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TMI Blog2023 (8) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... essary approval was granted by FIPB. In fact, the 1st respondent is also not disputing the approval granted to the petitioners for issuance of equity shares. However, the show cause notice was issued only on account of the petitioner company issuing share warrants, which was later converted into equity shares. The sequence of events for obtaining approval have already been extracted above. In this regard, the initial approval was granted by FIPB on 27.12.2005. Thereafter, as there was certain errors in the number of equity shares, further approval was solicited, which was also granted by FIPB on 31.01.2006. There is no quarrel that equity shares were issued by the petitioner company in favour of Newbridge. However, for an amount of about Rs.243 Crores, share warrants were issued, which was subsequently converted into equity shares. It has been the ratio of the Supreme Court even in LIC case [ 1985 (12) TMI 289 - SUPREME COURT] that RBI is the custodian general of foreign exchange. In the present case, the foreign investment was approved by FIPB. Communication reveals that FIPB had nowhere said that the issuance of warrants at the point of time when it was issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim that approval has not been obtained and such a finding is not only perverse, but arbitrary, illegal and unreasonable and, therefore, the impugned order passed as a consequence of the said finding deserves to be interfered with. This Court is of the considered view that the writ petitions deserve to be allowed by setting aside the orders impugned herein. Accordingly, the impugned order passed by the 1st respondent is set aside and all the writ petitions are allowed. Consequently, connected miscellaneous petitions are closed. - W.P. NOS. 8296, 8349, 8350 & 8351 OF 2020 AND W.M.P. NOS. 9944, 9945, 10697, 10019 & 10022 OF 2020 - - - Dated:- 27-7-2023 - Honourable Mr. Justice M.Dhandapani For the Petitioners : Mr.K.G.Raghavan, SC, for M/s. Preeti Mohan For the Respondents : Mr. R.Shankara Narayanan, ASG, Assisted by Mr. N.Ramesh, CGSC for R-1, Mr. C.Mohan for M/s.King Partridge for R-2, Mr. P.R.Pragadish for R-3 COMMON ORDER Assailing the impugned order in and by which the 1st respondent had imposed a penalty on the Directors of the Company and also on the company, the present writ petitions have been filed questioning the said order on the main plea that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2005. Vide the approval, permission was granted for investments to be made by Newbridge, which permitted foreign equity participation in foreign exchange upto 74% by way of investment through subscription and/or subsequent acquisition of upto 74% of the equity shares of SHMPL; consequential downstream investment by SHMPL in shares and warrants of each of SIL, STFCL and SOFL. Consequent upon the dilution, the holding of SHMPL in SIL, STFCL and SOFL reduced to 40%. The other terms and conditions on the basis of which approval was granted was also laid out by FIPB. 6. It is the further case of the petitioner that subsequent to the approval granted by FIPB, since SIL was merged with STFCL on the basis of the Scheme of Amalgamation approved by the High Court vide order dated 25.11.2005 with effect from 1.4.2005, which fact was brought to the notice of FIPB, approval was sought for, for making downstream investments only in STFCL and SOFL and amendment to the original approval was sought for, which was approved vide amendment dated 31.01.2006 granting approval in respect of downstream investment by SHMPL in STFCL and SOFL. Pursuant to the grant of approval, inward remittances were rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed STFCL, then SHMPL, with reference to the FC-GPR filed that though approval was obtained from FIPB dated 27.12.2005 as amended on 31.01.2006 for 74% equity participation by Newbridge in SHMPL and downstream investment by SHMPL in STFCL and SOFL, however, it was pointed out by the 2nd respondent that there was no approval for the issue of partly paid and unpaid optionally convertible warrants to Newbridge and accordingly advised SHMPL to obtain post facto approval from FIPB, Ministry of Commerce and Industry for the issue of partly paid and unpaid optionally convertible warrants. 11. Pursuant to the aforesaid communication of the 2nd respondent, STFCL addressed a letter dated 14.3.2013 to the Under Secretary, FIPB, Department of Economic Affairs pointing out that approval was granted by FIPB for the purpose of investments to be made upto 74% and that Newbridge had made investments in 6 tranches from February, 2006 to June, 2009 upto 49% of equity capital of SHMPL and further pointing out the circumstances under which the amendment to the approval was sought for in view of the intervening merger of SIL with STFCL. It was also further brought to the notice of FIPB that warrants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent to issue acknowledgement for the FC-GPRs on the basis of the communication of FIPB. 16. In response to the aforesaid communication, the 2nd respondent