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TMI Blog2024 (10) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... introduced on 12.02.2015 itself though with liberty to make reporting manually. In view of the above, we are unable to accept the excuse taken by the appellant in reference to teething problems. Teething problem, if substantiated, may remain initially but not in deplorable form under operation for a year before making it compulsory. Thus, the lame excuse taken by the appellant cannot be accepted to justify the delay. It is more so when there is no material placed on record to prove any teething problem in reporting. The appellant had not placed on record that even other Company also faced the difficulties which the appellant faced to substantiate their plea/excuse. The appellants no doubt have made reference of the letter sent to the RBI to seek excuse for delay in reporting and issuance of UIN. The RBI is not the authority to take up the matter of delay rather if reporting is made even with delay, UIN can be issued. It is not that for delayed reporting, UIN cannot be issued by the RBI. Thus, the letters sent to the RBI cannot fill the gap and prove the case in favour of the appellant which otherwise has not substantiated with material. In view of the above, we are unable to accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E COURT] It is necessary to clarify that so far as the regulations are concerned, it has not been framed by the Central Government and thereby the Regulations framed by the RBI remain in operation pursuant to Section 47(3) of the Act of 1999 as amended and when it was in continuity, the appellant cannot take excuse regarding repeal/omission of the provision in the light of operation of Section 6 and 6A of the General Clauses Act read with Section 24. The issue is squarely covered by the judgment in the case of Fibre Boards Pvt. Ltd. [ 2015 (8) TMI 482 - SUPREME COURT] . In the light of the discussion made above, we do not find even any legal ground to assail the order of the Adjudicating Authority. Quantum of penalty imposed on the appellant - We find reasons to interfere in the amount of penalty. It is true that the FDI for a sum of more than Rs. 204 crores was received by the appellant and it was required to be reported within a period of 30 days. The delay is of 24 days but for it the penalty of Rs. 20 crores on the Company and Rs. 5 crores on the Director is excessive in our opinion. Reasonableness in imposition of penalty needs to be shown and accordingly we cause interference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcular to provide online filing of the ARFs from 08.02.2016. The physical filing of the form was discontinued. 4. The appellant received the FDI of USD 3,09,00,000 equivalent to Rs. 204,91,04,000/- under automatic route of FDI policy of the Government of India. The receipt of FDI was permissible under Section 6 of FEMA for which no prior approval of the RBI or Government of India was required in terms of Regulation of 2000. 5. The appellant Company faced teething issues and difficulties in online filing system as it was relatively new thus the delay of 24 days occurred in reporting FDI remittance. The appellant Company reported the FDI through the Standard Chartered Bank on 13.06.2016. An application for condonation of delay in filing ARFs was submitted to the RBI on the ground that the Company attempted to file the reporting within the stipulated time, however, on account of teething problem in the online filing system, unwarranted delay in the reporting occurred. The RBI was further requested to allot the UIN against those ARFs. The appellant was allotted the UIN post reporting of the remittance thus it impliedly means condonation of delay by the RBI. 6. It is after six years tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th a prayer to condone the delay and issue the UIN. The RBI issued UIN and thereby presumption of condonation of delay was gathered by the appellant. The fact aforesaid has been ignored by the Adjudicating Authority. 10. The imposition of penalty was even in ignorance of the fact that subsequent to the bonafide default in reporting, the appellant Company did not commit any delay in reporting. In ignorance of the aforesaid, heavy penalty has been imposed without any loss to the respondent. It was at the best a case of technical default and in view of the catena of judgments of the Apex Court, the penalty could not have been imposed. The Adjudicating Authority ignored the aforesaid while imposing heavy penalty on the appellant. 11. It was lastly submitted that as per the provisions of FEMA, the penalty in the present case could have been maximum of Rs. 2 lakhs and not of Rs. 20 crores on the Company and Rs. 5 crores on the Director. It was not a case where any sum was involved so as to impose penalty three times to the amount rather being a technical default, the penalty could have been maximum of Rs. 2 lakhs. 12. Learned counsel for the appellant raised a legal issue and submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to promote and ease reporting of transaction of FDI under the aegis of e-Biz project for online filing of Foreign Currency Transfer of Shares. The online system was made compulsory w.e.f. 08.02.2016 and in that case also there could not have been any teething problem as online system was operational for almost a year prior to making it compulsory. No material could be produced by the appellant to prove any teething problem. The statement of fact regarding technical problem is also vague. If the appellant had faced any difficulty online, the material to make efforts for reporting of FDI would have been placed on record or could have been specified as to how they suffered technical difficulties. Thus, the lame excuse taken by the appellant may not be accepted. 