TMI Blog2017 (5) TMI 852X X X X Extracts X X X X X X X X Extracts X X X X ..... ne! Issue of Security by a Person Resident outside India) Regulations, 2000. We agree with the observations of the Adjudicating Authority expressed in para nos. 73 to m of the Adjudication Order. SCNs 1 to 4 were rightly issued. The penalty amount, if any deposited by the appellants as pre-deposit will be adjusted and the balance amount will be paid by them individually within a period of sixty days from the date of communication of the order, failing which the Enforcement Directorate may recover in accordance with law. With these directions, the instant appeals are disposed of with some modification in the amounts of penalties imposed against all the appellants taking into consideration all the facts and circumstances of the case. - APPEAL NOS. 9-19 OF 2013 - - - Dated:- 2-2-2017 - DR. H. K. MUDGIL, ACTG. CHAIRPERSON, AND MRS. SHARDA JAIN, MEMBER For The Appellant : Amar Dave, Deep Roy, Udit Jain and Rohan Shah Ld For The Respondent : M.R. Venkatesh ORDER Dr. H.K. Mudgil, Actg. Chairperson We have heard Mr. Amar Dave, Ld. Advocate along with Mr. Deep Roy and Mr. Udit Jain, Ld. Advocates for the appellants in Appeal Nos.9-12/2013 Mr. Rohan Shah, Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned (supra) arise out from the common Adjudication Order No. ADJ/01-04/B/SDE/BK/2013/FEMA, dated 30thJanuary, 2013, passed by Special Director, Enforcement Directorate, Mumbai, wherein the appellants were held liable for contravention of the provisions of Section 3 (b) .Section 6(2), 6 (3)b Section 42 (1) of FEMA, 1999 read with Regulation 5 (1) of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, Paragraph 8 of schedule 1 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, Regulation 5 of the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 and Para 9 (1) (A) of schedule 1 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 and a total penalty of ₹ 98,35,00,000/-(Rs. Ninety eight crores thirty five lakhs) has been imposed against all the appellants as mentioned in the Impugned Order. Since, all the appellants mentioned (supra) have preferred separate appeals against the common Adjudication Order, before the Tribunal, therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Jaipur IPL Cricket Pvt. Ltd. (JIPL) and BCCI. Mr. Fraser Castillino, the then CEO, JIPL signed the agreement on behalf of JIPL on 02.04.2008 and Mr. Lalit Modi, Vice President of BCCI and Chairman of IPL, signed the agreement on behalf of BCCI on 14.04.2008. 8. It was found from the replies of BCCI that in the case of JIPL the performance deposit was transferred from U.K. to the account of BCCI / IPL with HDFC Bank, Chermai. The copies of Foreign Inward Remittance Certificates (FIRCs) forwarded by BCCI also revealed that the amount of GBP 25,82,026.72 equivalent to ₹ 19,81,18,910.23/- and GBP 50,000 equivalent to ₹ 38,68,500/- were respectively transferred on 21.08.2008 and 22.01.2008. totaling GBP26,32,026.72 equivalent to ₹ 20,19,87,410.23/- by appellant Manoj Badale from U.K. on behalf of M/s. Emerging Media IPL Ltd. U.K. (EMIPL) towards performance deposit. The performance of remittance as shown in the two FIRCs dated 04.08.2008 issued by HDFC Bank, Mumbai was towards tender deposit for sponsorship of teams in IPL, the name of the beneficiary was shown as BCCI-IPL in the FIRCs. It is contended that the amount of ₹ 20,19,87,41023/- was paid by app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tender deposit money of US$ 5 million was remitted by appellant, Manoj Badale to BCCI after the successful bid for Rajasthan Royals. The balance deposit was paid to BCCI by M/s. EMSH, Mauritius and as it was imperative to set up an Indian company for signing franchise agreement with BCCI. He along with Mr. Fraser Castillino formed JIPL on 08.03.2008 in which both were 50% shareholders. The paid up capital of the company was ₹ 1 lakh. The company was to support appellant, Manoj Badale as per the requirements of IPL. He further stated that out of the 5000 shares held by him, 4990 shares were sold to Ms.EMIPL, U.K and the shares have been shown as transferred in the records of JIPL on 31.12.2008. He stated that shares have not been allotted till date as RBI approval is awaited. In respect of the amount received by BCCI directly they have approached RBI for allotment of shares, however, RBI has rejected their application advising to file the same before FIPB. 10. On 22-07-2009 M/s. JIPL filed an application before the FIPB seeking approval for issue of 1983 shares to M/s. EMSH, Mauritius for ₹ 3,29,40,000/- (US$ 7,73,480.99) which was paid by the aforesaid company to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at your proposal has not been acceded to for the reasons that the transaction involved issuance of shares for other than cash consideration, over and beyond the items allowed under the scheme of FEMA, 20. Further, the