had issued a memorandum dated 26.4.2013 by pointing out that the FC-GPRs forms cannot be taken on record for certain contraventions of FEMA, 1999, and the contraventions pointed out by the 2nd respondent related to the delay in reporting the inward remittances; though remittances equivalent to Rs.546,68,36,249/- towards allotment of shares, the shares were allotted only to the tune of Rs.546,67,91,700/-, thereby the excess amount in retention of the company to the tune of Rs.44,549/- for which no shares have been allotted within 180 days from the date of receipt of inward remittances; and that FC-GPR form after the issue of shares was submitted with a delay. It is therefore the specific case of the petitioners that there has been no contravention of FEMA, 1999, insofar as relating to foreign exchange is concerned. 17. It is the further case of the petitioners identifying the aforesaid issues, the 2nd respondent held that they were contraventions of Paras 9 (1)(A), 8 and 9 (1)(b) of Schedule I to notification FEMA 20/2000-R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant Director of the 1st respondent. 20. It is the further case of the petitioners that though explanation was offered by the petitioners, however, the 1st respondent had rendered a finding, inspite of the materials and also the personal representation of the petitioners that the company and its Directors had contravened the provisions of FEMA, 1999 and the Regulations. It is therefore the averment of the petitioners that even at the time of issuance of show cause notice, pre-determination of the issue has been made by the 1st respondent with regard to the allegation of the contravention of the provisions of FEMA, 1999 by the petitioners, which is writ large in the order of the 1st respondent as all the materials placed before it had not been taken into consideration while adjudicating the issue. 21. It is the further case of the petitioners that though detailed reply showing the sequence of events that had taken place had been placed before the 1st respondent in the explanation submitted by the petitioners, however, without properly taking cognizance of the same, the impugned order has come to be passed. It is the further averment of the petitioners that the impugned order ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the 1st respondent, this Court, called upon the learned senior counsel for the petitioners to address this Court as to the maintainability of the writ petitions in the first instance and, thereafter, proceed with the other contentions, so that this Court to decide the issue comprehensively, including on the question of maintainability. 26. In such circumstances, the learned senior counsel appearing for the petitioners addressed this Court on the question of maintainability of the writ petitions in addition to the other contentions. 27. Learned senior counsel appearing for the petitioners submitted that the mere availability of alternative remedy is not an absolute bar to the filing of a writ petition. It is the submission of the learned senior counsel that the rule relating to alternative remedy is only on account of efficacy and convenience rather than on law. It is the further submission of the learned senior counsel that the contention of the respondents, is more on the question of entertainability of the writ petition rather than on the question of maintainability of the writ petition. 28. Pointing to the aforesaid distinction between entertainability and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng March, 2019. The delay in taking action by issuing the show cause notice affects the substratum of the prosecution case and the present show cause notice cannot be allowed to survive. 31. It is the further submission of the learned senior counsel that the policy making body is the Government through the statutory functionaries like DIPP, FIPB, which decisions are implemented by the 2nd respondent, viz., Reserve Bank of India (for short RBI ) by notifying and implementing the amendments to the Regulations. In the case on hand, FIPB has given clearance to the petitioners for the issuance of equity shares and insofar as the warrants issued, which were later converted into equity shares, IFPB has clearly opined that post facto approval was not required as the warrants were already converted into equity shares and that being the case, the 1st respondent cannot sit over the decision of IFPB to decide whether approval has been granted or not or whether IFPB had permitted the particular transaction. 