FINAL ORDER

10.03.2025

Present appeals are filed by the appellantsu/s 19 of the Foreign Exchange Management Act, 1999 against the impugned order No. JD/05/KCO/2014/2768 dated 15.09.2014 passed by the Adjudicating Authority, vide whichfollowing penalties were imposed on the appellants:

i). On M/s Royal Golf Hotels India Pvt. Ltd, Noticee No.1, for contravention of Regulation 4 of Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 r.w. Regulation 6 of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000 – Penalty of Rs. 25,00,000/- (Rupees twenty-five lakhs only).

ii. On Shri K.P. Varghese, Noticee No. 2, for contravention of Regulation 4 of Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 r.w. Regulation 6 of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000, section 42(1) of Member the Foreign Exchange Management Act, 1999- Penalty of Rs. 1,00,000/- (Rupees one lakh only).

iii. On Shri Shabu, Noticee No. 3, for contravention of Regulation 4 of Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 r.w. Regulation 6 of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000 and section 42(1) of the Foreign Exchange Management Act, 1999 – Penalty of Rs. 1,00,000/- (Rupees one lakh only).

2. As per the facts of the case, information was received that Shri Ullattil Jossy Joseph, an NRI based in Switzerland, purchased agricultural land and constructed a hotel by name “Zurich International” in Kuruppumthara, Kottayam District, in violation of the provisions of Foreign Exchange Management Act, 2000&Rules and Regulations made under.

Shri Jossy Joseph in his statement recorded on 01.11.2010 u/s 37 of FEMA, 1999 before Assistant Director, ED, Cochin stated that after marriage he shifted to Zurich, Switzerland and he and his wife were working as nursing aid in hospital in Switzerland. He stated that he had converted their residence by adding further buildings and started a hotel by name Zurich International by taking loans from Kerala Financial Corporation, personal loan, but it did not make any profit. Hence, he decided to sell off the hotel and repay the debts for which he negotiated with Shri K.P. Varghese and advance amount of Rs. 300 lakh was collected by way of NRE cheque which was deposited in his NRE A/c No. 005401891726191001 with the Catholic Syrian Bank Ltd.

Shri Jossy in his letter dated 04.11.2010 stated that he had entered into an agreement with Shri K.P. Varghese, Chairman & Executive Director of M/s Royal Golf Hotels India Pvt. Ltd., Cochin to sell the land and hotel for an amount of Rs. 1525 lakh to M/s Royal Golf Hotels India (P) Ltd. and he had received Rs. 268 lakh as advance money and not Rs. 300 lakh as mentioned in his statement on 01.11.2010. He furnished the copy of land deals, copy of sale agreement dated 30.09.2010 and copy of sale deed dated 08.11.2010.

Shri K.P. Varghese, Noticee No.2, was examined on 11.05.2011. He deposed that he was working as Marine Engineer in Abu Dhabi and another Director of this company was Mr. Shabu who was an NRI based in Dubai. He added that the above-mentioned company was running two hotels on East Kodakara, Trichur and another at Kuruppumthara. The company had purchased 468 cents of land at Kuruppumthara from Shri Jossy Joseph and Smt. Chinnamma and for an amount of Rs. 1525 lakh and Shri Jossy executed deed on behalf of Smt. Chinnamma being the Power of Attorney Holder of Chinnamma and for this purchase Rs. 1000 lakh was taken as loan from Dhanalakshmi Bank, Kaloor on 15.11.2010 and 98 lakh from another account, Rs. 100 lakh was accounted from Union Bank, Ernakulam NRE A/c on 01.10.2010, Rs. 75 lakh from his NRO A/c in Dhanalakshmi Bank Ltd., Kaloor on 01.10.2010 and on 10.11.2010, an amount of Rs. 250 lakhs equivalent to $ 55,