proposal was not supporting by the Administrative Ministry also. 12. M/s JIPL has addressed a letter dated 20-11-2009 to AXIS Bank in which it has been reported that M/s JIPL has received 04 remittances and enclosed certain documents therewith, which includes a request to the AXIS Bank to forward the same to RBI for permission to issue shares to EMSH. In reply to the said letter, the RBI vide their letter dated 14-06-2010 interalia informed JIPL that the performance deposit payment made to BCCI by Mr. Manoj Badale on behalf of EMIPL and the franchise fee paid by EMSH can be at best treated as pre-incorporation expenses of JIPL and issue of shares to non-resident investor would tantamount to capitalization of pre-incorporation expenses which was not under the ambit of the general permission under the extant FDI policy. The RBI, therefore, advised JIPL to submit post-facto approval from the FIPB. 13. Thereafter M/s J.IFL side their letter dated 28-07-2010 addres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... av Karmarkar were recorded by the Enforcement Directorate. Complaint was filed thereafter SCN was issued. 16. SCN I (Show Cause Notice) was issued to the appellant M/s Jaipur IPL Cricket Pvt. Ltd. for contraventions: (i) under section 6(3) (b) of FEMA read with Regulation 5 (1) of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 and para 8 of Schedule 1 thereto read with Regulation 5 of Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 issued under Section 6(2) of FEMA to the extent of ₹ 23,49,27,410.23/- and (ii) for the contravention of section 6(3) (b) of FEMA read with regulation 5 (1) of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 and para 8 of Schedule 1 thereto and also read with Regulation 5 of Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 issued under section 6 (2) of FEMA to the extent of ₹ 9,73,l8,034/- and (iii) for contravention of section 6(3) (b) of FEMA read with Regulation 5(1) of Foreign Exchange Management (Transfer or issue of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 and Para 9 (1) (A) of schedule 1 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 as mentioned in the Impugned Order. The Adjudicating Authority has imposed a total penalty of ₹ 98,35,00,000/- ( Rs. Ninety eight crores thirty five lakhs) against all the appellants namely; M/s Jaipur IPL Cricket Pvt. Ltd. as ₹ 32,30,00,000/-(Rs. Thirty two crores thirty lakhs), Mr. Ranjit Barthakur as ₹ 6,40,00,000/- (Rs. Six crores forty lakhs), Mr. Raghuram Iyer as ₹ 5,10,00,000/-(Rs. Five crores ten lakhs), Mr. Fraser Castellino as Rs, 6,40,00,000/- (Rs. Six crores forty lakhs), M/s EM Sporting Holdings Ltd. as ₹ 18,90,00,000/- (Rs. Eighteen crores ninety lakhs),Mr. Bishwarnath Bachun as ₹ 2,45,00,000/- (Rs. Two crores forty five lakhs), Mrs. Samila Sivaramen as ₹ 2,45,00,000/- (Rs. Two crores forty five lakhs),Mrs. Barbara Jacqueline Haldi as ₹ 2,45,00,000/- (Rs. Two crores forty five lakhs), Mr. Suresh Chellaram as ₹ 3,70,00,000/-(Rs. Three crores seventy lakhs), M/s N.D. Invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial review generally speaking, is not directed against a decision, but is directed against the decision making process . The question of the choice and quantum of punishment is within the jurisdiction and discretion of the Court-Martial. But the sentence has to suit the offence and the offender. It should not be vindictive or unduly harsh. It should not be so disproportionate to the offence as to shock the conscience and amount in itself to conclusive evidence of bias. The doctrine of proportionality, as part of the concept of judicial review would ensure that even on an aspect which is, otherwise, within the exclusive province of the Court-Martial, if the decision of the Court even as to sentence is an outrageous defiance of logic, then the sentence would not be immune from correction. Irrationality and perversity are recognized grounds of judicial review. In Council of Civil Service Unions v. Minister For The Civil Service [1984] 3 WLR1174 Lord Daglock said: ...Judicial Review has, I think, developed to a stage today when without re-iterating any analysis of the steps by which the development has come about, one can conveniently classify under three heads the grounds u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is ₹ 33,22,45,444.23/-. It is further submitted that remittance No. 1 was made at a time when JIPL was not even incorporated. Remittance N0.2 was made when EMSH, the entity that hold the entire shareholdings of JIPL, was not incorporated and the bank accounts were not operational. Remittance No.3 was at a time when BCCI wanted the relevant funds within a very short timeline. Further submission is that in December, 2007, the BCCI issued global tender inviting bids for the twenty 20 competition. The invitation for tender was open for all over the world. As consideration for right to operate a franchise in the IPL, each franchise