9911796707
TMI Blog2011 (9) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... ement Act, 1999. The application for compounding was, in the present case, submitted under Section 15 on 27 September 2010. By an order dated 22 March 2011 the Deputy General Manager of the Reserve Bank as Competent Authority has stated that the contraventions which were observed are of a sensitive nature which require further investigation by the Directorate of Enforcement. Consequently the view adopted is that the contravention could not be compounded at the present stage and the compounding application was consequently returned together with the compounding fees in the sum of Rs. 5000/- paid by the Petitioner. 2. In the present case, from the records before the Court, it appears that the Petitioner received certain amounts in foreign ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nking channel and therefore, the method of investment is not in compliance with the provisions of FEMA. Further, it is observed that the company is not engaged in the business activities as stated in the MoA and the statement of accounts produced during the personal hearing on February 4, 2011 indicate that the source of income accrued to the company is the rent collected from the occupants of the immovable property purchased by the company. The contraventions observed are, therefore, of sensitive in nature which requires further investigation by the Directorate of Enforcement. In view of this, the contraventions cannot be compounded at this stage." 4. Section 15 of the Foreign Exchange Management Act, 1999 provides as follows :- &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvolves moneylaundering, national and security concerns involving serious infringements of the regulatory framework. If, before disposal of the compounding application by issue of a compounding order the Reserve Bank finds that there is sufficient cause for further investigation, it may recommend the matter to the Directorate of Enforcement (DoE) for further investigation and necessary action under FEMA, 1999 by them or to the Anti Money Laundering Authority instituted under the Prevention of Money Laundering Act, 2002 or to any other agencies, as deemed fit. Since the compounding application will have to be disposed of within 180 days, the application will be disposed of by returning the application to the applicant in view of such investi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laundering angle, national security concerns and/or involving serious infringement of the regulatory framework or where the contravener fails to pay the sum for which contravention was compounded within the specified period in terms of the compounding order, shall be referred to the Department of Enforcement for further investigation and necessary action in accordance with law would be initiated. 6. The letter of the Competent Authority dated 22 March 2011 furnishes reasons on the basis of which it has been concluded that the contravention cannot be compounded at this stage. Those reasons cannot be regarded as extraneous to the exercise of the power to compound. In any event, it has been stated by learned Counsel for the Reserve Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haustive list of factors since the facts of each case will have to be considered by the Competent Authority when it decides whether the application for compounding should be granted. There is a public interest element in the enactment of regulatory statutes such as the FEMA. Whether compounding of a breach would compromise the public interest involved in the enforcement of law has to be considered in the facts of each case. The circular which has been issued by the Reserve Bank makes it clear that the factors which have been set out in it are only indicative in nature. In that view of the matter, we are not inclined to pass any orders the effect that of which will stall the investigation which is being conducted by the Directorate of Enforc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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