic route". Hence, on this note itself, on stand-alone basis, the company has made outward remittances to the tune of Rs. 216.40 crores by way of FALSE declarations to AD Bank; which would have otherwise required RBI Approval under 'Approval Route', and hence such remittances are without RBI approval and hence not as per law. Since, such foreign securities/foreign exchange are acquired and held/owned/possessed, not in the manner permitted under FEMA, they are in contravention of Section 4 of FEMA. B.3 Remittances sent bv SAIPL by way of 'NON-REPORTING' of incorporation of step-down subsidiaries in its WOS: Instructions issued by RBI on Direct Investments by Residents in JV/WOS have been compiled by RBI in their Master Direction No. RBI/FED/2015-16/10, FED Master Direction No. 15/2015-1....
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....e placed on such transactions. In exercise of the powers conferred under FEMA, the Reserve Bank has issued Foreign Exchange Management (Transfer or Issue of any Foreign Security] Regulations, 2004 vide Notification No. FEMA. 120/RB 2004 dated July 7, 2004. The Notification seeks to regulate acquisition and transfer of foreign security by a person resident in India i.e. investment by Indian entities in overseas JV/W0S. Overseas investment can be made under 'Automatic Route' or 'Approval Route' depending upon the conditions mentioned therein. Instructions issued by RBI on Direct Investments by Residents in JV/WOS have been compiled by RBI in their Master Direction No. RBI/FED/2015-16/10; FED Master Direction No. 15/2015-16 dated January 1, 2016; as update from time to time. In the said Master Direction on ODI, as per Para B.8; it has been directed by Reserve Bank that: Prior approval of the Reserve Bank would be required in all other cases of direct investment abroad. For this purpose, application together with necessary documents should be submitted in Form ODI through their AD Bank. Reserve Bank would, inter alia, take into accoun....
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....90 crores in a short span of just two months i.e. between 28.06.2012 and 28.08.2012. As per FORM ODI submitted by the company to Its AD Bank, the overseas JV is engaged in "Distilling, rectifying and blending of spirits, ethyl alcohol production from fermented material". In this regard, upon analysis of the financial statements of the overseas entity, following observations are made; • • There is no business activity in the overseas entity and there is 'NIL' revenue i.e. there is no income from operations in any of the year through-out the entire period since Dec 2012 onwards. • The immediate and ultimate holding company of the overseas entity is Magnum Global Holdings Pte Limited, Singapore; and its ultimate controlling party is Mr. Nesamanimaran Muthu • The loan of 8 Million USD given by the Indian company to its overseas entity during June-Aug 2012, has been not utilized for the intended objective of business/operations in the overseas entity; rather the funds were further advances to other related parties by the overseas entity as "non-trade, unsecured, non-interest bearing and repayable on demand" ad....
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....reign outward remittances under ODI route to its overseas WOS Singapore SAFL Leisure & Entertainment Pte Limited, Singapore on 17.10.2013 of 1 Million USD and on 22.10.2018 of 0.5 Million USD, equivalent to total Rs. 9.85 crores. In this regard, upon analysis of the financial statements of the overseas entity, following observations are made:- • • The overseas Wholly Owned Subsidiary was incorporated on 02.08.2013 i.e. just before the sending of outward remittance Of 1 Million USD by the Indian Party TIPI to WOS on 17.10.2013: with the declared purpose of 'business operation /management of hotels/resorts &. Leisure Industry'. • However, on perusal of the financial statements it is observed that there is no business activity in the overseas entity and there is 'NIL' revenue i.e. No income from operations In any of the year through-out the entire period since Dec 2013 onwards. The 'other income' shown in the financials is a meagre bank interest and meagre income by way of 'exchange gain' only and not out of any business operations, what so ever. • The Indian funds of 1.5 Million USD given by ....
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.... garb of OPI. The company does not even have the names of the entitles to whom such funds have been diverted. This itself proves that the purpose of overseas remittances under the ODI route is not bona-fide. B.4.3 SAFL British Hotels Limited. UK The Indian company SAIPL made foreign outward remittances under to route to its oversea WOS SAFL British Hotels Limited, UK, year on year starting from FY 2017-18 to FY 2020-21 of total 1,99,00,000 GBP, equivalent to total Rs. 80.59 crores. In this regard, upon analysis of the financial statements of the overseas entity, following observations are made:- • • The overseas Wholly Owned Subsidiary was incorporated on 15.03.2017 i.e. just before the sending of outward remittance of 12.39 Million USD by the Indian Party [IP! to WOS on 12.05.2017. • On perusal of the financial statements, it is observed that there is no business activity in the overseas entity and there is 'NIL' revenue i.e. No income from operations in any of the year through-out the entire period since year ending March 2018 onwards. • The Indian funds of 27.49 Million USD equivalent to Rs.&n....
