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TMI Blog2024 (11) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... t therefore, follows that the amount of the penalty which is to be imposed by the Adjudicating Authority is a matter of discretion which, of course, is necessarily required to be exercised judiciously after taking into account the facts of the case and the evidence placed before it. While the Respondents have met with the compliances required under Paragraph 9(1)(A), they have failed to meet with the compliances required under Paragraph 9(1)(B). It does appear that the failure to comply with the requirements of Paragraph 9(1)(B) was due to unawareness of such requirements. However, the satisfaction of the conditionalities imposed under Paragraph 9(1)(A) did bring the fact of inflow of foreign remittance for issuance of share by the Appellant Company, to the knowledge of the RBI. Failure to report in Form FC-GPR deprived the RBI of the information about the compliances required to be met while issuing the shares by the Company. It is also noted that there is no dispute about the Appellant individual being the Director of the Company at the relevant time, who was responsible for its day to day operations. Thus, penalties imposed by the Ld. Adjudicating Authority on the two Appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l further informed that the Respondent No. 2 was the Director of the Company at the relevant time and was responsible for its day to day operations. 4. Ld. Counsel contended that the Ld. Adjudicating Authority while imposing the penalties has failed to take into consideration that the amount involved in the contravention is Rs. 67,50,00,000/-. The Ld. Counsel further argued that the penalty imposed under the impugned order is bereft of any rationale as it is the result of arbitrary exercise of discretion by the Ld. Adjudicating Authority. The Ld. Counsel furthermore argued that the meagre and insufficient penalty frustrates the purpose and object of the FEMA Act, 1999, and it would thus fail to secure the strict compliance to the Act and its Regulations. 5. Ld. Counsel further stated that the Respondent No. 1 has not as yet complied with the said requirement of reporting/ submitting Form FC-GPR. The Ld Counsel for the Appellant prayed for allowing the present appeal so as to enhance the penalty amounts imposed on the two Respondents. 6. Ld. Counsel for the Respondents stated that the Respondent(s) have complied with the provisions of Paragraph 9(1)(A) of the Schedule 1 to FEMA Regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of Schedule 1 of the said Regulations: Schedule I [See Regulation (5)(1)] Foreign Direct Investment Scheme 9. Report by the Indian Company (1) An Indian company issuing shares or convertible debentures in accordance with these Regulations shall submit to Reserve Bank, A) not later than 30 days from the date of receipt of the amount of consideration, a report indicating: i) Name and address of the foreign investors. ii) Date of receipt of funds and their rupee equivalent ii) Name and address of the authorised dealer through whom the funds have been received, and iv) Details of the Government approval, if any. B) not later than 30 days from the date of issue of shares, a report in form FC-GPR together with, i) a certificate from the Company Secretary of the company accepting investments from persons resident outside India certifying that: (a) all the requirements of the Companies Act, 1956 have been complied with; (b) terms and conditions of the Government approval, if any, have been complied with; (c) the company is eligible to issue shares under these Regulations; (d) the company has all original certificates issued by authorised dealers in India evidencing receipt of amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant. She relied upon the judgement dated 04.08.1969 of the Hon ble Supreme Court in Hindustan Steel Ltd. V/s State of Orissa[(1969) 2 SCC 627] that an order imposing penalty for failure to carry out a statutory obligation is the result of quasi-criminal proceeding and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or acted in conscious disregard of its obligation. She further cited the judgement dated 14.08.1977 of the Hon ble Supreme Court in State of M.P. Ors. v/s Bharat Heavy Electricals [(1977) 7 SCC 1] that even if provisions for penalty prescribed the maximum limit and if it does not prescribe an irreducible amount, then the authority can use its discretion. 12. We note the ratio propounded in the decision of the Hon ble Supreme Court in the case of The Chairman, SEBI v/s Shriram Mutual Fund Anr. [AIR 2006 SC 2287] wherein it was held, in our considered opinion, penalty is attracted as soon as the contravention of the statutory obligations as contemplated in the Act and Regulation is established and hence the intention of the parties committing such violations becomes wholly irrelevant. A breach of civil obliga ..... X X X X Extracts X X X X X X X X Extracts X X X X
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