TaxTMI 
TaxTMI 
2026 (7) TMI 1370
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....of TMBL), Shri K. N. Rajan (RBI Nominee & Dir. of TMBL), Shri K. V. Rajan (RBI Nominee & Dir. of TMBL), Shri Deepak C S (Co. Secretary of TMBL), M/s Standard Chartered Bank (SCB), Shri Ranjan Ghosh (Officer of SCB) SHRI BALESH KUMAR (MEMBER) AND SHRI RAJESH MALHOTRA (MEMBER) For the Appellants : Mr. Pranav Mishra, Advocate and Mr. Mohd. Wasay Khan, Advocate For the Respondents. No.1. : Mr. Vijay Narayan, Sr. Advocate, Mr. Amarjit Singh Bedi, Advocate Mr. Harshit Singh, Advocate For the Respondents. No.4, 6-10. : Mr. Gautham Shivshankar, Adv., Ms. Ruchira Goel, Advocate For the Respondents. No.11. : Mr. Manuraj S., Advocate and Mr. Arun Pandiyan, Advocate For the Respondents. No.25. : Dr. Harish Narasappa, Sr. Advocate, Ms. Priyanka Shetty, Advocate, Mr. Ayush Chadha, Advocate and Ms. Deepti Prabhu, Advocate FINAL ORDER This Order disposes of the Appeal No. FPA-FE-28/CHN/ 2021 filed by the Union of India through Deputy Legal Adviser, Directorate of Enforcement, Chennai against the Adjudication Order No. SDE/SRO/CEZO/10/2020(SK) dated 14.08.2020 (Impugned Order), passed by the Special Director, Enforcement Directorate, Government of Ind....
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....99 (FEMA). The Impugned Order has disposed of the SCN in terms of passing an Order relating to four set of issues. The first set of issues arise from transfer of 46,862 shares of TMBL to seven foreign investors without prior approval of RBI for a total consideration of Rs. 113,32,16,884/-. Such transfer of shares has been penalized for contravention of Section 6(3)(b) of FEMA read with Regulation 4 of the Foreign Exchange Management (FEM) (Transfer or Issue of Security by a Person Resident outside India) Regulation, 2000. While the Appeal filed by TMBL challenges the findings made in the Impugned Order against it on this set of issues, the Appeals filed by the Noticee No. 2 to Noticee No. 14 challenging the findings against each of the Noticee, who has been penalized for the aforementioned contraventions in terms of Section 42 of FEMA. The second set of issues has arisen from the fact that subsequent to the transfer of 46,862 shares of TMBL, 13,209 shares of TMBL were further transferred to M/s Sub-Continental Equities Ltd., Mauritius on 26.12.2011 for total consideration of Rs. 90,31,41,094/- and 14,080 shares of TMBL were further transferred to M/s Robert & Adris James Company Lt....
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....6 challenging the findings against the Noticee, who has been penalized for the aforementioned contraventions in terms of Section 42 of FEMA. The fourth and last set of issues has arisen from the fact that Shri M. G. M. Maran, the then Chairman and Director of TMBL, a person resident in India, without the permission of Reserve Bank of India, opened an account vide No.7102356 with M/s ABN Amro Bank NV., Singapore Branch, Singapore in his name and received foreign exchange amounting to US$ 68,50,000 (equivalent to Rs. 28,08,50,000/-) in the said account from M/s Katra Holdings Limited, Port Louis, Mauritius, as consideration, for facilitating and assigning the rights towards transfer of shares of TMBL in favour of M/s Katra Holdings Limited, consequent to agreement dated 02.03.2006 with M/s Katra Holdings. He also failed to repatriate the same into India. For the aforementioned transactions penalty has been imposed on Shri Maran for the contravention of Sections 4 and 8 of FEMA read with Regulation 3 & 4 of FEM (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2000 and Regulation 3 of FEM (Foreign Currency Accounts by a person resident in India) Regulation 200....