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.... 1,48,91,041 1,98,95,492 Profit & Loss A/C (IN GBP) Particulars 31.03.2018 31.03.2018 21.03.2020 31.03.2021 Income Interest - - - 5,554 Total (In GBP) - - - 5,554 Expenditure Administrative Expenses 4,214 2,853 3,692 3,503 Total (In GBP) 4,214 2,853 3,692 3,503 Net Profit Loss 4,214 -2,853 -3,692 -2,051 Bank Balance as % to Capital 80.13 72.09 41.26 47.90 • • As on 31.03.2021, the total net worth of the Indian company was Rs. 257.76 crores and the Indian company has remitted aboard Rs. 216.40 crores crores fbeino 84% of company's entire Net Worth) to its IV/WOS to be further advanced interest free unsecured to other entities and balance portion to be lust kept in foreign bank account, at the cost of working capital requirements of the Indian company. • This itself shows that the outward remittances are not bonafide and the actual intention behind such outward remittances under ODI is not to invest funds with via....
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....t and in next three months we would exit from the credit relationship as well. Further to this we have gone through the transactions summary as above for ^ remittances under Overseas Direct Investment and during our initial review we observed following which has been given to our Internal Investigation team. We have requested our Investigation team to submit their finding in next 4 business days and post review of finding and recommendation Bank will take deem fit strongest possible action against the client based on recommendation of Investigation team (By 21stMarch 2022):- • • Multiple JV/ VOS and SDS were formedacrosspast12years for three UIN without any commercial means of the investment • No assessment of viability and return on investment(Including bonaftdes of the investments made) • Almost full profit from Indian company was routed outside under ODI to these three companies Most of the investment remained as cash and bank balance with WOS/JV/SDS and by way of "lending to other associated/ non associated units/firms at Zero Interest". • Balance sheet was not supporting the need of investment and Board ....
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....unds from India in the name of overseas investments without any bonafides; • That the declaration given by the company with regards to the ODI remittance application appears to be incorrect and that made transaction allowance under automatic route instead of approval route. • That it appears that the company misrepresented the facts/declaration/ Non adherence to the Intent of ODI guidelines. Further, the bank submitted its detailed investigation report under its letter dated 28.03.2022 wherein based on the findings of the investigation team of the Axis Bank, the AD Bank of the company has inter alia concluded that:- • • As per the balance sheets of Singapore Spirits Pte Limited, Singapore, the entity is having two subsidiaries viz. Magnum Dhyamanthiya Pvt. Ltd, Sri Lanka and Magnum Holding Lanka Limited, Sri Lanka with 100% holding; however, the company SAIPL has not submitted any request to the bank or declared any details of subsidiaries in the APR for reporting to RBI. • The purpose of ODI investment by the company was for acquisition of resorts in Europe. Review of financials of the company over a period ....
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....ntended purpose and channelised outside the country under the ODI route. • The company did not disclose the step down subsidiaries of its Singapore JV viz. Singapore Spirits Pte Limited, Singapore which is contravention of FEMA guidelines on the part of the corporate. • By suppressing the penal action by DOE against the promoter of the company in ODI application, the company has cheated the bank for facilitating the ODI remittances under 'Automatic Route'. • Based on the above findings, the case is recommended to be concluded as 'Fraud'. Hence, on this note itself, on stand-alone basis, that company's own AD Bank has considered such foreign outward remittances as not bona-fide and with the objective to siphon-off funds from India in the name of ODI and that such remittances have been wrongly made under Automatic route instead of Approval Route, by not disclosing true and complete facts to the AD Bank, it is held that the company has acquired and continue to hold, own, possess such foreign securities, foreign exchange in contravention of 'Section 4 of FEMA. Accordingly, I hereby order the seizure of all....
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.... foreign security, or any immovable property, situated outside India, is suspected to have been held in contravention of section 4, he may after recording the reasons in writing, by an order, seize value equivalent, situated within India, of such foreign exchange, foreign security or immovable property: Provided that no such seizure shall be made in case where the aggregate value of such foreign exchange, foreign security or any immovable property, situated outside India, is less than the value as may be prescribed. (2) The order of seizure along with relevant material shall be placed before the Competent Authority, appointed by the Central Government, who shall be an officer not below the rank of Joint Secretary to the Government of India by the Authorised Officer within a period of thirty days from the date of such seizure. (3) The Competent Authority shall dispose of the petition within a period of one hundred eighty days from the date of seizure by either confirming or by setting aside such order, after giving an opportunity of being heard to the representatives of the Directorate of Enforcement and the aggrieved person. Explanation.-While co....
