A PROJECT REPORT ON

FEMA ACT, 1999

SUBMITTED BY: KRITI AGARWAL HARISH SREEDHAR PRINCE KARTIKAY (A030) PRINCE BEHL TUSHAR AMBWANI ASHUTOSH CHATURVEDY ADITYA KAPOOR (A029) MANALI KHANDELWAL (A031)

FACULTY: MR. PRASEN NAITHANI

INDEX

1.) INTRODUCTION 2.) COMPARISON BETWEEN FERA AND FEMA 3.) SECTIONS under FEMA 4.) CASES on FEMA violations a) RBI slapped Rs. 125 crore on Reliance b) BCCI blames LALIT MODI for FEMA violations in IPL c) Bharti Airtel under scrutiny for FEMA violations d) Etisalat DB under ED scanner for FEMA violations e) 2G spectrum scan f) Rahat Fateh Ali Khan, manager slapped with FEMA violations g) Ramdev under ED scanner 5.) REFERENCES

Introduction to FEMA
In India, all transactions that include foreign exchange were earlier regulated by Foreign Exchange Regulations Act (FERA), 1973. Due to the policy at that time which was leaning toward nationalized economy, the main objective of FERA was conservation and proper utilization of the foreign exchange resources of the country. It also sought to control certain aspects of the conduct of business outside the country by Indian companies and in India by foreign companies. It was a criminal legislation which meant that its violation would lead to imprisonment and payment of heavy fine. It had many restrictive clauses which deterred foreign investments. Around 1993, significant developments took place relating to foreign trade and investments. The liberalisation of foreign investments and globalisation of foreign trade called for a closer interaction with the world economy and as a result, the Government took initiatives to review the FERA in 1993 and several amendments were enacted in the Act. However, in light of subsequent developments, the Government thought that a better course would be to repeal the old Act by enacting a new legislation. Thus the Foreign Exchange Regulation Act, 1973 (FERA) has now been repealed by a new Act called the Foreign Exchange Management Act, 1999(FEMA). The enactment of FEMA marks a transition from the era of regulation, control and prohibition to a new era for consolidation and management of foreign exchange reserves for the country. A Bill based on the recommendations of the Task Force, was introduced in the Lok Sabha on 4 August, 98 but the 12th Lok Sabha was dissolved before any decision could be taken on the bill. The Bill subsequently lapsed. The bill was again introduced in the 13th Lok Sabha on 25th Oct'99. The presidential Assent was received on 6th Jan 2000. Finally the FEMA came into operation w.e.f. 1st June 2000.

PREAMBLE of F.E.M.A., 1999

An Act to consolidate and amend the law relating to foreign Exchange with the objective of Facilitating external trade and payments and Promoting orderly development and maintenance of forex market in India.

Comparison of FERA and FEMA.

Similarities. The similarities between FERA and FEMA are as follows: The Reserve Bank of India and central government would continue to be the regulatory bodies. Presumption of extra territorial jurisdiction as envisaged in section (1) of FERA has been retained. The Directorate of Enforcement continues to be the agency for enforcement of the provisions of the law such as conducting search and seizure

Differences

Sr. No 1

DIFFERENCES PROVISIONS

FERA

FEMA

FERA consisted of 81 sections, and was more FEMA is much simple, and consist of only 49 complex sections. Presumption of negative intention (Mens Rea These presumptions of Mens Rea and (guilty mind)) and joining hands in offence abatement have been excluded in FEMA (abatement) existed in FEMA

FEATURES 2

NEW TERMS IN FEMA 3

Terms like Capital Account Transaction, current Terms like Capital Account Transaction, Account Transaction, person, service etc. were current account Transaction person, service not defined in FERA. etc., have been defined in detail in FEMA