was required, apart from other things to pay to BCCI a fee in ten equal annual installments over a period of ten years and each bidder was required to deposit of US$ 5 million as single party deposit and was also required to have operating company in India for first three years. Submission is that on 22.10.2008, M/s Emerging India IPL made over to operate franchise of which Mr Manoj Sadale was the sole shareholder, revetted a deposit as remittance no. 1to BCCI. The bid of EM PIL for Jaipur IPL was accepted and on 08.03.2008, Jaipur IPL was incorporated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statue. In the case of M/s. Hindustan Steel Ltd, v. State of Orissa,1969 (2) Supreme Court Cases 627, equivalent AIR 1970 SC 253, Hon'ble Supreme Court inter-alia held that: (Para 8.) Under the Act penalty may be imposed for failure to register as a dealer - Section 9(1) read with Section 25(i)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses concealed the particulars of his income or deliberately furnished inaccurate particulate of such income. The Supreme Court observed that, it appears to have been taken as settled by now in the sales tax law, that an order imposing penalty is the result of quasi-criminal proceedings. They also approved the view taken in CIT v. Goculdas Harivallabhdas, [1958] 34 ITR 98 by the Bombay High Court. In that case, it was observed that the penalty proceedings are criminal proceedings in their very nature. In Hindustan Steel Ltd.'s [1972] 83 ITR 26 (SC) it was categorically stated by the Supreme Court that an order imposing penalty for failure to carry out any statutory obligation. Their scope cannot be confined to the sales tax statutes only, nor will it be proper to hold that the basic nature of the penalty proceedings under one clause of s.27l(i) is different from those under another clause3 of the same sub-section. The matter has been placed beyond all doubt by the Supreme Court in Khemka and Co.(Agencies)Pot. Ltd. v. State of Maharashtra, [1975] 2 SCC 22: AIR 1975 SC 1549 by stating that the Income-tax Act, 1961, imposes penalty under ss. 270 and 271. These sections in I.T. Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D did not advert to specific defence, of the appellant that at the relevant time he was not a director in-charge of or responsible to the company for the conduct of its day-to day affairs. The AT too does not appear to have noticed the above decisions of the Supreme Court and has mechanically concluded that since there was no restriction on the exercise of powers by the Appellant in relation to the transactions in question, he should be held liable. IN light of the reply doted 9th April 2001 sent by the Appellant it was possible to discern the distinction between those directors who were in-charge of the day to day affairs of the company and those were not. The explanation offered by the Appellant is that the Company Secretary of XML placed before the Board of Directors of MXL compliance certificates at every meeting held during the relevant period, which led the directors, including the Appellant, to believe that there were no contravention of any of the statutory provisions, appears to be a plausible one. This explanation has not been considered either by the DD or AT. (Para 19) In the considered view of the Court, the Appellant on his part discharged the burden in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f would have to contain some specific averment as regards each of the Directors before making them liable particularly where the filing of the complaint has been preceded by a notice to which a reply has been received from the Director concerned. At the bare minimum it would have to comprise the two mandatory elements as explained by the Supreme Court in Neeta Bhalla I. In the instant case, the averment in the complaint when read as a whole does not satisfy the requirement of the law in this regard as far as the petitioner is concerned. (para 20) For all the aforementioned reasons the petition is allowed. The petitioner stands discharged in the complaint case titled Chief Enforcement Officer V. Ratan Exports Industries Ors pending in the Court of the Ld. ACMM, New Delhi. However, the complaint will continue against the other accused, excluding Rajan Bagaria who has already been discharged by this Court by the order dated 8th February, 2008 in Crl. Misc. No.5094/2006. (para 21) The petition is accordingly allowed with no orders as to costs. The pending application also stands disposed of. A copy of this order will be sent by the Registry to the Court of the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because, the weather conditions in South Africa were better in England and the venues in South Africa were equipped with flood light facilities which were not available in all the stadiums in UK. (para 30) As it transpires from the complaint itself, day to day affairs and the operational matters of