The aforesaid MSA is filed under Section 42 of the Prevention of Money Laundering Act, 2002 against the Order dated 12.09.2019 passed by the Appellate Tribunal (SAFEMA, FEMA, PMLA, NDPS, PBPT Act), New Delhi, in MP-FE 95/BNG/2018 (STAY), MP-FE-96/BNG/2018 (MISC), MP-FE 97/BNG/2018 (COD) & FPA-FE-02/BNG/2018/2934, and consequently to confirm the order of the Adjudicating Authority in F.No.T-4/02/BGZO/JD(JK)/2014-20 dated 28.06.2016.

2. Writ Petition No.698/2018 is filed by the petitioners therein challenging the Order No. JD/BGZO/O3/ 2016 dated 28.06.2016 passed by the Joint Director of the Directorate of Enforcement, Bengaluru Zonal Office.

MSA 40/2020

3. From the record, it appears that acting under the complaint dated 09.03.2015 made by the Deputy Director of the Directorate of Enforcement, Bengaluru, under Section 16(3) of the Foreign Exchange Management Act, 1999¹FEMA against the respondents, alleging violation of various provisions of FEMA read with the provisions of various extant Regulations, the Joint Director issued a show cause notice dated 13.03.2015 to the respondents in the MSA as to why adjudicating proceedings under Section 16 of the FEMA should not be held against them for the contraventions and why the assets mentioned in the show cause notice and belonging to the respondent be not confiscated under Section 13(2) of the FEMA.

4. By means of the adjudication order dated 28.06.2016, the Joint Director found that the respondents had contravened the provisions of FEMA and accordingly they were found guilty. Exercising powers under Section 13(1) of the FEMA, various penalties were imposed on the respondents. However, enquiries revealed that the balance in the bank accounts maintained by respondent No.2 were Rs.508/- and Rs.9,499/- respectively. The said amounts along with the land measuring 3237 sq.ft. at Site Nos. 41 & 56, Khata No.88, Survey No.116/2, Challakere Village, K.R. Puram Hobli, Bangalore East Taluk, Bangalore, along with the building thereon, were ordered as confiscated. The cash penalties imposed were directed to be deposited in the office of the Directorate of Enforcement within 45 days from the date of receipt of the order.

5. The aforesaid order passed by the Joint Director was challenged by the respondents before the Appellate Tribunal. By means of the order dated 12.09.2019 passed in Appeal No. FPA/FE/02/BNG/2018, the Appellate Tribunal held that there is no violation and accordingly the order of confiscation dated 28.06.2016²This date is erroneously mentioned in the operative part of the impugned order as 13.03.2015., which also imposed penalty, was set aside.

6. The Appellate Tribunal held that the respondents were residing in India for more than 182 days in the previous financial year at the time of setting up of business and purchase of property in India. Thus, they satisfied the definition of the term “Person Resident in India”, as defined in Section 2(v) of the FEMA. It was held that the respondents had continuously stayed for a period of 182 days in the preceding financial year, that is 2008-2009, as contemplated under Section 2(v). It was held that the respondents had applied for permission in the Reserve Bank of India³RBI, before the purchase of immovable property. The RBI had informed that no prior permission was required if they fulfilled the criteria under Section 2(v) of the FEMA. The amount for purchase of immovable property came through legal channel and necessary FIRC certificates were issued by the Bank. The respondent was assessed for income tax since the assessment year 2010-11 and had been paying income tax till assessment year 2017-18. It was accordingly held that there was no violation. The appeal of the respondents was accordingly allowed and the order of confiscation and penalty dated 28.06.2016 was set aside.

7. It is submitted on behalf of the appellant that the partnership firm was formed without the prior permission of the RBI. They received donations from various Fore