ORDER :

1. The present writ petitions arise out of a common set of facts and involve similar issues. Therefore, they are being decided vide the following common order.

2. The present writ petitions are filed challenging the orders dated 05.09.2022 on File No. T-4/04/HYZO/2019 passed by the Adjudicating Authority (Respondent No. 3 in W.P. No. 37659 of 2022) as arbitrary, illegal and without jurisdiction.

3. Heard Mr. Deepak Bhattacharjee, learned senior counsel representing Mr. Dishit Bhattacharjee, learned counsel for the Petitioner in W.P. No. 35702 of 2022 and Mr. Vedula Srinivas, learned senior counsel representing Mr. V. Aneesh, learned counsel for the Petitioners in W.P. No. 37659 of 2022. Mr. Anil Prasad Tiwari learned standing counsel for the Directorate of Enforcement (hereinafter referred to as ‘ED’) for the Respondents in both the writ petitions.

4. For the sake of convenience, the parties in W.P. No. 37659 of 2022 will be referred to as the Petitioners and Respondents.

Facts of the case

5. M/s Telearc Technologies Pvt. Ltd. (formerly known as Teleonto Tecnologies Pvt. Ltd.) is the Petitioner No. 1 in W.P. No. 37659 of 2022 and is represented by its Managing Director who is Petitioner No. 2 in the said writ petition.

6. According to the Respondents, on receipt of credible information that M/s Teleonto Tecnologies Pvt. Ltd. was involved in fraud and misappropriation of funds, an investigation was initiated under the Foreign Exchange Management Act, 1999 (hereinafter referred to as ‘the Act, 1999’) on file bearing F.No. T-3/10/HZO/2014.

7. After the completion of investigation, a complaint dated 20.06.2019 was filed by the Deputy Director of Enforcement (Respondent No. 3 in W.P. No. 37659 of 2022) under Section 16(3) of the Act, 1999. It is to be noted that one Mrs. Sowmya Nuthalapati was the Deputy Director of Enforcement who filed the complaint dated 20.06.2019.

8. In the said complaint dated 20.06.2019, it was alleged that the Petitioners received foreign direct investment to the tune of Rs. 1,32,38,364/-between 2009 to 2014 from three foreign companies and one Non-Resident Indian as consideration for issuance of shares worth Rs.85,45,184/-in exchange for such investment in M/s Teleonto Tecnologies Pvt. Ltd. The complaint alleges the following contraventions by the Petitioners:

(i) Petitioner No. 1 reported with delay the receipt of foreign direct investment to the Reserve Bank of India. Therefore, contravened Section 6(3)(b) of the Act, 1999 r/w Para 9(1)(A) of Schedule I to Regulation 5(1) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 (hereinafter referred to as ‘Regulations, 2000’).

(ii) Petitioner No. 1 failed to report to the Reserve Bank of India, the issuance of shares worth Rs. 85,45,184/- to foreign companies. Therefore, it contravened Section 6(3)(b) of the Act, 1999 r/w Para 9(1)(B) of Schedule I to Regulation 5(1) of the Regulations, 2000.

(iii) Petitioner No. 1 failed to file a report titled “Annual Return on Foreign Liabilities and Assets” before the Reserved Bank of India. Therefore, it contravened Section 6(3)(b) of the Act, 1999 r/w Para 9(2) of Schedule I to Regulation 5(1) of the Regulations, 2000.

(iv) As Petitioner No. 2 was the Managing Director of Petitioner No. 1 and was responsible for the contraventions by Petitioner No. 1, he is liable under Section 42(1) of the Act, 1999.

(v) The complaint stated that the Petitioners are liable to be penalized under Section 13(1) of the Act, 1999.

9. At this stage, it is relevant to note the contraventions as alleged to have been committed by the Petitioner in W.P. No. 35702 of 2022. The complaint dated 20.06.2019 states that one of the three foreign companies i.e., M/s Webford Baseline Ltd. based out of Mauritius invested an amount of Rs. 8,46,90,000/- in exchange for 165976 Compulsorily Convertible Preference Shares. Relying on a letter dated 22.12.2018, it is alleged that the Petitioner in W.P.