Second IPL in South Africa, such as, opening bank account, obtaining Reserve Bank of India permission, etc. were to be handled by the Secretary, Mr. Srinivasan, assisted by Mr.. Prasanna Kannan, Manager of BCCI and employed with Indian Cements Ltd., Chennai, Mr. Sunder Rajan, Chief Operating Officer of IPL and-Mr.M. P. Fandove Treasure BCCI. Hence, the petitioner's case that the petitioner was not at ail required to attend to such operational matters or day to day affairs was not contradicted by any of the persons whose statements were recorded during the investigation. The petitioner would, therefore, prima facie be justified in submitted as far as opening and operating of bank account of IPL or obtaining permission of Reserve Bank of India for making remittances or receipts of foreign exchange was concerned, the petitioner was not in charge of and responsible to BCCI for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er has relied on the observations of the three Judge Bench of the Supreme Court in the above case in the very next paragraph immediately preceding sub para and after para 9:- ........When the requirement in Section 141, which extends the liability to officers of a company, is that such a person should be in charge of and responsible to the company for conduct of business of the company, how can a person be subjected to liability of criminal prosecution without it being averred in the complaint that he satisfies those requirements. Not every person connected with a company is made liable under Section 141. Liability is cast on persons who may have something to do with the transaction compliance of. A person who is in charge of and responsible lor conduct of business of a company would naturally know why the cheque in question was issued and why it got dishonoured. 10. While analyzing Section 141 of the Act, it will be seen that it operates in cases where an offence under Section 138 is committed by a company. The key words which occur in the section are every person . These are general words and take every person connected with a company within their sweep. Therefore, these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial on record as disclosed in the complaint itself was sufficient to persuade any reasonable person that the petitioner was not in charge of and responsible for anything relating to opening and operating bank account involving receipts and remittances of foreign exchange by Governing Council of IPL chaired by Mr. Lalit Modi and that the operational matters of IPL were handled by the then Secretary and Treasurer, BCCI and Chairman/Chief Executive Officer of Governing Council for IPL and that the petitioner had clearly stated that RBI permission should be obtained, the Adjudicating Authority must first indicate whether the petitioner is required to be called upon to discharge the burdon cast by the proviso to sub-section (1) of Section 42 of the Act. (Para 34) Since the provisions of Section 42 of the Act are in pari material with the provisions of Section 141 of the Negotiable Instruments Act. 1881, the principles laid down by the Supreme Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and another, MANU/SC/0622/2005: (2005)8 SCC 89, are required to be applied to FEMA cases also. The Supreme Court has in terms held that the liability is cast on persons who may have so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs v. State of Haryana,[1989]4 Supreme Court Cases 630, Hon'ble Supreme Court inter-alia held that: (para 9) But we are concerned with a criminal liability under penal provision and not a civil liability. The penal provision must be strictly construed in the first place. Secondly, there is no vicarious liability in criminal law unless the statue takes that also within its fold. Section 10 does not provide for such liability. It does not make all the partners liable for the offence whether they do business or not. (Para 10) It is, therefore, necessary to add an emphatic note of caution in this regard. More often it is common that some of the partners of a firm may not even be knowing of what is going on day to day in the firm. There may be ladies and minors who were admitted for the benefit of partnership. They may not know anything about the business of the firm. It would be a travesty of justice to prosecute all partners and ask them to prove under the proviso to sub-section (1) that the offence was committed without their knowledge. It is significant to note that the obligation for the accused to prove under the proviso that the offence tool: place without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sult of a quasi criminal proceedings; (Hindustan Steel Ltd. v. The State of Orissa C.A.S. 883-392/66 dt. 04.08.1969. In England also it has never been doubted that such proceedings are penal; Fattorini (Thomas) (Lanchashire) Ltd., v. Inland Revenue Commissioner 1943 (11) I.T.R.50. (Para 5). The next question is that when