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.... of Section 37A of the Act of 1999 questioned by the respondent is not tenable in reference to the contravention took place after the amendment under Section 37A of the Act of 1999. At this stage, we may further, clarify that even the contravention prior to the amendment has been taken into consideration for the reason it remained continuing and for continuing the contravention till amendment and even subsequent to it could have been subject matter of action under Section 37A of the Act of 1999. Thus, the question of prospective application of the provision or its retrospective application has been raised for the sake of it. Thus, the argument to question application of Section 37A of the Act of 1999 on the facts of this case cannot be accepted. It may be added that on the date the provision of Section 37A of the Act of 1999 was invoked by the appellant, it was available on the statute and finding a contravention of Section 4 of the Act of 1999 of one transaction in the year 2010 and the subsequent transactions from the year 2012-13 followed by contravention from the year 2017 till 2021 have been taken into consideration and therefore for the reasoning given above, we are unable to....
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.... under Section 2(u) of the Act of 1999 which is quoted hereunder for ready reference:- 2. Definitions.-In this Act, unless the context otherwise requires,- xx xx xx xx xx xx xx xx xx xx xx (u) "person" includes- (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or not, (vi) every artificial juridical person, not falling within any of the preceding sub-clauses, and (vii) any agency, office or branch owned or controlled by such person; xx xx xx xx xx xx xx xx xx xx xx 13. A perusal of the definition would show it to be inclusive and not exhaustive. The respondent has taken a narrow meaning of the definition defining a 'person' and under different context. The word used under Section 37A(5) of the Act of 1999 is the 'person aggrieved' and not simply a 'person'. In any case, even if it is taken to be a 'person' simplicitor, the definition is not exhaustive and therefore to be given meaning taking note of an inclusive definition. We may refer to the judgment of the Supreme Court in the case of We....
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....ther clarified that the term "person" may include the State, unless the context otherwise requires or such inclusion is expressly given. In this regard, reference may be made to the judgement of Hon'ble Supreme Court in Samatha vs State Of Andhra Pradesh and Ors. reported in AIR 1997 Supreme Court 3297, the relevant paragraph is reproduced below: 62. In Superintendent and Legal Remembrancer, State of West Bengal v. Corporation of Calcutta MANU/SC/0020/1966... It would, therefore, be settled law that the question whether or not the word 'person' used in a statute would include the State has to be determined with reference to the provisions of the Act, the aim and its object and the purpose the Act seeks to subserve. There is no reason to consider the word 'person' in a narrow sense. It must be construed in a broader perspective, unless the statute, either expressly or by necessary implication, exempts the State from the operation of the Act as against the State and would include "State Government". 15. One has to go strictly by the provision, however, if the definition is inclusive, it cannot be given narrow meaning. If the object and reason of defining a....
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....matic route of ODI. In fact, there was no operational revenue in the entity and therefore no business income was generated, rather, overseas entities were existing on the papers, otherwise, to be shell companies. 17. It was, further, submitted that even allegation of contravention of the provisions of the Act of 1999 has not been analyzed after referring to the relevant facts, thus, a perverse finding has been recorded. The Competent Authority failed to analyze the use of the funds remitted under ODI automatic route. It is more so, when the appellant categorically demonstrated that funds were either lying idle in overseas account or diverted on interest free unsecured loan to related parties. 18. The allegation for diversion of funds from wholly owned subsidiary company to stepdown entities was another issue apart from concealment in overseas accounts. The respondent failed to produce any evidence towards actual utilization of the funds, business activities and earning of revenue abroad. The aforesaid was first part, otherwise, the respondent found guilty of false declaration and suppression of material facts. The main promoter of the company was Mr. MGM Maran. He was even Ch....
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....cided by the Competent Authority were raised which includes violation of the principles of the natural justice. The aforesaid would be referred while drawing conclusion after proper consideration of the rival submissions. This is to avoid bulkiness of the order and otherwise issues raised by the parties would be determined while recording findings by the Tribunal. Arguments of the Ld. Counsel for the respondent: 23. Ld. Counsel for the respondent vehemently contested the appeal. The issues were raised not only on the preliminary objections on the maintainability of the appeal but even on merit of the case. We would address all the issues raised by the appellant and while doing so refer to the argument of the respondent at that stage to avoid repetition of the facts and for the sake of brevity. Ld. Counsel, further, submitted that respondent did not cause contravention of any of the provisions of the Act, 1999, thus, no reason for seizure and therefore the impugned order has rightly been passed by the Competent Authority. The prayer was made to confirm the order. Findings of the Tribunal: 24. The first issue taken up by the Competent Authority is regarding false declarat....