32. It is the further submission of the learned senior counsel that the 1st respondent is only an enforcing authority under the FEMA, 1999 and RBI alone has the power to determine whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B for post facto approval, on the advice of RBI, was not negative by FIPB; rather FIPB had merely indicated that there was no necessity for grant of post facto approval, as the warrants, which stood issued had already been converted into equity shares. It is therefore the submission of the learned senior counsel that had the intention of IFPB that issuance of warrants was per se illegal, necessary action would have been taken by IFPB. But IFPB did not take any action, but merely held that the grant of approval did not arise because of the fact that the warrants stood already converted to equity shares. It is the further submission of the learned counsel that had the issuance of warrants been illegal, IFPB would not have held that approval was not necessary, as by no means, IFPB would have been a party to the alleged illegality. Therefore, the clear indication of IFPB that no approval was necessary as the warrants have been converted into equity shares clearly show that the act of the petitioners in issuing warrants is not illegal and even otherwise, IFPB would have granted post facto approval had the warrants not been converted into equity shares by then. Therefore, the act of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Foreign Compensation Commission Anr. vi) Embassy Property Development Pvt. Ltd. Vs State of Karnataka Ors. vii) LIC of India - Vs Escorts Ltd. Ors. (1986 (1) SCC 264); viii) Commissioner of Customs Vs Aditya Birla Nuvo Ltd. (2021 (378) ELT 42 (Kar.) ix) Titan Industries Ltd. Vs The Addl. Commissioner of Customs, Air Cargo Complex Ors. (2003 (111) ECR 819); x) Titan Medical Systems (P) Ltd. Vs Collector of Customs, New Delhi (2003 (9) SCC 133); xi) Autolite (India) Ltd. Vs Union of India (UOI) Ors. (2003 (5) BomCR 92); xii) Cannon India Pvt. Ltd. Vs Commissioner of Customs (2021 SCC OnLine SC 200); xiii) Indibly Creative Pvt. Ltd. Ors. Vs Government of West Bengal Ors. (2020 (12) SCC 436); xiv) SEBI Vs Sunil Krishna Khaitan Ors. (2023 (2) SCC 643); and xv) R.M.Mehrotra Vs Enforcement Directorate Ors. (MANU/DE/0706/2008) 36. Learned Addl. Solicitor General appearing for the 1st respondent, while fairly conceded that there is no revenue loss to the Government on account of the issuance of share warrants by the petitioners, which have subsequently been converted into equity sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Addl. Solicitor General that only in the yer 2014, RBI, by way of notification dated 30.06.2014 made amendments to Foreign Exchange Management (Transfer of Issue of Security by a Person Resident Outside India) Regulations, 2000, which amendment, brought within its inclusion of the term Warrant , share warrants as well, which could be treated as security within the meaning of Section 2 (za) of FEMA, 1999. 42. It is the further submission of the learned Addl. Solicitor General that in response to the show cause notice issued by the 1st respondent, explanation was submitted by the petitioners in which it has been stated that FDI policy of 2010 mandated that prior approval was required for issuance of warrants by Indian Company to residents outside India and prior to that, there was no prohibition. Further, it was stated by the petitioners that FIPB had in its response to the post facto approval clarified that no permission of FIPB was required and, therefore, the act of the 1st respondent is in derogation to the stand taken by FIPB and the 1st respondent has no jurisdiction to issue the show cause notice. 43. It is the further submission of the learned Addl. Solicit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e year 2005 in contravention of the provisions of FEMA, it is clear whatever not permitted is prohibited . In the absence of any permission granted to the petitioners, the natural corollary would be that there stood a prohibition for the petitioners to issue share warrants and, therefore, there is a clear contravention of the provisions of FEMA. 46. It is the further submission of the learned Addl. Solicitor General that the contention of the petitioners that Section 6 (3)(b) having stood repealed with effect from 15.10.2019 and, therefore, no action can be taken as against the petitioners for any alleged violation is wholly erroneous as the show cause notice was issued on 30.3.2019 when the relevant provision was available under the FEMA and the subsequent repeal of the said provision would not bar the continuance of the legal proceedings, which had been initiated prior to the repealment of the said provision. In this regard, the decision in State of Punjab Vs Mohar Singh (1955 (1) SCR 893) . 47. It is the further submission of the learned Addl. Solicitor General that express omission would also covered u/s 6 of the General Clauses Act in respect of the word Omissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly when there is an appeal remedy available under FEMA, 1999. 53 The power of the High Court to entertain petitions under Article 226 of the Constitution does not stand curbed inspite of availability of alternative remedy. It has been the consistent view of the Courts that the power of the High Court under Article 226 is wide and any attempt to give a narrow construction would militate the spirit of the Constitution. 54. In Whirlpool Corporation Vs Registrar of Trademarks, Mumbai Ors. (1998 (8) SCC 1) , the Apex Court has detailed the circumstances under which, inspite of the availability of an alternative remedy, a writ is maintainable. The relevant portion of the said decision is quoted hereunder :- 14. