APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI (1) MP-FE-26/KOL/2025 (A.D.)

MP-FE-25/KOL/2025 (Stay) MP-FE-46/KOL/2022 (Stay)

FPA-FE-33/KOL/2022 M/s. Fairdeal Supplies Ltd. … Appellant (2) MP-FE-28/KOL/2025 (A.D.)

MP-FE-27/KOL/2025 (Stay) MP-FE-47/KOL/2022 (Stay)

FPA-FE-34/KOL/2022 Shri Pawan Kumar Agarwal … Appellant Versus The Special Director Directorate of Enforcement, Kolkata … Respondent Advocates/Authorized Representatives who appeared For the Appellant : N.K. Chowdhury, Kaushik B., Sourav Roy, Anshu Deshpande, Advocates For the Respondent : Shri Vivek Gurnani, Advocate CORAM JUSTICE MUNISHWAR NATH BHANDARI : CHAIRMAN SHRI V. ANANDARAJAN : MEMBER

ORDER

28.04.2025 This order would decide the application filed by the appellant for waiver of condition of pre deposit under section 19 of Foreign Exchange Management Act of 1999 (FEMA) (in short, the Act of 1999).

2. It is a case where a penalty of Rs. 20 crores has been imposed on the appellant M/s Fairdeal Supplies Ltd. and penalty of Rs. 3.6 crores on the appellant Pawan Kumar Agarwal (Managing Director of Fairdeal) for the contravention of section 6(3)(f) of Foreign Exchange Management Act, 1999 (FEMA) coupled with Regulation 3 of Foreign Exchange (Deposits)

Regulations, 2000 read with section 42 of the Act of 1999.

3. The learned counsel for the appellant prayed for stay of the proceedings in the light of an order passed by NCLT, Kolkata Bench admitting the application under section 7 of the IBC imposing a moratorium under section 14 of IBC.

4. The order of the NCLT, Kolkata dated 19^th March, 2024 was however stayed by NCLAT, Principal Bench by an interim order dated 8^th April 2024. The interim order was passed against constitution of the Committee of the Creditors. However, according to the appellant, the Resolution Professional was continued to verify the claims. It is further submitted that on 8^th April, 2024, the NCLAT directed that no further steps be taken in the Corporate Insolvency Resolution Process (CIRP) of M/s Fairdeal. In the light of the order passed by the NCLAT and also the NCLT, the submission were made that no proceeding can be taken against the Company as barred by section 14 of IBC and on the aforesaid ground itself, the condition of pre deposit be waived. Reference of Judgement of the Apex Court was given to indicate that order under the Act of 1999 is not considered to be for criminal offence, rather it is civil in nature and accordingly section 14 of the Act of IBC would operate against any other proceeding and accordingly the impugned order be stayed or alternatively, the condition of pre deposit be waived.

5. It is further submitted that section 6(3)(f) of FEMA was omitted by section 139 of the Finance Act, 2015 with effect from 15^th October, 2019. The omission was without saving clause and thereby, the impugned order should not be allowed to operate in the light of the omission of the provision even if the proceedings were initiated prior to the omission of the provision on 15^th October, 2019. The reference of the Judgement of Karnataka High Court in writ petition no 1418 of 2021 decided vide order dated 6^th December, 2024 holding imposition of penalty for contravention of section 6(3) of FEMA after its omission to be without jurisdiction. Thus, an argument was made to allow the application for waiver of the condition of pre-deposit in view of the above also.

6. The learned counsel further submitted that there was no contravention of section 6(3)(f) of the Act of 1999, rather penalty has been imposed by taking erroneous interpretation of the provision. The transaction alleged against the appellant for transfer of Rs. 23.6 crores on behalf of the appellant was not between a person resident in India and person resident outside India. In fact, the appellant did not made any remittance to make out a case of contravention of section 6(3)(f) of the Act of

1999.

7. The further submission was about discrepancy in the allegation. It was initially alleged to be in contr