When an entity exercises due diligence by submitting regulatory filings to an authorized intermediary within the prescribed timeline, it cannot be penalized for the intermediary's administrative failure to transmit those documents to the regulator. Such delay does not constitute a statutory contravention by the complying entity.

This Order disposes of the Appeal No. FPA-FE-80/CHN/2019 filed by M/s Rithwik Projects Pvt. Ltd. (RPPL), against the Order No. SDE/SRO/HYZO/05/2019 dated 27.09.2019 (Impugned Order), passed by the Special Director, Enforcement Directorate, Government of India, Chennai. The Ld. Adjudicating Authority (AA) imposed the penalty of Rs. 1,20,00,000/- on M/s Rithwik Projects Pvt. Ltd. for the contravention of Section 6 (3) (b) of the Foreign Exchange Management Act, 1999 (FEMA) in terms of Paragraph 9 (1) (B) of Schedule 1 to the said Regulation 5 (1) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulation 2000, to the extent of Rs. 119,99,85,541/-, vide the Impugned Order.

2. Ld. Counsel for the Appellant submitted that M/s RPPL is a private limited company incorporated in the year 1999. The Directors of the Company were S/Shri Chintakunta Munaiah Rajesh, G. Govardhan Naidu, Shri K. Purushotham, etc. On 26.03.2008, M/s RPPL received an amount Rs.120 Crore in its bank account maintained at SBI, Industrial Development Branch, Saifabad. Hyderabad from the Vostro account maintained by M/s Baring Private Equity Asia IV Mauritius Holdings (4) Limited, Mauritius at Barclays Bank Plc, Mumbai. M/s RPPL reported the receipt of remittances towards share subscription amounting to Rs. 120 Crore to Regional Office of Reserve Bank of India (RBI), Hyderabad on 02.04.2008 within the stipulated period of 30 days from the date of receipt of inward remittance. M/s RPPL reported in the form FC-GPR about the allotment of shares amounting to Rs.119,99,85,841/- allegedly with delay of around four years i.e. on 10.04.2012 beyond the prescribed period of 30 days which is evident from Reserve Bank of India (RBI) letter dated 09.01.2013 addressed to M/s RPPL. M/s RPPL filed a compounding application before RBI, Hyderabad on 18.04.2013 for compounding of contravention of the provisions of FEMA and the Regulations issued there under i.e. for delay in reporting allotment of shares. RBI, Hyderabad issued an order dated 18.07.2013 for compounding the contravention of the provisions of FEMA by M/s RPPL, through imposition of penalty of Rs. 48,10,000/- and granted time of 15 days to pay the penalty amount. Since M/s RPPL failed to pay the amount imposed for compounding of offence, RBI, Mumbai vide letter dated 22.10.2013 addressed to the Special Director, Western Region, Directorate of Enforcement, Mumbai with a copy to the office of the Appellant, intimated that M/s RPPL failed to pay the compounding amount and to take necessary action as deemed fit under the provisions of FEMA or any other law of the land. The Respondent Directorate on the basis of the Complaint filed under Section 16 (3) of FEMA, issued Show Cause Notice (SCN) dated 18.09.2015 to M/s RPPL, for contravention of Section 6(3)(b) of FEMA read with the Regulation 5(1)(i) & Paragraph 9(1)(B) of Schedule 1 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, as the Company filed FC-GPR for the allotment of shares to Rs. 119,99,85,541/- with a delay of four years approximately beyond the prescribed period of 30 days, to the Reserve Bank of India. Hence, M/s RPPL was made liable for penalty under Section 13 of FEMA.

3. Ld. Counsel for the Appellant clarified that vide the Impugned Order penalty of Rs. 5,22,000/- has been imposed for contravention of Regulations 6 (1), 6 (2) (iv), 6 (2) (vi) and 15 (iii) of Foreign Exchange Management (Transfer or Issue of