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....91.91 19,00,000 17,46,29,000 19.09.2019 GBP 3000000 93.93 30,00,000 28,17,90,000 20.11.2020 GBP 2000000 20,00,000 19,88,00,000 12.01.2021 GBP 3000000 30,00,000 30,06,00,000 TOTAL 19900000 1,80,59,99,000 25. The statement given in the table would significantly show ODI prior to 01.01.2016 and subsequent to it. The ODI form was changed by the RBI since 01.01.2016. The new form introduced from 01.01.2016 was with the elimination of promoters, directors etc. for pending investigation/adjudication against them. According to the respondent, the necessity of declaration of any investigation against the promoters and directors was not required on elimination of the relevant clauses in the ODI form introduced by the RBI. It is said to have been ignored by the appellant while causing Seizure of the amount. The Competent Authority in its wisdom taken note of the ODI subsequent to 01.01.2016 and more specifically in the year 2020-21. No reason exists to ignore ODI prior to 01.01.2016 and non-declaration by the respondent about pending investigation. We may quote one of the ODI fo....
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...., including any special benefits/ incentives available in the host country for setting up / acquiring the proposed concern. NO I/ We hereby certify that the information furnished above are true and correct For SOUTHERN AGRIFURANE INDUSTRIES PRIVATE LIMITED Sd/- AUTHORISED SIGNATORY (Signature of authorized official) Name: P.S. MAHADEVAN Designation: GROUP PRESIDENT Place: Chennai Date: 28th June, 2012 26. The respondent did not mark the relevant column to be 'Not Applicable' in light of the Regulation 6 (2)(iii) of the Regulation of 2004, rather, it was marked 'NO'. It is more so when the ODI was remitted from time to time during the year 2012-13. The investigation against the promoters and directors was initiated on 14.03.2012. It is necessary to clarify that the ODI form was required to be filled in truthfulness and not with the presumption that it is in conflict with the Regulation of 2004. Even, otherwise, the respondent could have marked the column as 'Not Applicable' in that case but instead furnished incorrect and false information by stating 'NO'. The Competent Authority made much emphasis on the aforesaid aspect in reference to ....
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....ending against the directors or the promoters. It seems that the Competent Authority has ignored the outcome of the false declaration by the respondent before 01.01.2016 for reasons best known to it and made much emphasis about the Indian Party to be on the caution list. 29. The obligation was, otherwise, in consonance with the regulation and for illustration for submission of Annual Performance Report to RBI annually is in consonance with the Regulation 13 of the Regulation of 2004. An excuse was taken by the respondent that if investment is not in the prohibited sector notified by the RBI, there was no requirement to submit details of the business of the subsidiaries and therefore the argument was taken casually that the ODI was not used for the prohibited sector whereas there was no such allegation. The way matter was taken by the Competent Authority shows total non-application of mind and therefore perverse finding has been recorded. It is even in ignorance of the Regulation and with the finding that venial breach of the contravention could not have been taken to be for causing Seizure. It is despite a fact that the respondent filled the ODI form making false declaration in ....
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....ompetent Authority for adherence to the regulation while it makes a reference to regulation 13. 33. The Reporting Authority has quoted details of the step-down subsidiary and date of filing of Annual Performance Report. M/s Oban Queens Management Ltd. incorporated on 12.09.2017. The Annual Performance Report was submitted in the year 2019, though, it was required to be submitted annually. The view taken by the Competent Authority, thus cannot be endorsed. It is erroneous to record a finding that reporting of the investment in SDS was inserted in ODI form in the year 2016 while it was required as per Regulation of 2004. The period of delay was shown to be under confusion without any pleading to this effect by the respondent. The Competent Authority seems to have played the role of one of the parties to record the finding going contrary to the record. 34. The Competent Authority has further referred to the utilization of the funds in reference of the arguments of the respondent that they were not under obligation to show how the entity has utilized the funds. It is with the argument that every business entity operating on high risk in the competitive world, thus cannot invest o....
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....parked idle or diverted as unsecured interest free loan. The end use of the ODI has also been ignored because there was nothing on record to show end use of the ODI while ODI has to be for the purpose and not for the sake of it. 37. The other issue taken up by the Competent Authority is about non-grant of fair opportunity of defence to the respondent. It was alleged by the respondent that sufficient time was not given to defend the case and otherwise the respondent have made a reference of the Departmental Circular issued in Enforcement Directorate's Press Release dated 12.11.2021 to the effect that the notices and summons must be signed by generating it through the system except in certain exceptional circumstances. It was with the further direction that summons shall bear QR code and unique passcode so that the noticee may verify the authenticity of the summons. The allegation was that the summons was not issued following the procedures given in the Press Release dated 12.11.2021. 38. We have scanned the matter carefully and find objections of the respondent and finding of the Competent Authority to be of hyper-technical in nature. It is not a case where the summons was not....