APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI Date of Order : 03.07.2023 FPA-FE-130/HYD/2020 Union of India through … Appellant Deputy Legal Adviser, Directorate of Enforcement, Hyderabad Versus M/s. OSR Infra Pvt. Ltd. … Respondent Advocates/Authorized Representatives who appeared For the Appellant : Mr. A.R. Aditya, Advocate Ms. Anwesha Mishra, Advocate For the Respondent : Ms. Y. Siri Reddy, Advocate CORAM SHRI BALESH KUMAR : MEMBER

JUDGEMENT

FPA-FE-130/HYD/2020 This order disposes of the appeal No. FPA-FE-130/HYD/2020 filed by Union of India against the Adjudication Order No. JD/AG/02/HYZO/2020 from File No. T-4/04/HYZO/2019(JD-AG) dated 31.07.2020 passed by the Joint Director, Hyderabad Zonal Office, Enforcement Directorate, Hyderabad. The appeal is for enhancement of penalty of Rs. 2,00,000/- (Rupees Two Lakhs only) imposed by the Adjudicating Authority on the respondent M/s. OSR Infra Private Limited, RR District (Respondent 1) and for enhancement of penalty of Rs. 1,00,000/- (Rupees One Lakh Only) on the respondent Shri Vamsidhar Maddipatala, Director, M/s. OSR. Infra Private Limited (Respondent 2). The penalty of Rs. 2,00,000/- which has been imposed on Respondent 1, for contravention of Section 6 (3) (b) of FEMA 1999 r/w provisions of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations 2000, comprises of Rs. 50,000/- for contravention of Para 9 (1) (A) of Schedule-1 to the said Regulations, another Rs. 50,000/- for contravention of Para 9 (1) (B) of Schedule-1 to the said Regulations and Rs. 1,00,000/- for contravention of Para 8 of Schedule-1 to the said Regulations. Penalty of Rs. 1,00,000/- has been imposed upon Respondent 2 under Section 42 of FEMA 1999 for the aforementioned contraventions by Respondent 1. It has been pleaded in the appeal that the penalties imposed are very low without having considered the quantum of contravention involved. It is further pleaded that the penalties are not commensurate to the amount involved in the contravention committed by the respondents and the Adjudicating Authority has not assigned any proper reason for doing so.

The appellant filed an application for Condonation of Delay of 76 days in filing the appeal beyond the limitation period stipulated under the Act. The period of delay is covered by the Order dated 10.01.2022 of the Hon’ble Supreme Court in Suo-Moto Writ Petition No. 03/2020 for being excluded for limitation on account of covid pandemic. Accordingly, the application is disposed of.

Learned counsel for the appellant argued at length during the hearing on 29.05.2023 for allowing the appeal on the grounds that the penalty imposed is low and should have correlation with the quantum of contravention. Learned counsel for the respondent contended that the contraventions are technical in nature. In any case, the compliances to the provisions of the Regulations were made, though with some delay, which could not be avoided due to the unavoidable circumstances. She further argued that the Adjudicating Authority has examined each of the contravention, the compliances made thereof and has exercised his discretion judiciously while imposing the penalty. The respondent in their reply to the appeal have stated the unavoidable circumstances as operational reasons and shortage of staff. The respondents have clarified that on one occasion the authorized signatory was abroad. For the delay of 72 days in allotment of shares, the respondents have stated that holding of general meeting of members for approval of increase in authorized share capital and share valuation certificate from a Chartered Accountant took some time. The respondents have pleaded that they did not prefer to file appeal against the Adjudication Order so as not to litigate further and bring the issue to closure.

I have considered the records of the case including the appeal filed, the Adjudication Order, the reply filed by the respondents and the arguments made b