9911796707
TMI Blog2025 (5) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon'ble Apex Court on 23.07.2019 in the case of Bikram Chatterjee v. Union of India in W.P. (C) No. 940/2017. The Apex Court directed the Enforcement Directorate to conduct investigation for the contravention of provision of the FEMA by Amrapali Group of Companies. The following order was passed by the Apex Court and quoted here under for ready reference: 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, we direct the Enforcement Directorate to make investigation accordance with law and submit reports quarterly to this Court. Money Laundering aspect is also to be looked into by concerned authorities." ".... In view of the finding recorded by the Forensic Auditors and fraud unearthed, indicating prima facie violation of FEMA and other fraudulent activities, money laundering, we direct Enforcement Directorate and concerned authorities to investigate and fix liability on persons responsible for such violation and submit the progress report in the Court and let the police also submit the report of the investigation made by them so far." 3. The matter was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue from Rs. 191/- to Rs. 1071.81 per share within 10 days to get higher F.D.I.. It is with a further condition that the foreign investors who had purchased the share at a premium of Rs. 1071.81 per share would be entitled for dividend @ 25% of the profit though the newly incorporated company had no track record of earning with substantial distributable profit in the first year of the operation i.e. on 31.03.2010 and there was no earning of distributable profit even at the time when investment in the share by the foreign investors was made on astronomical premium. No justification was found charging for steep premium on the share for the investor as compared to the promoter because promoter was allotted share @ Rs. 191/- per share 10 days back then charged from the investor @ Rs. 1071.81 per share within 10 days. 6. So far as the appellant bank is concerned, the allegations have been made for contravention of Section 6(3)(b), Section 10(5) and Section 47(3) of the Act of 1999 read with Regulation 11(2)(b) of the Regulation of 2000. It is on outward remittance of Rs. 140 Crores to J.P. Morgan. The main allegation is in regard to the application of Discounted Cash Flow (DCF) method ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required documents which includes the valuation certificate relevant to this case and has been questioned by the respondent despite the fact that it was prepared by DCF method with a declaration that the transaction is not aimed to contravene any provisions of FEMA or its rules and regulations. 10. It is submitted that an Authorized Dealer was not having an expertise to scrutinize the documents for ascertaining whether the valuation made by DCF method by the C.A. was accurate and genuine or not. There was no requirement under the Act of 1999 and Rules or Regulations requiring Authorized dealer to ascertain the accuracy or veracity of the valuation report submitted to it. As per rules, authorized person is to take a certificate from CA, which was taken by the appellant in this case. Relying on the certificate of CA, the remittance was made because it was not in the domain of the appellant to make an independent valuation of shares for remittance of the amount. The value of share at Rs. 2290, 2577.25 and Rs. 2910 per share was taken as certificate of the C.A. 11. The Counsel for the appellant reiterated the instructions contained in RBI Circular No. 16 pertaining to Foreign Direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 2000. Elaborate arguments were made by the Counsel for the respondent to contest the issues raised by the appellant and would be referred while recording finding in reference to the arguments of the appellant. It is to avoid repetition of one and same facts. Finding of the Tribunal: 16. In the opening paras, a reference of the order of the Apex Court has been given. A direction for initiation of investigation for violations of FEMA and FDI norms has been indicated. The Enforcement Directorate was directed to undertake action in accordance with law and submit the reports quarterly to the Apex Court. Based on the order of the Apex Court, proceedings were initiated by the respondent. It is for suspect contravention of the provisions of the Act of 1999 in regard to the affairs of the Amrapali. The petition before the Apex Court was filed by the homebuyers suffered in the hands of the aforesaid company for siphoning off the funds. 17. By the impugned order, separate penalty was imposed against the different noticee which include the appellant on whom penalty of Rs. 14 crores was imposed invoking Section 13(1) of the Act of 1999 for contravention of Section 6(3)(b), Section 10(5) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the date on which the provisions of this section are notified under section 6 and section 47 of this Act on capital account transactions, the regulation making power in respect of which now vests with the Central Government, shall continue to be valid, until amended or rescinded by the Central Government.] Foreign Exchange Management (Transfer of Issue of Security by a Person Resident Outside India) Regulation, 2000-Remittance of sale proceeds. 11. (2) An authorised dealer may allow the remittance of sale proceeds of a security (net of applicable taxes) to the seller of shares resident outside India: Provided xx xx xx xx xx xx xx xx xx xx xx (b) either the security has been sold on a recognised stock exchange in India through a stock broker at the ruling market price as determined on the floor of the exchange, or the Reserve Bank's approval has been obtained in other cases for sale of the security and remittance of the sale proceeds thereof; xx xx xx xx xx xx xx xx xx xx xx 20. If the matter is considered in narrow compass, it is a case where shares were allotted at the premium of Rs. 1071.81 per share while the share to the promoters were allotted at the premiu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is apart from the other paras of the circular: 5.2 For sale of shares by a person resident outside India i. Consent Letter duly signed by the seller and buyer or their duly appointed agent indicating the details of transfer i.e. number of shares to be transferred, the name of the investee company whose shares are being transferred and the price at which shares are being transferred. ii. Where the Consent Letter has been signed by their duly appointed agent the Power of Attorney Document authorizing the agent to purchase/sell shares by the seller/buyer. In case there İs no formal Sale Agreement, letters exchanged to this effect may be kept on record. iii. If the sellers are VRIS/OCB5, the copies of RBI approvals evidencing the shares held by them on repatriation/non- repatriation basis. The sale proceeds shall be credited NRE/NRO account, as applicable. iv. Certificate indicating fair value of shares from a Chartered Accountant. v. No Objection/Tax Clearance Certificate from income Tax authority/Chartered Account. vi. Undertaking from the buyer to the effect that the Pricing Guidelines have been adhered to. 23. It is emphasized that what was required for the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on rate and schedule of shareholder's agreement. It was not followed at the time of exit. The clause 4.2(iii) was also ignored where the Company shall grant an interest free loan of Rs. 85 crores to UHCPL. Many other clauses have been referred in the impugned order to indicate the contravention of the provisions of the Act of 1999 along with Regulation of 2000 in the hands of the noticee which include the appellant bank. 25. The Amrapali otherwise followed recognition of revenue on the basis of Project Completion Method - Accounting Standard 7 (Construction Contracts). As per the Projection Completion Method given in the Accounting Standard 7, the profit could not have been recognized unless the project is completed and as per clause no. 7.3 of the Shareholder's agreement for distributable amount is the balance amount representing the aggregate of all profits. The Ld. Special Director, further, discuss the issue under the head "Valuation". The correct methodology of DCF (Discounted Cash Flow) was not followed. Without any sanctity and validity, the valuation was carried out to cause wrongful loss to the home buyers of Amrapali to give advantage to JP Morgan. The partner Ms. Deept ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
