The main legal point established in the judgment is the application of the doctrine of proportionality in imposing penalties under FEMA and the requirement for justifying the imposition of maximum penalties.

JUDGMENT :

Neela Gokhale, J.

1. These Appeals under Section 35 of the Foreign Exchange Management Act, 1999 (“FEMA”) are directed against order dated 11th July 2019 passed by the Appellate Tribunal for SAFEMA, FEMA, NDPS, PMLA & PBPT Act (“the Tribunal”), modifying the order passed by the Special Director of Enforcement to the extent of reducing the quantum of total penalty imposed upon the Appellants which totaled to Rs.98.35 Crores to Rs.15 Crores only. The Tribunal has thus held that the amount of Rs.15 Crores already deposited by Appellants pursuant to the directions of this Court dated 21st January 2015 is reasonable and the same be treated as penalty for the contravention of the Act as held by the Tribunal.

2. The facts emerging from the Appeals are:

(a) On receipt of information, inquiries were initiated by the Mumbai Zonal Office of the Directorate of Enforcement in the functioning of the Twenty-Twenty cricket tournament popularly known as ‘the Indian Premier League’ (“IPL”) organized by the Board of Control for Cricket in India (“BCCI”). BCCI was called upon to furnish certain information on the basis on which, it was felt that there were large scale irregularities in the conduct and functioning of the IPL and its franchisees. A comprehensive investigation revealed certain irregularities in the context of Respondents.

(b) The process of allotting ownership of teams for IPL commenced by floating an Invitation to Tender (“ITT”) to any person to submit a bid to own and operate a team for participation in the IPL. The bidders were required to choose from eight locations to operate their teams, viz., Mumbai, Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Mohali and Jaipur. The person being awarded ownership of a team is known as a 'franchisee.' Each successful bidder would be allotted only one team. Several criteria with respect to eligibility and fitness were stipulated and laid down in the ITT. One such criteria was the performance deposit of US$5 million equivalent to Rs. 20 Crores.

3. The present Appeals relate to the deposits from various sources made during the bidding process by Jaipur IPL Cricket Pvt. Ltd. and its Directors and Promoters, the Respondents herein which were held to be in contravention of the various provisions of FEMA and the regulations made thereunder.

4. One Emerging Media IPL Ltd., UK submitted a bid of US$ 67 millions (Rs.268 Crs.) for a team at Jaipur. This amount was to be paid in ten equal installments over a period of ten years. The franchise for Jaipur was known as ‘Rajasthan Royals’. The franchise agreement was signed by Jaipur IPL Cricket Pvt. Ltd. (“JIPL”) and the BCCI. Fraiser Castellino, the then CEO of JIPL ( Respondent in FEMA Appeal No.8 of 2021) executed the agreement on behalf of JIPL and one Lalit Modi, Vice President of BCCI and Chairman of IPL executed the same on behalf of BCCI.

5. The performance deposit of Rs.20,19,87,410.23 for JIPL was transferred from UK to the account of BCCI-IPL with HDFC Bank, Chennai. The said amount was transferred by one Manoj Badale (Respondent in FEMA Appeal No.2 of 2020) from UK on behalf of Emerging Media IPL Ltd. Subsequently, the franchise agreement was signed on 14th April 2008 and the balance deposit money, i.e., US$773,480.99 after the auction was paid by one EM Sporting Holdings Ltd., Mauritius (“EMSH”) (Respondent in FEMA Appeal No.7 of 2021) to BCCI. Thus, Manoj Badale and EMSH together paid a total amount of Rs.23,49,27.410/-. The documents furnished by JIPL clearly showed that JIPL was a wholly owned subsidiary of EMSH. The date of incorporation of EMSH was 5th May 2008 and that of JIPL was 8th March 2008. The paid-up capital of the company at incorporation was Rs.1 Crore having 10000 shares. Ranjit Barthakur (Respondent in FEMA Appeal No.1 of 2021) and Fraiser Castellino, both Directors of JIPL owned 5000 shares each. Ranjit Barthakur so