RBI compounds FEMA violations in Joinmay, Universal Biofuels cases

Mumbai, June 9 (SocialNews.XYZ) The Reserve Bank of India (RBI) has issued compounding orders under Section 15 of Foreign Exchange Management Act, 1999 (FEMA), in the separate cases of Joinmay Electronic Private Limited and Universal Biofuels Private Limited, which has resulted in the termination of investigation against the two companies for contraventions of provisions of the act, according to a press statement issued by the Directorate of Enforcement (ED).

The order in each case has been passed by the RBI after issuance of "No Objection" by the ED, the statement said.

Section 15 provides a mechanism for individuals or companies to voluntarily admit to a violation of FEMA regulations, pay a penalty, and regularise the contravention without undergoing lengthy litigation or legal proceedings.

In the Joinmay Electronic Private Limited case, the ED took up the investigation based on credible information received on the delay in reporting of receipt of foreign inward remittance towards subscription of equity instruments covering a total amount of Rs 10 crore.

The company, later on, filed an application before the RBl for compounding of the said contraventions under the FEMA as per the provisions of Section 15. On reference from the RBI, the ED issued no objection for the compounding in line with the true spirit of the act.

Accordingly, the RBI, based on the ED's response, has compounded the said contraventions with a one-time payment of Rs 26,750. This has resulted in the termination of further investigation under the provisions of FEMA against the company with regard to the contravention.

In the case of Universal Biofuels Private Limited, an investigation was taken up by the ED based on the credible information received under the provisions of FEMA. After completion of the investigation, the ED filed a complaint before the Adjudicating Authority regarding the company failing to undertake exports within one year from the date of receipt of advance payment in contravention of regulations. The total value involved in the breach of regulations amounted to Rs 39.07 crore.

The company, later on, filed an application before the RBI for compounding of the said contravention under FEMA as per the provisions of Section 15. On reference from RBl, the ED issued no objection to such compounding, and accordingly, the RBI compounded the contravention with a one-time payment of Rs 29.81 lakh. This has resulted in the termination of adjudication proceedings under the provisions of FEMA against the company with regard to the aforementioned contravention, as well as further litigation, the statement added.

Source: IANS