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement of any of the fundamental Rights contained in Part III of the Constitution but also for any other purpose . 15. Under Articl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sirable to lay down inflexible rules which should be applied with rigidity in every case which comes up before the Court . 19. Another Constitution Bench decision in Calcutta Discount co.Ltd. vs Income Tax Officer Companies Distt. I AIR 1961 SC 372 laid down : Though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment. the High Court will issue appropriate orders or directions to prevent such consequences. Writ of certiorari and prohibition can issue against Income Tax Officer acting without jurisdiction under 8.34 I.T.Act . 20. Much water has since flown beneath the bridge, but there has been no corrosive effect on these decisions which though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a Writ Petition under Article 226 of the Constitution, in spite of the alternative statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edy cannot be accepted. The impugned notice was issued way back in 1994, and after a lapse of fourteen years it would unjust for this Court to direct the Petitioners to take recourse to the appellate procedures under the relevant enactments. 56. Recently, the Apex Court had occasion to reiterate the aforesaid position in the decision in Godrej Sara Lee case (supra) , wherein it has been held as under :- 4. Before answering the questions, we feel the urge to say a few words on the exercise of writ powers conferred by Article 226 of the Constitution having come across certain orders passed by the high courts holding writ petitions as not maintainable merely because the alternative remedy provided by the relevant statutes has not been pursued by the parties desirous of invocation of the writ jurisdiction. The power to issue prerogative writs under Article 226 is plenary in nature. Any limitation on the exercise of such power must be traceable in the Constitution itself. Profitable reference in this regard may be made to Article 329 and ordainments of other similarly worded articles in the Constitution. Article 226 does not, in terms, impose any limitation or restraint on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion by a high court on the ground that the petitioner has not availed the alternative remedy without, however, examining whether an exceptional case has been made out for such entertainment would not be proper. 5. A little after the dawn of the Constitution, a Constitution Bench of this Court in its decision reported in 1958 SCR 595 (State of Uttar Pradesh vs. Mohd. Nooh) had the occasion to observe as follows: 10. In the next place it must be borne in mind that there is no rule, with regard to certiorari as there is with mandamus, that it will lie only where there is no other equally effective remedy. It is well established that, provided the requisite grounds exist, certiorari will lie although a right of appeal has been conferred by statute, (Halsbury s Laws of England, 3rd Edn., Vol. 11, p. 130 and the cases cited there). The fact that the aggrieved party has another and adequate remedy may be taken into consideration by the superior court in arriving at a conclusion as to whether it should, in exercise of its discretion, issue a writ of certiorari to quash the proceedings and decisions of inferior courts subordinate to it and ordinarily the superior court will decli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, it is necessary for this Court to consider whether the writ could be entertained, as the main ground of attack is the jurisdiction of the 1st respondent to pass the impugned order. 59. The main ground canvassed by the petitioner with regard to ouster of jurisdiction of the 1st respondent, in respect of the issue on hand is the fact that the 1st respondent is merely an enforcer and not the custodian and in respect of any regulation with regard to conservation of foreign exchange, it is only the RBI, which has the authority to grant permission or otherwise. However, to the contrary, it is the stand of the 1st respondent that it has jurisdiction to deal with the issue, as, as an enforcer, the 1st respondent is to see whether the petitioners have obtained the requisite permission with regard to involving in the transaction of foreign exchange with an off-shore entity. 60. There could be no contra opinion that RBI is the authority vested with the powers relating to the regulation and conservation of foreign exchange and, in fact, in the words of the Apex Court in LIC s case (supra) , RBI is the custodian-general of foreign exchange. Necessarily any permission with regard to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2), the Reserve Bank may, by regulations prohibit, restrict or regulate the following :- (a) transfer or issue of any foreign security by a person resident in India; (b) transfer or issue of any security by a person resident outside India; * * * * * * * 63. When the show cause notice was issued on 30.03.2019, Section 6 (3) (b) was available in the statute. However, subsequently, the said provision has been repealed with effect from 15.10.2019 and no longer subsists. However, the present impugned order had come to be passed on 04.03.2020 after repeal of the provision and, therefore, according to the petitioners, the order passed by the 1st respondent is without jurisdiction. 