16. It is more so when the appellant is a reckoned defaulter in reporting of FDI because in previous many years also they committed default in reporting. It is not for the first time that there was delay in reporting but such delay has been committed by the appellant even in the past. An application for compounding was submitted thereupon. 17. Coming to the legal issue, learned counsel submitted that notice was issued in refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n reference to the amendment, to repeal Section 6(3)(b) is of no consequence. 21. The learned counsel further submitted that there was delay in initiation of action by the respondent. The Directorate does not get information about delay in reporting rather it remains with the concerned bank where transaction of FDI is made or to the RBI. The respondent could know later on and immediately thereupon the proceedings were initiated by seeking information from the bank about the FDI transaction of a sum more than 204 crores. On receipt of information and getting necessary material, the summons were issued to the appellant immediately. Thus, there was no delay in initiation of the action. 22. It is further submitted that the default of the appellant in reporting FDI beyond a period of 30 days cannot be termed to be a technical default so as to ignore it and thereby not to impose penalty. If on the pretext of technical default, no penalty is to be imposed then there would be no sanctity of the provisions of the Act and Regulation. No one would bother to make reporting of the FDI within the time prescribed if no penalty is to be imposed. If there would be delay, the excuse of technical def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty in India, other than a lease not exceeding five years, by a person resident outside India; (j) giving of a guarantee or surety in respect of any debt, obligation or other liability incurred- (i) by a person resident in India and owed to a person resident outside India; or (ii) by a person resident outside India . The provision quoted above was omitted by the Act of 20 of 2015 w.e.f. 15.10.2019. Reference of Para 9(1)(A) of Schedule-I of Regulation 5(1) of the Regulation of 2000 would also be relevant and is quoted hereunder: 9. Report by the Indian Company. (1) An Indian Company issuing shares or convertible debentures in accordance with these Regulations shall submit through AD Bank to the Regional Office concerned of the Reserve Bank under whose jurisdiction the Registered Office of the company operates, (A) not later than 30 days from the date of receipt of the amount of consideration for issue of shares or convertible debentures or warrants, a report in the form specified in Annex. `C' to this schedule along with a copies of Foreign Inward Remittance Certificate (FIRC), Know Your Customer (KYC) Report on the non-resident investor and details of the Government approv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elay, UIN can be issued. It is not that for delayed reporting, UIN cannot be issued by the RBI. Thus, the letters sent to the RBI cannot fill the gap and prove the case in favour of the appellant which otherwise has not substantiated with material. In view of the above, we are unable to accept the case of the appellant on facts to find justification in delay in making report of the FDI. It is more so when appellant Company committed default in reporting in previous years also and for that an application for compounding was filed and for it learned counsel for the respondent has submitted documents to show an application by the appellant for compounding for the delay caused in reporting of FDI. It was not that for the first time but on several occasions, appellant caused delay in making report of FDI. The facts are relevant to analyse the bonafide of the appellant company and even in reference to justification for imposition of the penalty of the nature imposed herein. 29. At this stage, we would also analyse as to whether delay in reporting should be considered only as a technical default so that no penalty be imposed. Learned counsel for the appellant has given reference to the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rivilege, obligation, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed. 6A. Repeal of Act making testual amendment in Act or Regulation. - Where any (Central Act) or Regulation made after the commencement of this Act repeals any enactment by which the text of any (Central Act) or Regulation was amended by the express omission. 24. Continuation of orders, etc. issued under enactments repealed and re-enacted.