DEFINITION OF Definition of "Authorized Person" in FERA was a The definition of Authorized person has AUTHORIZED PERSON narrow one ( 2(b) been widened to include banks, money changes, off shore banking Units etc. (2 ( c ) MEANING OF There was a big difference in the definition of "RESIDENT" AS "Resident", under FERA, and Income Tax Act COMPARED WITH INCOME TAX ACT. The provision of FEMA, are in consistent with income Tax Act, in respect to the definition of term" Resident". Now the criteria of "In India for 182 days" to make a person resident has been brought under FEMA. Therefore a person who qualifies to be a non-resident under the income Tax Act, 1961 will also be considered a nonresident for the purposes of application of FEMA, but a person who is considered to be non-resident under FEMA may not necessarily be a non-resident under the Income Tax Act, for instance a business man going abroad and staying therefore a period of 182 days or more in a financial year will become a non-resident under FEMA.

PUNISHMENT 6

Any offence under FERA, was a criminal offence , Here, the offence is considered to be a civil punishable with imprisonment as per code of offence only punishable with some amount criminal procedure, 1973 of money as a penalty. Imprisonment is prescribed only when one fails to pay the penalty. OF The monetary penalty payable under FERA, was Under FEMA the quantum of penalty has nearly the five times the amount involved. been considerably decreased to three times the amount involved if it is quantifiable. If it is not quantifiable, then limit is up to Rs. 2 lac. If it is a continuing offence, further

QUANTUM PENALTY.

penalty of up to Rs. 5000/- per day after the first day. APPEAL An appeal against the order of "Adjudicating The appellate authority under FEMA is the office", before " Foreign Exchange Regulation special Director ( Appeals) Appeal against Appellate Board went before High Court the order of Adjudicating Authorities and special Director (appeals) lies before "Appellate Tribunal for Foreign Exchange." An appeal from an order of Appellate Tribunal would lie to the High Court. (sec 17,18,35)

RIGHT OF ASSISTANCE FERA did not contain any express provision on FEMA expressly recognizes the right of DURING LEGAL the right of on impleaded person to take legal appellant to take assistance of legal PROCEEDINGS. assistance practitioner or chartered accountant (32) POWER OF SEARCH FERA conferred wide powers on a police officer The scope and power of search and seizure AND SEIZE not below the rank of a Deputy Superintendent has been curtailed to a great extent of Police to make a search

10

With the introduction of FEMA the restrictions on withdrawal of Foreign Exchange for the purpose of current Account Transactions, has been removed. However, the Central Government may, in public interest in consultation with the Reserve Bank impose such reasonable restrictions for current account transactions as may be prescribed. FEMA has also removed the restrictions on transactions in foreign Exchange on account of trade in goods, services except for retaining certain enabling provisions for the Central Government to impose reasonable restriction in public interest.

EXTENT and APPLICATION of FEMA, 1999 Section 1(2&3)

The FEMA, is applicable(1)To the whole of India. (2)Any Branch, office and agency, which is situated outside India, but is owned or controlled by a person resident in India and also to any contravention there under committed outside India by any person to whom this Act applies. Broadly speaking FEMA, covers, three different types of categories, and deals differently with them. These categories are: A. Person B. C. Person Resident In India Person Resident Outside India

A. Person For the purpose of provisions, a person shall include any of the following: i. ii. iii. iv. v. vi. vii. An individual A Hindu Undivided family A company A Firm An association of persons or a body of individuals, whether incorporated or not, Every artificial judicial person, not falling within any of the preceding sub clauses, and Any agency, office or branch owned or controlled by such person.

B. "Person resident in India" "A person resident in India", shall include any of the following i. A person who has been residing in India for more than 182 days, in the last financial year. This means if a person has to be assessed, as to whether he is person resident in India, for any offence committed in August 2001, then he should be residing in India for more than 182 days during April 2000 to March 2001 Any person or body corporate registered or incorporated in India, or An office, branch or agency in India owned or controlled by a person resident outside India, or An office, branch or agency outside India owned or controlled by a person resident in India.

ii. iii. iv.

