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TMI Blog2025 (5) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant for waiver of condition of pre deposit under section 19 of Foreign Exchange Management Act of 1999 (FEMA) (in short, the Act of 1999). 2. It is a case where a penalty of Rs. 20 crores has been imposed on the appellant M/s Fairdeal Supplies Ltd. and penalty of Rs. 3.6 crores on the appellant Pawan Kumar Agarwal (Managing Director of Fairdeal) for the contravention of section 6(3)(f) of Foreign Exchange Management Act, 1999 (FEMA) coupled with Regulation 3 of Foreign Exchange (Deposits) Regulations, 2000 read with section 42 of the Act of 1999. 3. The learned counsel for the appellant prayed for stay of the proceedings in the light of an order passed by NCLT, Kolkata Bench admitting the application under section 7 of the IBC imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the omission of the provision on 15th October, 2019. The reference of the Judgement of Karnataka High Court in writ petition no 1418 of 2021 decided vide order dated 6th December, 2024 holding imposition of penalty for contravention of section 6(3) of FEMA after its omission to be without jurisdiction. Thus, an argument was made to allow the application for waiver of the condition of pre-deposit in view of the above also. 6. The learned counsel further submitted that there was no contravention of section 6(3)(f) of the Act of 1999, rather penalty has been imposed by taking erroneous interpretation of the provision. The transaction alleged against the appellant for transfer of Rs. 23.6 crores on behalf of the appellant was not between a per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly for the reason that moratorium does not affect the proceeding under FEMA Act, 1999 but order imposing penalty was passed much prior to the order passed by the NCLAT. It was not an order during pendency of the moratorium but much prior to it. Thus, argument in reference to section 14 of IBC has no merit. Reference of several judgements on the issue were given. 12. It is further submitted that initiation of the proceeding for contravention of section 6 (3) was made prior to the amendment and thus omission of the provision would not affect the proceeding and otherwise the issue aforesaid would be dealt with while hearing the appeal. 13. It is further submitted that there is no discrepancy in issuance of the notice. If due to omission, ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. So far as the issue in reference to the moratorium under section 14 of the IBC is concerned, we do not find much substance in the plea raised by the appellant not only for the reason that the impugned order was passed much prior to the moratorium issued by the NCLAT, Kolkata but even the appeal was filed prior to the aforesaid. Thus, moratorium under section 14 would not affect or can result in waiver of condition of pre deposit to the appeal was preferred by the appellant to challenge the order dated 5th March, 2022 passed by the authority below. It is otherwise held by different High Courts and even Apex Courts that moratorium does not affect the proceeding of all nature. The imposition of the penalty under the consumer protection w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 14 of the IBC extends to proceedings under Section 138 of the NI Act. However, a distinction between debt recovery proceedings and punitive actions needs to be created, and therefore all criminal liabilities do not fall within the scope of the moratorium unless explicitly covered under the IBC. Consequently, penalties imposed by regulatory bodies in the public interest cannot be stayed merely because insolvency proceedings are ongoing. 17. There are Judgements of the High Court holding that the proceeding for imposition of penalty under different legislation is not affected by section 14 of the Act. Thus, prima facie we are of the view that the plea raised by the appellant in reference to section 14 is not tenable. It is more s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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