Once a contravention has been compounded, no further proceedings can be initiated or continued against the person committing the contravention.

JUDGMENT :

MILIND N. JADHAV, J.

1. Petitioner No.1 is a public limited company engaged in the business of import of copper concentrate from abroad and after processing manufactures various products of copper, i.e., copper cathodes, rods, wires, transmission cables etc. out of the same. Petitioner Nos.2 to 5 are directors of petitioner No.1. Petitioner No.1 effected a foreign remittance of Rs.203.82 crore, i.e., US$43.5 million through Centurion Bank towards acquisition of 100% equity stake of Monte Cello B.V., Netherlands from its holding company Monte Cello Corporation NV, Netherlands under "Automatic Route" of Reserve Bank of India as prescribed in the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2000 ("the said Regulations"). On 22.11.2000, petitioner No.1 informed the Reserve Bank of India about the said transaction. Vide letter dated 28.02.2001, an "Unique Identification Number" was allotted to the said transaction by the Reserve Bank of India. The acquired company holds 100% shares in two copper mines in Australia which have thus become wholly owned subsidiaries of petitioner No.1.

2. On 11.06.2008, respondent No.1, i.e., the Special Director of Enforcement, Ministry of Finance, Government of India issued a consolidated show-cause-notice to petitioner Nos.1 to 5 alleging that petitioners, by remitting US$43.50 million for acquisition of two copper mines in Australia in the year 2000, had contravened the provisions of section 6(3)(a) read with section 42(1) and 42(2) of the Foreign Exchange Management Act, 1999 ("the said Act") read with Regulations 2, 3, 5, 6 and 9 of the said Regulations.

3. On 23.07.2008, petitioners filed compounding applications before the Chief General Manager, Reserve Bank of India, the Compounding Authority for compounding of the contravention alleged in the show-cause-notice in exercise of powers under section 15(1) of the said Act read with the said Regulations. In the application, it was specifically mentioned that respondent No.1 had issued a show-cause-notice dated 11.06.2008 to petitioners on a complaint under sub-section (3) of section 16 of the said Act made by the Assistant Director of Enforcement Directorate (FEMA), Ministry of Finance, Government of India. Petitioners were accorded an opportunity of personal hearing by the Compounding Authority, i.e., the Chief General Manager, Reserve Bank of India. Various submissions were advanced by petitioners before the Compounding Authority, inter alia, stating that the company was not under any investigation under FEMA at the time of making remittance for direct overseas investment; that in terms Regulations 2(d) of the Notification No.FEMA/19/2000-RB- dated 03.05.2000, 'core activity' was defined as activity carried on by an Indian entity constituting 50% of its average turnover in the previous accounting year and since the turnover of petitioner No.1 from copper based products was 67.48%, direct investment was made in a 'core activity', i.e., acquisition of copper mines and therefore prior permission from the Reserve Bank of India could not be required; that in Form ODA, i.e., application submitted by petitioner No.1 to the Reserve Bank of India after remitting the direct overseas investment, the 'core activity' mentioned was 'manufacturing of copper'. The Chief General Manager, Reserve Bank of India considered the submissions of petitioner No.1 alongwith the documents placed on record and passed five separate Compounding orders in respect of petitioner Nos.1 to 5, all dated 20.11.2008, inter alia, compounding the admitted contravention namely the contravention of section 6(3)(a) of the said Act read with Regulations 2, 3, 5, 6 and 9 of the said Regulations and directed payment of Rs.25 lakhs by petitioner No.1 as condition precedent for compounding the contravention. Identical orders, all dated 20.11.2008 were also passed in respect of petitioner Nos.2 to 5, however, they were directed to deposit an amount