ND INVESTMENTS Vs. UNION OF INDIA

JUDGEMENT

(1.) These Appeals and the Notice of Motions are directed against the order passed by the Chairman of the Appellate Tribunal under the Foreign Exchange Management Act, 1999. The order is in the nature of a condition imposed on the Appellants to enable them to proceed and prosecute their Appeals on merits. In other words, the order has been passed on applications seeking waiver of the condition of pre-deposit of a penalty amount and stay of the orders impugned in the Appeals on the file of the Tribunal.

(2.) The few facts which are required to appreciate the rival contentions and the substantial questions of law are that the Appellants are companies as also individuals. The Board of Control for Cricket in India (BCCI) had established a separate sub-committee/unit known as Indian Premiere League (IPL). That was to hold and oversee operation of a domestic 20 overs cricket competition in India and if permitted, elsewhere in the world. The IPL is a part of the BCCI and managed by a separate governing Council reporting to BCCI. In terms of a global tender inviting bids for franchisees and floated in December, 2007, bidders were invited to participate by selecting a team and for playing in this tournament. There were conditions, which have been imposed on the bidders. In the light of the tender being global and the participants would be companies registered and functional abroad, there are certain stipulations and which have been noted by the Tribunal as well. The performance deposit amount was to be made on behalf of the promoters. The Appellants rely upon the corporate structure under which there was a holding company and there was a subsidiary incorporated in Mauritius. There was also a newly incorporated Indian operating company, which is a 100% subsidiary. However, before the formalities of incorporation and registration of the Indian company were completed and since the bid was successful, certain amounts were remitted. They were remitted and reached BCCI through concerns abroad rather than the Indian subsidiary. The compliances had to be made with the Regulations under the Foreign Exchange Management Act, 1999 (FEMA). Those having not been made, the Enforcement Directorate proceeded on the footing that the parties have violated the terms and conditions under these regulations and consequently of the Act itself. The notices to show cause were issued and in terms thereof, certain orders have been passed. The proceedings culminated in imposition of penalty for unlawful remittance allegedly made and which is computed in terms of the provisions of FEMA.

(3.) We do not wish to express any opinion insofar as the merits of the matter including the computation of penalty. What we have noted is that aggrieved by the order passed, Appeals were preferred and the Appellate Tribunal was therefore approached with applications seeking waiver of the condition of pre-deposit. The matter was placed before the Appellate Tribunal Foreign Exchange (Appeal Nos. 9-19/2013). The applications were heard extensively. The parties argued as to how the adjudication order dated 30th January, 2013 passed by the Special Director, Enforcement Directorate, Mumbai, holding them liable for contravention of Section 3(b) and 6(2) of FEMA read with Regulation 5 of Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 read with para 8 of Schedule I to Regulation 5(1) of Foreign Exchange Management (Transfer of Issue of Security by a person resident outside India) Regulations, 2000 is illegal and incorrect. The penalty imposed of Rs. 98.35 crores, according to the Appellants, was wholly unsustainable.