- Where any (Central Act) or Regulation is, after the commencement of this Act, repealed and re-enacted with or without modification, then, unless it is otherwise expressly provided, any (appointment, notification), order, scheme, rule, form or bye-law (made or) issued under the repealed Act or Regulation, shall so far as it is not inconsistent with the provisions re-enacted, continue in force, and be deemed to have been (made or) issued under the provisions re-enacted, continue in force, and be deemed to have been (made or) issued under the provisions so re-enacted, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seded by any 45 [appointment notification,] order, scheme, rule, form or bye-law, 45[made or] issued under the provisions so re-enacted 46 [and when any 44 [Central Act] or Regulation, which, by a notification under section 5 or 5A of the Scheduled Districts Act, 1874, (14 of 1874) or any like law, has been extended to any local area, has, by a subsequent notification, been withdrawn from the re- extended to such area or any part thereof, the provisions of such Act or Regulation shall be deemed to have been repealed and re-enacted in such area or part within the meaning of this section] 20. In Poonjabhai Vanmalidas v. Commissioner of Income Tax, Ahmedabad, 1992 Supp. (1) SCC 182, this Court in construing Section 24 of the General Clauses Act held:- 7. The effect of Section 24 of the General Clauses Act, 1897, insofar as it is material, is that where the repealed and re-enacted provisions are not inconsistent with each other, any order made under the repealed provisions is deemed to be an order made under the re-enacted provisions. The question, therefore, is whether the provisions of the repealed Section 10(2)(xi), under which the bad debts were written off as irrecoverable in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons issued under the 1947 Act. We are further of the opinion that the High Court committed a mistake of law by holding that as notifications have not expressly been saved by Section 30 of the Act, those would not enure or survive to govern any investigation done or legal proceedings instituted in respect of the cases registered under the 1988 Act. There is no dispute that the 1988 Act is both repealing and re-enacting the law relating to prevention of corruption to which the provisions of Section 24 of the General Clauses Act are specifically applicable. It appears that as Section 6 of the General Clauses Act applies to repealed enactments, the legislature in its wisdom thought it proper to make the same specifically applicable in the 1988 Act also which is a repealing and re-enacted statute. Reference to Section 6 of the General Clauses Act in sub-section (1) of Section 30 has been made to avoid any confusion or misunderstanding regarding the effect of repeal with regard to actions taken under the repealed Act. If the legislature had intended not to apply the provisions of Section 24 of the General Clauses Act to the 1988 Act, it would have specifically so provided under the enact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 24 would have no application. 24. Shri Prasad is correct in relying upon these two Constitution Bench judgments for they do indeed say that in Section 6 of the General Clauses Act, the word repeal would not take within its ken an omission . 25. In Rayala Corporation (P) Ltd., what fell for decision was whether proceedings could be validly continued on a complaint in respect of a charge made under Rule 132A of the Defence of India Rules, which ceased to be in existence before the accused were convicted in respect of the charge made under the said rule. The said Rule 132A was omitted by a notification dated 30th March, 1966. What was decided in that case is set out by paragraph 17 of the said judgment, which is as follows: 17. Reference was next made to a decision of the Madhya Pradesh High Court in State of Madhya Pradesh v. Hiralal Sutwala [AIR 1959 MP 93] but, there again, the accused was sought to be prosecuted for an offence punishable under an Act on the repeal of which Section 6 of the General Clauses Act had been made applicable. In the case before us, Section 6 of the General Clauses Act cannot obviously apply on the omission of Rule 132-A of the DIRs for the two obviou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouring the reference to a larger bench, ultimately it decided that the prosecution in cases of noncompliance of the provision therein contained was only transitional and cases covered by it were few and far between, and hence found on facts that it was not an appropriate case for reference to a larger bench. 29. We may also point out that in G.P. Singh's Principles of Statutory Interpretation, 12th Edition, the learned author has criticized the aforesaid judgments in the following terms: Section 6 of the General Clauses Act applies to all types of repeals. The section applies whether the repeal be express or implied, entire or partial or whether it be repeal simpliciter or repeal accompanied by fresh legislation. The section also applies when a temporary statute is repealed before its expiry, but it has no application when such a statute is not repealed but comes to an end by expiry. The section on its own terms is limited to a repeal brought about by a Central Act or Regulation. A rule made under an Act is not a Central Act or regulation and if a rule be repealed by another rule, section 6 of the General Clauses Act will not be attracted. It has been so held in two Constitutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act making textual amendment in Act or Regulation - Where any Central Act or Regulation made after the commencement of this Act repeals any enactment by which the text of any Central Act or Regulation was amended by the express omission, insertion or substitution of any matter, then, unless a different intention appears, the repeal shall not affect the continuance of any such amendment made by the enactment so repealed and in operation at the time of such repeal. 33. A reading of this Section would show that a repeal can be by way of an express omission. This being the case, obviously the word repeal in both Section 6 and Section 24 would, therefore, include repeals by express omission. The absence of any reference to Section 6A, therefore, again undoes the binding effect of these two judgments on an application of the 'per incuriam' principle.