proceedings under Section 28 are penal in character what would be the nature of the burden upon the department for establishing that the assessee is liable to payment of penalty. As has been rightly observed by Chagla C.J., in Commissioner of Income-tax, Ahmedabad v. Gokuldas Harivallabhdas MANU/MH/0195/1958: [1958] 34 ITR 98(Bom) the gist of the offence under Section 28(1) is that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income and therefore, the department must establish that the receipt of the amount in dispute constitutes income of the assessee. If there is no evidence on the record except the explanation given by the assessee which explanation has been found to be false it does not follow that the receipt constitutes his taxable income. 24. It is also submitted that remittance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Tribunal It is submitted that section 1(3) of the FEMA makes it abundantly clear that non-residents would also be subjected to the provision of FEMA. Hence, it is submitted that provisions of FEMA are applicable to any contravention made outside India by any person to whom the Act applies. The link/connection in India with respect to the transactions and the acts of the non-residents are clearly mentioned in the Impugned Order. Further submission is that the shares of the money received by BCCI and JIPL were sought to be issued to a Mauritius entity. The consideration for the share has been made by Mr. Badale (individual) / M/s ND Investment from U.K whereas the shares are expected to be issued to an entity in Mauritius for the purpose of availing tax benefit in India. It is submitted that appellants have adopted treaty shopping for the purpose of investing in India. The correspondence with Price Water Cooper (PWC) clearly shows that arrangement has been made to route the investment through Mauritius but the funds are flowing into India from United Kingdom which is not permissible. This would cause a significant loss to the Government exchequer if such transaction is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporation of the JIPL nor in the issue of shares. The first remittance includes two transactions which is transfer of funds from Mr. Badale to BCCI and issue of share by JIPL to EMSH which are two different transactions in the eye of law. The claim of the appellants that the funds has been transferred by Mr. Badale on behalf of EMSH to BCCI (instead of JIPL) for the reason that JIPL was not formed during the period does not find force under the provisions of law except for general or special permission given by RBI in this regard. In the present case no such approval has been granted. On the contrary, it is reiterated that applications made by the appellant were rejected being beyond the scope of FEMA. Even if the above claim of the appellant is accepted, the appellant has not explained as to why remittance directly made to BCCI even when JIPL was in existence during the third remittance. 28. With regard to the second remittance, it has been made in 4 tranches by Mr. Manoj Badale and ND Investments to JIPL, however, the shares are proposed to be issued to EMSH by JIPL. In other words, the remitter of funds is different from the investor-to whom the shares are being sought to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmission is that no general or special approval of the ill Reserve Bank of India has been given in this regard. On the other hand, RBI directed JIPL to get the approval of FIFB which has rejected the application of the appellant twice. Hence, the remittances made are in contravention of Section 3 of FEMA. 32. It is further submitted that decision of making investments and/or issues of shares are done by the Board (Board of Directors) and not by the officials of the company. This is the position under the companies Act. In the present case, it involves issue of shares by JIPL and investment by Mauritius entity and the Board of Directors of JIPL and EMSH cannot plead ignorance at this stage. It is clear that every person who was in charge of, and was responsible to, the company for the conduct of its business at the time the contravention was committed shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly. Hence all the directors of the company are liable under section 42 of FEMA, 1999. 33. There is also violation of Regulation 5 of Foreign Exchange Management(Transfer or Issue of Security by a Person Resident out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Adjudicating Authority has rightly imposed a total penalty of ₹ 98 crores 35 lakhs against all the appellants for contravention of the provisions of Section 3 (b),Section 6(2), 6(3)b Section 42 (1) of FEMA, 1999 read with Regulation 5 (1) of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India), Regulations, 2000, Paragraph 8 of schedule 1 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, Regulation 5 of the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000, and Para 9 (1) (A) of schedule 1 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 as mentioned in the Adjudication Order No. ADJ/01-04/B/SDE/BK/2013/FEMA, dated 30thJanuary, 2013, passed by Special Director, Enforcement Directorate, Mumbai. Hence, the appeals are liable to be dismissed. 