64. However, in this regard, learned Addl. Solicitor General placed reliance on the decision of the Apex Court in State of Punjab Vs Mohar Singh (1955 (1) SCR 893 :: AIR 1955 SC 84) , wherein the effect of repealment and order passed subsequent thereto has been dealt with. The relevant portion of the said decision is quoted hereunder :- The High Court, in support of the view that it took, placed great reliance upon certain observations of Sulaiman C.J. in Danmal Parshotamdas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the consequences laid down in section 6 of the General Clauses Act will follow unless, as the section itself says, a different intention appears. In the case of a simple repeal there is scarcely any room for expression of a contrary opinion. But when the repeal is followed by fresh legislation on the same subject we would undoubtedly have to look to the provisions of the new Act, but only for the purpose of determining whether they indicate a different intention. The line of enquiry would be, not whether the new Act expressly keeps alive old rights and liabilities but whether it manifests an intention to destroy them. We cannot therefore subscribe to the broad proposition that section 6 of the General Clauses Act is ruled out when there is repeal of an enactment followed by a fresh legislation. Section 6 would be applicable in such cases also unless the new legislation manifests an intention incompatible with or contrary to the provisions of the section. Such incompatibility would have to be ascertained from a consideration of all the relevant provisions of the new law and the mere absence of a saving clause is by itself not material. It is in the light of these principles that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l granted by FIPB, the crux of the whole issue requires to be looked into. 69. Necessary permission was solicited from FIPB for the purpose of receiving foreign exchange to the extent of about Rs.600 Crores by SHMPL from the off-shore entity from Mauritius, viz., Newbridge. Pursuant to the above, approval sought for was granted by FIPB for subscription of upto 74% of equity share capital so as to enable SHMPL to make further downstream investments into STFCL, vide its communication dated 27.12.2005. 70. Pursuant to the above, foreign investments were received by the petitioners and the details of the amounts received have been given by the petitioner in its affidavit and for better appreciation, the same is quoted hereunder :- Sl.No. Date of Allotment Details of Instrument as contained in FC-GRP No. of instruments Date of remittance Amount Received as per FIRC. In INR 1 02.02.2006 Equity shares 6868696 02.02.2006 324,80,00,000/- 2 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no implicit approval for the issue of partly paid and unpaid optionally convertible warrants to Newbridge and, therefore, the petitioners were advised to obtain post facto approval from FIPB in respect of the partly paid and unpaid optionally convertible warrants. 74. Pursuant thereto, the petitioners addressed their communication dated 14.3.2013 to FIPB seeking post facto approval by pointing out that approval granted by FIPB to investments to be made upto 74% of which investments have been made only to the tune of 49% of the equity capital, which is within the approved limit and, therefore, sought for post facto approval with regard to the share warrants issued by further pointing out that the said share warrants, which were issued, were already converted to equity shares within a period of 18 months from the date of allotment. 75. In response to the aforesaid communication, FIPB, vide its response dated 20.03.2013 had replied that the policy regarding issue of warrants at the material time was not explicit. Since the warrants in question have already been converted even before the current policy was formulated, as such approval of FIPB s not required at this point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the transferee becomes a shareholder in the true and full sense of the tern, with all the rights of a shareholder, only when the transfer is registered in the company's register. A transfer effective between the transferor and the transferee is not effective as against the company and persons without notice of the transfer until the transfer is registered in the company's register. Indeed until the transfer is register in the books of the company the person whose name is found in the register alone is entitled to receive the dividends, notwithstanding that he has already parted with his interest in the shares. However, on the transfer of shares, the transferee becomes the owner of the beneficial interest though the legal title continues with the transferor. The relationship of trustee and 'cestui que trust' is established and the transferor is bound to comply with all the reasonable directions that the transferee may give. He also becomes a trustee of the dividends as also of the right to