[1] 34. Thirdly, an earlier Constitution Bench judgment referred to earlier in this judgment, namely, State of Orissa v. M.A. Tulloch Co., [1964] 4 SCR 461 has also been missed. The Court there stated: .Now, if the legislative intent to supersede the earlier law is the basis upon which the doctrine of implied repeal is founded could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would be binding or be per incuriam. After detailed analysis. It has been held that repeal or express omission and substitution of any provision unless a different intention appears, the repeal/omission shall not affect the continuance of such enactment by the enactment so repealed and in operation at the time of such repeal. The detailed discussion on the issue has been made to show that words repeal and omission are interchangeable and even there is express omission of the provision it would remain in operation in a given case detailed out by the Apex Court. The judgments of the Apex Court in the case of Rayala Corporation (P) Ltd. and also of Kolhapur Canesugar Works Ltd. (supra) were considered at length. In the case of Rayala Corporation (P.) Ltd. (supra), the Apex Court failed to consider earlier judgment of the Constitution Bench and thereby after detailed discussion, the judgment in the case of Fibre Boards Pvt. Ltd. (supra) was given. 33. Another judgment in the case of Shree Bhagwati Rolling Mills (supra) is also on the subject matter. However, the detailed reference of the said judgment by quoting the paras is not required as the issue is otherwise covered by the judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill it is rescinded or amended by the Central Government. 35. The reference of the Regulation of 2017 has been given which was issued by the Reserve Bank of India and in exercise of the power conferred by clause (b) of sub-section 3 of Section 6. The reporting requirement was made under Regulation 13 of the Regulation and is quoted hereunder: 13. Reporting requirements 13.1 The reporting requirement for any Investment in India by a person resident outside India shall be as follows: (1) Advance Remittance Form (ARF): An Indian company which has received amount of consideration for issue of capital instruments and where such issue is reckoned as Foreign Direct Investment for the purpose of these regulations, shall report such receipt (including each upfront/call payment) in ARF to the Regional Office concerned of the Reserve Bank, not later than 30 days from the date of receipt . 36. The rules aforesaid were brought to regulate investment in India by person resident out of India. The Central Government thereafter notified the Regulations of 2019, namely, Foreign Exchange Management (Non-debt Instruments) Rules, 2019. It was in supersession of the Foreign Exchange Management (Transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etween a person resident outside India holding equity instruments on a non-repatriable basis and person resident in India is not required to be reported in Form FC-TRS. (b) Transfer of equity instruments on a recognised stock exchange by a person resident outside India shall be reported by such person in Form FC-TRS. (c) Transfer of equity instruments prescribed in Rule 9(6) of the Rules, shall be reported in Form FC-TRS on receipt of every tranche of payment. The onus of reporting shall be on the resident transferor / transferee. (d) Transfer of 'participating interest / rights' in oil fields shall be reported Form FC-TRS. The form FCTRS shall be filed within sixty days of transfer of equity instruments or receipt / remittance of funds whichever is earlier. (4) Form Employees' Stock Option (ESOP): An Indian company issuing employees' stock option to persons resident outside India who are its employees / directors or employees / directors of its holding company / joint venture / wholly owned overseas subsidiary / subsidiaries shall file Form-ESOP, within 30 days from the date of issue of employees' stock option. (5) Form Depository Receipt Return (DRR): The Dome ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y an Indian start-up company shall report such transfers to or from a person resident outside India, as the case may be, in Form CN within 30 days of such transfer. Provided, the format, periodicity and manner of submission of such reporting shall be as prescribed by Reserve Bank in this regard. Provided further that unless otherwise specifically stated in these regulations all reporting shall be made through or by an Authorised Dealer bank, as the case may be. 5. Delays in reporting The person / entity responsible for filing the reports provided in Regulation 4 above shall be liable for payment of late submission fee, as may be decided by the Reserve Bank, in consultation with the Central Government, for any delays in reporting. (Ajay Kumar Misra) Chief General Manager-in-charge 37. It is necessary to clarify that so far as the regulations are concerned, it has not been framed by the Central Government and thereby the Regulations framed by the RBI remain in operation pursuant to Section 47(3) of the Act of 1999 as amended and when it was in continuity, the appellant cannot take excuse regarding repeal/omission of the provision in the light of operation of Section 6 and 6A of the G ..... X X X X Extracts X X X X X X X X Extracts X X X X
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