36. We have considered the submissions of Ld. Advocates for the appellants and Mr. M. R. Venkatesh, Ld. Chartered Accountant/Presenting Officer on behalf of the respondents, Enforcement Directorate and have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 and para 8 of Schedule 1 thereto read with Regulation 5 of Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 issued under Section 6(2) of FEMA to the extent of ₹ 23,49,27,410.23/- and (h) for the contravention of section 6(3) (b) of FEMA read with regulation 5 (1) of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 and para 8 of Schedule 1 thereto and also read with Regulation 5 of Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 issued under section 6 (2) of FEMA to the extent of ₹ 9,73,18.034/- and (iii) for contravention of section 6(3) (b) of FEMA read with Regulation 5(1) of Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 and also read with para 9 (1) (A) of Schedule 1 thereto to the extent of $' ₹ 23,49,27,410.23/- and ₹ 9,73,18.034/- and (iv) Mr Ranjit Bharthakur, Mr Raghuram Iyer and Mr Fraser Castelino, have been charged for the above contrav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Mr. Manoj Badale as ₹ 16,20,00,000/-(Rs. Sixteen crores twenty lakhs) respectively, .for contravention of the provisions of Section 3 (b),Section 6(2), 6(3)b Section 42 (1) of FEMA, 1999 read with Regulation 5 (1) of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India), Regulations, 2000, Paragraph 8 of schedule 1 of the Foreign Exchange Management (Transfer Issue of Security by a Person Resident outside India) Regulations, 2000, Regulation 5 of the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000, and Para 9 (1) (A) of schedule 1 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 as mentioned in the Impugned Order. 43. The relevant provisions of FEMA, 1999 and its Regulations referred in the instant matters are as under:- Section 3 of FEMA,1999 reads as follows: Dealing in Foreign Exchange, etc - Save as otherwise provided in this Act, rules or regulations made thereunder, or with the general or special permission of the Reserve Bank, no person shall - (a) deal in or transfer any foreign exchange or for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akistan) may purchase shares or convertible debentures of an India company under Foreign Direct Investment Scheme, subject to the terms and conditions specified in Schedule 1. (ii) Notwithstanding anything contained in sub-regulation (i) above, a person who is a citizen of Bangladesh or an entity incorporated in Bangladesh may, with the prior approval of the Foreign Investment Promotion Board of the Government of India, purchased shares and convertible debentures of an Indian company under Foreign Direct Investment Scheme, subject to the terms and conditions specified in Schedule 1. And Paragraph 8 of schedule 1 of the Foreign Exchange Management (Transfer Or Issue of Security by a Person Resident outside India) Regulations, 2000 reads as under:- A company in India issuing shares or convertible debentures under this Schedule to a Person Resident outside India shall receive the amount of consideration for such shares- (i) By inward remittance through, normal banking channel, or (ii) By debit to NRE/FONR account of the person concerned maintained with an authorized dealer/authorized bank. Explanation.-Conversion of royalty/lump sum fee due for payment or con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Advocates for the appellants titled as Fatima Bibi Ahmed Fate v. Stale of Gujrat and Another, 2003 (6) SCC 789 is not applicable as the fact;; are different. 45. No special or general permission exists for allowing the nature of transactions in the present case as stated by RBI in its letter, dated 14.06.2010. FIPB has categorically disapproved the remittance, vide its letter dated 24.05.2010. No legal remedy against the said opinion of FIPB has been claimed by the appellants. FIPB vide its letter, dated 23.11.2009 has made a categorical finding that the company could not provide satisfactory proof of receipt of foreign exchange despite ample opportunities, which is clearly mentioned in the Impugned Order, Approval of Foreign Investment Promotion Board (FIPB) is mandatory as the transaction does not fall under the automatic route. With regard to first remittance, it is clear that contravention of the provisions of FEMA read with FEM (Transfer or Issue of Security by a Person Resident outside India), Regulations, 2000 and FEM (Permissible Capital Account Transaction) Regulations, 2000 have been made. It is also clear that payment was not made by the Investor; Payment was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the BCCI is not a party to the Show Cause Notice in question. No order can be passed with regard to the remittances worth ₹ 23,49,27,410.23/- because BCCI is not a party to the SCN in question . With regard to tire remittance of ₹ 9,73,18,034/- there was a violation, accordingly, penalty was imposed by the Adjudicating Authority. We agree with the observations of the Adjudicating Authority as mentioned in para nos. 85 86 of the Adjudication Order No. ADJ/oi-04/B/SDE/BK/20i3/FE;MA, dated 30th January, 2013. 