FINALORDER

30.09.2024

 These appeals have been preferred under section 19 read with section 49(5) of the Foreign Exchange Management Act,1999 against Adjudication Order No. ADJ/12/ADE/SK/2018/FEMA/2406 dated 28.09.2018 (impugned order) passed by the Ld. Adjudicating Authority.

Facts in Brief

2. The appellants in these appeals are Mr. Sunil Chawla, his mother, Mrs. Bina Chawla and two private limited companies namely, M/s Prerak Investment Services Pvt. Ltd. & M/s Nita Infrastructure Ltd., in which they were directors at the relevant time.

3.A complaint was filed by M/s Khaitan & Jaykar, the solicitors for one Mr. Paul McGlade, an Irish national, indicating that Mr. Sunil Chawla and his mother Mrs. Bina Chawla had received foreign remittances in their companies‟ M/s Nita infrastructure Pvt. Ltd., and M/s Prerak Investment Services Pvt. Ltd. from the said Mr. Paul McGlade and his company M/s Infinity Financial Ltd., towards share application money. However, no shares were allotted to Mr. Paul McGlade or his company, M/s Infinity Financial Ltd., and Mr. Sunil Chawla and Mrs. Bina Chawla used the amounts for acquiring personal assets by investing in real estate.

4.It was mentioned in the letter that M/s Infinity Financial Ltd. had remitted Euro 9,24,963.50 (equivalent to Rs. 6,10,56,883.65) to the HSBC Bank account of M/s Nita Infrastructure Pvt. Ltd. towards share application money. However, out of total funds received, Rs.6,05,41,930/- were advanced to by M/s Nita Infrastructure to M/s Prerak Investments Services Pvt. Ltd. and Rs. 4,09,675/- to Mr. Sunil Chawla as loans. Further, Mr. Paul McGlade had also remitted Euro 5,32,000 (equivalent to Rs. 3,18,36,559.87) to HSBC bank account of M/s Prerak Investments Services Pvt. Ltd. towards share application money and Euro 3,57,000 equivalent to Rs. 2,02,25,102/- to the HSBC bank account of Mr. Sunil Chawla towards incorporation of another company. However, Mr. Sunil and Mrs. Bina Chawla used these funds for their personal use.

5. It was alleged that Mr. Sunil Chawla and Mrs. Bina Chawla used the above remittances to the tune Rs. 5,54,50,751/- to acquire properties in Goa and Alibag in the name of M/s Prerak Investments Services Pvt. Ltd. and to tune of Rs.2,99,01,000/- in the personal name of Sunil Chawla.

6. Mr. Paul McGlade had also remitted Euro 2000 to the bank account of Mrs. Bharti Gada and Mrs. Jagruti Gada, the original shareholders of M/s Prerak Investments Services Pvt. Ltd. The said remittance was towards consideration for transfer of their shares as well as reimbursement of cost of incorporation and ROC fees, stamp fees towards increase in authorized share capital of M/s Prerak Investments Services Pvt. Ltd. However, Mr. Sunil and Mrs. Bina Chawla were alleged to have acquired the shares of the said company in their names in equal proportion and became the executive directors of M/s Prerak Investments Services Pvt. Ltd., without allotting any shares to Mr. Paul McGlade or his nominees.

7. On the basis of the aforesaid complaint, necessary enquiries were initiated under provisions of FEMA,1999 by way of issue of directives to HSBC Bank, Peddar Road Branch, Mumbai calling for the statements of account of the companies – M/s Prerak and M/s Nita Infrastructure Pvt. Ltd. and their directors Mr. Sunil Chawla and Mrs. Bina Chawla.

8. In their reply, the HSBC Bank provided details of bank accounts (current accounts) of M/s Prerak Investments and M/s Nita Infrastructure, including the dates and amounts remitted. Mr. Sunil Chawla also submitted copies of bank statement for the period 04.05.2004 to 08.05.2010 of his NRE Account with HSBC Bank, Pedder Road, Mumbai from which it was seen that foreign remittances amounting to Rs. 2,41,64,036.06 had been received into the said account from Mr. McGlade on three dates in Jan-Feb 2008.

9. Statements of Mr. Sunil Chawla and Mrs. Bina Chawla were recorded during the course of the investigations. Investigations revealed that the appellants had received