However, in following cases a person shall not be person resident in India", even if he is residing in India for more than 182 days in the last financial year: i. ii. A person who has gone abroad, for : Taking up employment outside India or For carrying on any business outside India, or For any other purpose, which itself would indicate his intention to stay outside India for an uncertain period. Similarly, a person who has come to India for any purpose except : Taking up employment in India, or Carrying on any business in India, or For any other purpose, which itself would indicate his intention to stay in India for an uncertain period

C. Person resident outside India Simply putting it, "a person resident outside India" means "a person who is not resident in India".

REGULATION AND MANAGEMENT OF FOREIGN EXCHANGE

Dealing in foreign exchange, etc. Section 3 prohibits the following transactions: (a) Deal in or transfer any foreign exchange or foreign security to any person not being an authorised person (Section 2: An "Authorized Person" under FEMA, is a person who is authorized by Reserve Bank to deal in Foreign Exchange. For being registered as an "Authorized Person", necessary application along with relevant documents has to be furnished to Reserve Bank. He is also, not given a free hand to deal in foreign Exchange. He has to furnish details and information, to Reserve Bank from time to time as may be required by it.) (b) Make any payment to or for the credit of any person resident outside India in any manner (c) Receive otherwise through an authorised person, any payment by order or on behalf of any person resident outside India in any manner; (d) Enter into any financial transaction in India as consideration for or in association with acquisition or creation or transfer of a right to acquire, any asset outside India by any person. There are two explanation for this section: 1) where any person receives any payment without a corresponding inward remittance then he shall be deemed to have received such payment otherwise than through an authorised person. If any payment is received outside Indiawithout corresponding inward remittance, then the recipient shall be deemed to have violated the provisions of FEMA. 2)Financial transaction means making any payment to, or for the credit of any person, or receiving any payment for, by order or on behalf of any person, or drawing, issuing or negotiating any bill of exchange or promissory note, or transferring any security or acknowledging any debt.

Holding of foreign exchange, etc. Section 4

No person resident in India shall acquire, hold, own, possess or transfer any foreign exchange, foreign security or any immovable property situated outside India. However the acquisition of such property outside India on lease for a period not exceeding 5 years is permissible provided such transactions are not specifically prohibited.

Current account transactions.(Section 5)

Current account transaction means a transaction other than a capital account transaction and without prejudice to the generality of the foregoing such transaction includes(i) Payments due in connection with foreign trade, other current business, services, and short-term banking and credit facilities in the ordinary course of business, (ii) Payments due as interest on loans and as net income from investments, (iii) Remittances for living expenses of parents, spouse and children residing abroad, and (iv) Expenses in connection with foreign travel, education and medical care of parents, spouse and children;

Current Account Transactions states: That any person may sell or draw foreign exchange to or from a authorized person. Drawl of foreign exchange for certain current account transactions is prohibited, a few need permission from Govt. Of India authority and some others will require RBI permission. The three categories are: i. Transactions for which drawl of foreign exchange is prohibited. Remittance out of lottery winnings. Remittance of income from racing/riding. Payment related to call back services of telephones. Remittance on purchase of lottery tickets. ii. Transactions which require prior approval from Govt. Of India, for drawl of foreign exchange: Cultural tours

iii.

Remittance of freight of vessel chartered by PSU Remittance of membership of P&I club Remittance of container detention charges. Transactions requiring RBIs prior approval: Release of exchange exceeding US$10000. Gift remittance exceeding US$5000. Remittance for maintaining close relatives abroad. Release of foreign exchange exceeding US$25000 to a person. Release for exchange for studies abroad exceeding the estimates of the institution abroad.

Capital account transactions.(Section 6)

Capital account transaction means a transaction which alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India, and includes transactions referred to in sub-section (3) of section 6. Any person may sell or draw foreign exchange to or from an authorized person for a capital account transaction.