vote. The right of the transferee 'to get on the register' must be exercised with due diligence and the principle of equity which makes the transferor a constructive tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the scheme of the Act, it is the Reserve Bank of India that is constituted and entrusted with the task of regulating and conserving foreign exchange. If one may use such an expression, it is the 'custodian-general' of foreign exchange. The task of enforcement is left to the Directorate of Enforcement, but it is the Reserve Bank of India and the Reserve Bank of India alone that has to decide whether permission may or may not be granted under Section 29(1) of the Act. The Act makes it its exclusive privilege and function. No other authority is vested with any power nor may it assume to itself the power to decide the question whether permission may or may not be granted or whether it ought or ought not to have been granted. The question may not be permitted to be raised either directly or collaterally. We do not, however, rule out the limited class of cases where the grant of permission by the Reserve Bank of India may be questioned, by an interested party in a proceeding under Article 226 of the Constitution, on the ground that it was mala fide or that there was no application of the mind or that it was opposed to the national interest as contemplated by the Act, being in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o equity shares. 82. The interregnum infraction in issuance of share warrants and subsequent conversion into equity shares invited the investigation of the 1st respondent, resulting in the show cause notice and the subsequent impugned order. 83. It has been the ratio of the Supreme Court even in LIC case (supra) that RBI is the custodian general of foreign exchange. In the present case, the foreign investment was approved by FIPB. However, with respect to the issuance of warrants, even the 2nd respondent had called upon the petitioners to obtain post facto approval of FIPB. As aforesaid, the 2nd respondent being the custodian general of foreign exchange, had it felt that Section 6 (3) (b) was infracted by the petitioners as permission was explicitly required for issuance of warrants, definitely the 2nd respondent would not have relegated the petitioners to go before FIPB and obtain post facto approval. This clearly shows that the 2nd respondent was of the view that there was no prohibition u/s 6 (3) (b) on issuance of warrants. However, as the 2nd respondent felt that approval was initially granted by FIPB, an explicit post facto approval was directed to be obtained f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven if FIPB had felt that a permission was required, though there was no prohibition for issuance of warrants, FIPB would have accorded post facto approval. However, the fact that FIPB has made it clear that no post facto approval was required clearly shows that there was no prohibition in the issuance of warrants at the material point of time. 88. Further, one other aspect, which also gives more impetus to the case of the petitioners is sub-section (3) of Section 6, which is as under :- (3) Without prejudice to the generality of the provisions of sub-section (2), the Reserve Bank may, by regulations prohibit, restrict or regulate the following. 89. As on the relevant date when the share warrants were issued, there was no regulations bny the 2nd respondent prohibiting the issue of share warrants, which was the only reason the 2nd respondent had directed the petitioners to approach FIPB to obtain post facto approval. If really there were any regulations, or even implied prohibition in the issuance of share warrants, RBI being the custodian general of foreign exchange, would definitely have called upon the explanation of the petitioners. However, without calling fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Apex Court in LIC case (supra) , except for the RBI and in this case FIPB, no other authority is vested with any power nor may it assume to itself the power to decide the question whether permission may or may not be granted or whether it ought or ought not to have been granted and the question cannot be raised by any authority either directly or indirectly, even by the 1st respondent. 94. Further, the investment by Newbridge in the petitioner company though approved to the extent of 74% of equity shares, only 49% has been invested in the petitioner company. The finding recorded by the 1st respondent is that the approval of FIPB is permission of investment through subscription and/or subsequent acquisition of upto 74% of the equity shares of M/s.SHMPL and not warrants. However, it is not clear from where the 1st respondent has culled out that warrants were not permitted. In fact, the terminology used in the approval is that it is investment through subscription and/or subsequent acquisition of upto 74% . A harmonious reading of the above approval would only go to mean that subsequent to the subscription, subsequent acquisition can be made upto 74% of the equity shares an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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