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2023 Supreme(Del) 1314
IN THE HIGH COURT OF DELHI AT NEW DELHI
Purushaindra Kumar Kaurav, J.
Veritas (india) Ltd. – Appellant
Versus
Union of India Through The Secretary
Department For Promotion of Industry And Internal Trade (Dpiit) Through Its Director – Respondent
W.P.(C) 11713 of 2019
Decided On : 20-04-2023
Mr. Jayant Mehta, Senior Advocate alongwith Mr. Ajay Bhagvan, Mr. Aseem Chaturvedi & Mr. Siddhant Kumar, Advocates, for the Petitioner.
Mr. Dev P. Bhardwaj, Ms. Anubha Bhardwaj, Mr. Sachin Singh & Mr.Sarthak Anand, Advocates for UOI.
The court emphasized the need for fair consideration of FDI applications on their merits and highlighted the obligation of the Competent Authority to make a decision within a specified timeframe.
Headnote:
Foreign Direct Investment - Approval of FDI Transactions - Income Tax Act, 1961, Section 68 - Reserve Bank of India Act, 1934, Section 6 - Foreign Exchange Management Act, 1999, Section 10(6) - Consolidated Foreign Direct Investment Policy dated 15.10.2020
Fact of the Case:
The petitioner sought ex-post facto approval for Foreign Direct Investment (FDI) received from foreign companies. The applications were rejected by the Foreign Investment Promotion Board (FIPB) and later by the Department for Promotion of Industry and Internal Trade (DPIIT). The petitioner approached the court seeking direction for consideration of its application on merits.
Finding of the Court:
The court directed the petitioner to file an application in accordance with the Consolidated Foreign Direct Investment Policy through the online portal, NSWS, for processing the FDI proposal. The court emphasized that the decision should be taken without being influenced by the earlier rejection orders and set a three-month deadline for a decision.
Issues: Consideration of FDI application on merits, delay in decision-making, influence of previous rejection orders
Ratio Decidendi: The court emphasized the need for the Competent Authority to consider the FDI application on its own merit, without being influenced by previous rejection orders. It also highlighted the obligation to make a decision within a specified timeframe.
Final Decision: The petition was disposed of with the direction for the petitioner to file an application in accordance with the FDI policy. The court set a three-month deadline for a decision and granted the petitioner the liberty to file a revival application if the order was not complied with.
JUDGMENT
Purushaindra Kumar Kaurav, J. (Oral)
1. The present petition has been filed under Article 226 of the Constitution of India, primarily seeking for a direction to the respondents to grant ex-post facto approval to the Foreign Direct Investment (hereinafter referred to as 'FDI') received by the petitioner from two foreign companies, namely, Aventia Global Limited and Onix Assets Limited (hereinafter referred to as `the foreign companies').
2. The brief facts of the case are that the petitioner is a company engaged in international trade and distribution of chemicals/petrochemicals/polymers etc. On 26.12.2009, the petitioner allotted 4,00,000 warrants to the two foreign companies for a consideration of 50 crores and the said warrants were converted into equity shares on 27.03.2010. The petitioner received disbursals from the foreign companies between 23.12.2009 to March 2010. The petitioner intimated the Reserve Bank of India (hereinafter referred to as the `RBI') about the receipt of foreign investment and was advised by RBI vide its letter dated 11.02.2010 to seek approval from the Foreign Investment Promotion Board (hereinafter referred to as `FIPB') before the issuance of warrants.
3. Following the same, the petitioner company vide its first application dated 08.06.2011, applied with the FIPB seeking ex-post facto approval of the aforesaid FDI transactions. The application so submitted, came to be rejected on 27.03.2012 by FIPB on the ground that the request could not be acceded to for the reason that the exact source of funds of the investors had not been substantiated.
4. The petitioner, thereafter, filed a second application on 09.11.2015 disclosing the source of funds received from the foreign companies. It is to be seen that on 24.02.2016, the second application for ex-post facto approval was also rejected by FIPB on the ground that the petitioner has not given any fresh evidence to establish that the investments were made from the known and declared sources of income by the investors.
5. The petitioner, thereafter, was compelled to file a third application on 31.03.2016. By this time, an assessment order dated 10.03.2014, which was passed against the petitioner, came to be partly set aside by the Commissioner of Income Tax (Appeals) [hereinafter referred to as `CIT(A)'] in terms of order dated 22.02.2016. The third application of the petitioner also came to be rejected on 21.06.2016 on the ground that against the said order passed by the CIT(A), the respondent No.2-Department for Promotion of Industry and Internal Trade (hereinafter referred to as `DPIIT') has preferred an appeal before the Income Tax Appellate Tribunal (hereinafter referred to as the `ITAT').
6. The petitioner, thereafter, approached the Bombay High Court in W.P (C) 562/2016. The said writ petition was withdrawn with the liberty to approach the appropriate High Court. The petitioner thereafter filed W.P. (C) 1464/2017 before this court, which was disposed of in terms of an order dated 13.10.2017, which reads as under:
"1. Learned counsel appearing for the petitioner submits that the Foreign Investment Promotion Board (hereafter `the FIPB'), which has been arrayed as respondent no.3, has since ceased to exist, he seeks leave to withdraw the present petition with liberty to move an application before the appropriate authority. Learned counsel further requests that the appropriate authority be now directed to examine the petitioner's application uninfluenced by the orders passed by the FIPB. The said request is not objected to by the learned counsel for the respondents.
2. In view of the above, the present petition is dismissed as withdrawn with the liberty to the petitioner to move an appropriate application before the concerned authority. Needless to state that as and when the said applications are moved, the concerned authority shall decide the same uninfluenced by the previous orders passed by the FIPB".
7. It is thus seen that the appli
