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TMI Blog2025 (5) TMI 1142X X X X Extracts X X X X X X X X Extracts X X X X ..... in reference to the violations committed by Amrapali Group of Companies and for ready reference, relevant Paras 91, 92, 151 and 154(vi) of the order are quoted hereunder: "Para 91 The ASCPL did not use the money for the project which was received from IPFII-S Singapore but transferred Rs. 85 Crore to ACPPL and Rs. 55 Crore to repay bank loan instalments and repay the outstanding creditors provided for in the books and standing in the books. The said payments have rightly been held by Auditors to be in contravention of the FDI norms and rules and for which the money was brought in India." Para 92 "From 2013 to 2015, ASCPL has paid interest of Rs. 58.81 Crore @ 17 percent, which is a highly abnormal rate. A sum of Rs. 14.41 Crore was paid on 31.3.2013. Likewise, on 31.3.2014 Rs. 22.20 Crore were paid and on 31.3.2015, another amount of Rs. 22.20 Crore was paid. The violations were made with the knowledge of the IPFII-S Singapore and they were in connivance with the ASCPL. Para 151 ..... The criminal cases have also been registered by the police, we propose to monitor the progress of the investigation. For violations of FEMA and FDI norms. direct the Enforcement Directorat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the Act, Rule, Regulation, Notification, direction or order made thereunder. For ready reference, Section 10(5) of the Act of 1999 is quoted hereunder: "10. Authorized person. (1) to (4) xxx (5) An authorised person shall, before undertaking any transaction in foreign exchange on behalf of any person, require that person to make such declaration and to give such information as will reasonably satisfy him that the transaction will not involve, and is not designed for the purpose of any contravention or evasion of the provisions of this Act or of any rule, regulation, notification, direction or order made thereunder, and where the said person refuses to comply with any such requirement or makes only unsatisfactory compliance therewith, the authorised person shall refuse in writing to undertake the transaction and shall, if he has reason to believe that any such contravention or evasion as aforesaid is contemplated by the person, report the matter to the Reserve Bank". 6. It is a case where in pursuance to the SHA and SSA dated 23.07.2012, the CCDs were to be converted into equities in five years. It was not converted even after expiry of five years and, therefore, it b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, mandatorily & compulsorily convertible and also repatriable without any restrictions as per Chapter-7 'REMITTANCE, REPORTING AND VIOLATION'. Para 7.1.3 allows interest on CCDs without any restriction and accordingly there was no illegality in the action of the appellant bank to make outward remittance of interest on the CCDs on the instructions of Amrapali. 9. It was further submitted that non-conversion of CCDs received under the FDI would not become External Commercial Borrowings (ECB) if the CCD is not converted in a period of five years. In the instant case, remittance towards the interest was made much prior to the period of five years in terms of the agreement thus the impugned order deserves to be set aside. 10. The learned counsel for the appellant bank made a reference of the relevant para of the order passed by the Special Director, Adjudicating Authority to hold appellant bank to be responsible for contravention of Section 10(5) of the Act of 1999 and imposed penalty of Rs. 5 Crores. 11. The perusal of the records would reveal that the present matter was initiated on the direction of the Apex Court finding violation of the provisions of the Act of 1999 and FDI norm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avention of the provisions of the Act of 1999. It may be by M/s Amrapali and its entities which were mainly responsible for contravention of the Act of 1999 and Rules and Regulations but the appellant bank could not have acted as silent spectator to the events otherwise noticed by the Apex Court and has taken serious view and directed the Enforcement Directorate to cause investigation. In fact, FDI of Rs. 140 Crores was taken by M/s Amrapali which ultimately contravened the provisions of the Act of 1999 and the rules and regulations made thereunder. It diverted the FDI and used it for the purpose other than for it was taken. The transactions to divert the funds were made after receipt of the amount in the bank account of the appellant bank who remitted the interest despite diversion of the fund and its utilization for the purpose other than for which FDI was taken. The appellant bank has pleaded no control over the affairs of M/s Amrapali and its entities after the amount came to their account ignoring the fact that diversion of the amount out of the bank account was to be in the knowledge of the appellant bank otherwise there was no purpose to seek declaration by the authorized pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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