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....for sufficient reasons, permit an entity to issue any security to a person resident outside India or to record in its books transfer of security from or to such person, subject to such conditions as may be considered necessary. Regulation 3 of the Foreign Exchange Management (Deposit) Regulations, 2000, restricts deposits between a person resident in India and person outside India and reads as under: Restriction on deposits between a person resident in India and person resident outside India:- Save as otherwise provided in the Act or regulations or in rules, direction and orders made or issued under the Act, no person resident in India shall accept any deposit from, or make any deposit with, a person resident outside India: Provided that the Reserve Bank may, on an application made to it and being satisfied that it is necessary so do to, allow a person resident in India to accept or make deposit from or with a person resident outside India. The Foreign Exchange Management (Deposit) (Third Amendment) Regulations 2007 (Notification No. FEMA 162/2007-RB) dated 18.09.2007 permitted opening of Escrow Account and Special account....
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....dent in India to whom any foreign exchange is due or has accrued shall, save as otherwise provided under the provisions of the Act, or the rules and regulations made thereunder, or with the general or special permission of the Reserve Bank, take all reasonable steps to realize and repatriate to India such foreign exchange, and shall in no case do or refrain from doing anything, or take or refrain from taking any action, which has the effect of securing- a) that the receipt by him of the whole or part of that foreign exchange is delayed; or b) that the foreign exchange ceases in whole or in part to be receivable by him Regulation 4 of the Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations 2000 reads as under: Manner of Repatriation:- (1) On realization of foreign exchange due, a person shall repatriate the same to India, namely bring into, or receive in, India and- a) Sell it to an authorized person in India in exchange of Rupees; or b) Retain or hold it in account with an authorized dealer in India to the extent specified by the Reserve Bank; or c) Use it for discharge ....
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....ich contravention has taken place, shall include- (a) deposits in a bank, where the said property is converted into such deposits; (b) Indian currency, where the said property is converted into that currency; and (c) any other property which has resulted out of the conversion of that property. 4. Ld. Counsel for the Appellant Directorate submitted that being aggrieved by the said Order No. SDE/SRO/CEZO/10/ 2020(SK) dated 14.08.2020 of Special Director of Enforcement, the Appellant begs to move this appeal on the following amongst other grounds: 1. The Order No. SDE/SRO/CEZO/10/2020(SK) dated 14.08.2020 (Impugned Order) passed by the Ld. Adjudicating Authority is against law, weight of evidence and probabilities of the case, thus liable to be set aside. 2. Ld. Adjudicating Authority did not consider the object of the Act, that it is an Act to consolidate and amend the law relating to Foreign Exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of Foreign Exchange market in India. 3. Ld. Adjudicating Authority did not consider that the contravention un....
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....e matter through the Impugned Order wherein only penalty have been imposed and no confiscation has been ordered, then there is no question that at this stage of Appeal confiscation can be ordered. Ld. Counsel for the Respondents therefore pleaded to dismiss the Appeal filed by the Appellant Directorate. 6. We have considered the rival submissions and the material on record. The ground taken to file the Appeal is to plead for confiscation of shares, since these were illegally transferred. It is pleaded that once the Ld. Adjudicating Authority has held that the Respondents have contravened the provisions of Section 6(3)(b) of FEMA read with Regulation 4 of Foreign Exchange Management (Transfer or issue of Security by a person Resident Outside India) Regulation, 2000, then it ought to have ordered for confiscation under Section 13(2) of FEMA, of the 46,862 TMBL shares which were illegally transferred to the foreign investors without prior approval of RBI valued at Rs.113,32,16,884/- at the relevant time and a part of which were further transferred without the approval of RBI i.e., 13,209 shares of M/s. TMBL in the name of Sub-Continental Equities Ltd., Mauritius and 14080 sha....
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....hich he may impose for such contravention direct that any currency or security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government. We find from the language of the Section, 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 Ld. 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. The exercise of the judicious discretion on the part of the Ld. Adjudicating Authority becomes all the more obvious with respect to the provisions of Section 13(2) of FEMA. The provision explicitly uses the word 'may' and then the phrase 'if he thinks fit in addition to any penalty'. It is therefore clear that the Ld. Adjudicating Authority which is adjudging any contravention under the Section may decide to order confiscation if it thinks fit in addition to the imposition of penalty to do so. In the instant case the Ld. Adjudicating Authority has deci....