Bombay High Court Upholds Reduction Of Rajasthan Royals Penalty In FEMA Violation Case
The appeals pertain to deposits made during the IPL bidding process, which were deemed to contravene FEMA and related regulations.
The Bombay High Court has upheld the reduction of the penalty imposed on Jaipur IPL Cricket Pvt., the owner of the Rajasthan Royals franchise, from Rs 98.35 crore to Rs 15 crore for violating foreign exchange laws and regulations.
The case involves appeals under the Foreign Exchange Management Act, 1999, against a tribunal order that modified the penalty imposed on the appellants. The tribunal had reduced the total penalty to Rs 15 crore, stating that the amount already deposited by the appellants would be treated as the penalty for violation.
The appeals pertain to deposits made during the IPL team bidding process, which were deemed to contravene FEMA and related regulations.
Findings Of The Directorate Of Enforcement
The special director of the Directorate of Enforcement found all the respondents guilty of violating FEMA and imposed a total penalty of Rs 98.35 crore. The respondents appealed this decision to the tribunal, seeking a waiver of the pre-deposit condition for the penalty amount.
Due to a difference of opinion among the tribunal members, the chairman directed the respondents to deposit 40% of the penalty and provide a bank guarantee for the remaining 60%. This decision was challenged, and the high court substituted the pre-deposit order, instructing the respondents to deposit a total of Rs 15 crore.
The tribunal, in its order dated July 11, 2019, considered legal precedents and concluded that the special director's order was flawed. It reevaluated the evidence and found no intention or mens rea on the part of the respondents to violate FEMA.
It reduced the penalty to Rs 15 crore, citing that the parameters for imposing such penalties in quasi-criminal proceedings were not wholly satisfied. The special director of ED then challenged this reduction in the penalty amount in the current appeals before the Bombay High Court.
High Court Ruling
The high court said that the special director failed to apply the doctrine of proportionality and imposed an unsustainable maximum penalty without proper discussion or justification.
The court agreed with the tribunal's findings and stated that the matter involved the appreciation of evidence, not a question of law. As there was no error in the tribunal's judgement, the appeals were dismissed, and no costs were awarded.