46. In the present case, there is violation of Section 3 of FEMA, 1999 as the payments have been made by non-residents viz, Mr. Manoj Badale, M/s ND Investments and EMSH there is no general or special approval of the Reserve Bank of India. On the other hand, RBI directed JIPL to get the approval of-FIFE which has rejected the application of the appellant twice. Hence,-the remittances made are in contravention of Section 3 of FEMA. 47. As per section 42(1) of FEMA, 1999, It is clear that every person who was in charge of, and was responsible to, the company for the conduct of its business at the time the contravention was committed, shall be deemed to be gui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident outside India) Regulations, 2000(TISPR0) demands reporting of issuance of shares by Indian company within 30 days from the receipt of the amount of consideration which has not been done in the present case which is mentioned in the Impugned Order . Regulation 9(i)(A) mentioned (supra) has not been complied by the JIPL and no satisfactory explanation was given for such non-compliance and hence, violates Regulation 9(l)(A) of schedule 1 of FEM (TISPRO) Regulations, 2000. 51. In the present case, the remitter and investor are different and are not in accordance with the Regulations made by the Reserve Bank of India under the Act. The remittance 1 and remittance 2 were made by the person other than the investor and are in direct contravention of Regulation 5 of FEMA (Permissible Capital Account Transactions) Regulations, 2000. 52. From the perusal of record, It is clear that in the instant matters, there is contravention of the provisions of Section 3 (b) .Section 6(2), 6(3)b Section 42 (1) of FEMA, 1999 read with Regulation 5 (1) of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India), Regulations, 2000, Paragraph 8 of schedule 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 8,73,18,034/- totaling to ₹ 33,322,45,444/- and Mr Bishwamath Bachun, Mrs. Sarniia Sivaramen, Mrs. Barbara Jacqueline Hakli and Mr. Manoj Badale, Director of M/s EM Sporting Holdings Ltd. and Shri Suresh Chellaram, Managing Director for above contraventions in terms of section 42 (l)of FEMA, 1999. SCN.III was issued to Mr Manoj Badale and he is held liable for contravention of Section 3 (b) of FEMA to the extent of ₹ 20,19,87,410/- and another amount of ₹ 5,07,25,000/-. SCN.IV was issued to M/s N.D. Investments Ltd. and who is held liable (i) for contravention of Section 3(b) of FEMA to the extent of ₹ 4,65,93,034/- and (ii) to Mr Manoj Badale, Director for the said contraventions in terms of section 42 (1) of FEMA, 1999. 53. The Adjudicating Authority vide Adjudication Order No. ADJ/01-04/B/SDE/BK/2013/FEMA, dated 30thJanuary, 2013 has imposed a total penalty of ₹ 98,35,00,000/- ( Rs. Ninety eight crores thirty five lakhs) against all the appellants namely; M/s Jaipur IPL Cricket Pvt. Ltd. as ₹ 32,30,00,000/-(Rs. Thirty two crores thirty lakhs), Mr. Ranjit Barthakur as ₹ 6,40,00,000/- (Rs. Six crores forty lakhs), Mr. Raghura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 33,22,45,444.23/-. The penalty imposed on the appellants is almost thrice to the total amount of remittance i.e. ₹ 33,22,45,444.23/-. We feel that the ends of justice will be met, if the total penalty amount is reduced to some extent i.e. 30 % from the total penalty amount of ₹ 98,35,00,000/-(Rs. Ninety eight crores thirty five lakhs) which after deduction of 30% becomes ₹ 68,84,50,000/-(Rs. Sixty eight crores eighty four lakhs fifty thousand). The order of the Adjudicating Authority is modified and in the case of JIPL, the amount of penalty imposed by the Adjudicating Authority is reduced from ₹ 32,30;00,000/-(Rs. Thirty two crores thirty lakhs) to ₹ 22,61,00,000/-(Rs. Twenty two crores sixty one lakhs), in the case of Mr. llanjit Barthakur, the penalty amount is reduced from ₹ 6,40,00,000/- (Rs. Six crores forty lakhs) to ₹ 4,48,00,000/-(Rs. Four crores forty eight lakhs), in the case of Mr. Raghuram Iyer, the penalty amount is reduced from ₹ 5,10,00,000/-(Rs. Five crores ten lakhs) to ₹ 3,57,00,000/- (Rs. Three crores fifty seven lakhs), in the case of Mr. Frazer Castellino, the penalty amount is reduced from ₹ 6, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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