The Reserve Bank, may, by regulations, prohibit, restrict or regulate the following: Transfer or issue of any foreign security by a resident of India. Any borrowing or lending in foreign exchange or rupees. Deposits between persons resident in India and outside India. Export, import, or holding of currency. Transfer of immovable property outside India.

A person resident in India, may hold, invest or transfer foreign currency, foreign security, or immovable property situated outside India, if such property was held or owned when he was resident outside India or inherited. Capital account transactions split into 3 categories: Transaction, which are permissible in respect of persons resident in India and outside India. Transactions, which are prohibited. Transactions on which restrictions cannot be imposed.

Permissible Transactions: Investment by an Indian in foreign securities. Foreign currency loans raised in India. Transfer of immovable property outside India. Guarantees issued by an Indian to a person resident outside India. Export, import, holding of currency. Maintenance of foreign currency accounts in India. Sale and purchase of foreign exchange derivatives in India.

Transactions without any restrictions: 1. 2. For amortization of loans. For depreciation of direct investments in ordinary course of business.

Prohibited Transactions: A person resident outside India is prohibited from investing in: Business of chit fund. A nidhi company Agriculture or plantation activities. Real estate business.

A person resident in India, who has acquired immovable property outside India, may transfer it by way of gift. A company incorporated in India having overseas offices, may acquire property outside India for business and residential purposes of its staff.

Export of goods and services.(Section 7)

(1) Every exporter of goods has to (a) Furnish to the Reserve Bank or to such other authority a declaration containing true and correct material particulars, including the amount representing (ii) (iii) the full export value or, if the full export value of the goods is not ascertainable at the time of export, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in a market outside India;

(b) Furnish to the Reserve Bank such other information as may be required by the Reserve Bank for the purpose of ensuring the realisation of the export proceeds by such exporter. (2) The Reserve Bank may, for the purpose of ensuring that the full export value of the goods or such reduced value of the goods as the Reserve Bank determines, having regard to the prevailing market conditions, is received without any delay, direct any exporter to comply with such requirements as it deems fit. (3) Every exporter of services shall furnish to the Reserve Bank or to such other authorities a declaration in such form and in such manner as may be specified, containing the true and correct material particulars in relation to payment for such services

Realisation and repatriation of foreign exchange.(Section 8)

As per Section 2 Repatriate to India means bringing into India the realised foreign exchange and (i) The selling of such foreign exchange to an authorised person in India in exchange for rupees, or (ii) The holding of realised amount in an account with an authorised person in India to the extent notified by the Reserve Bank, and includes use of the realised amount for discharge of a debt or liability denominated in foreign exchange and the expression repatriation shall be construed accordingly; Where any amount of foreign exchange is due or has accrued to any person resident in India, such person shall take all reasonable steps to realise and repatriate to India such foreign exchange within such period and in such manner as may be specified by the Reserve Bank. A person resident in India to whom any amount of foreign exchange is due or accrued shall take all steps to realize and repatriate to India such foreign exchange which has the effect of securing: That the receipt by him of the whole or part of foreign exchange is delayed. That the foreign exchange ceases in whole or part to be receivable by him.

On realization of foreign exchange due, the person shall repatriate the same to India and sell it to an authorized person in India, or, retain it with an authorized dealer in India or use it for discharge of a debt.

Exemption from realisation and repatriation in certain cases. Section 9

The provisions of sections 4 and 8 shall not apply to the following, namely: (a) Possession of foreign currency or foreign coins by any person up to such limit as the Reserve Bank may specify; (b) Foreign currency account held or operated by such person or class of persons and the limit up to which the Reserve Bank may specify; (c) Foreign exchange acquired or received before the 8th day of July, 1947 or any income arising or accruing thereon which is held outside India by any person in pursuance of a general or special permission granted by the Reserve Bank; (d) Foreign exchange held by a person resident in India up to such limit as the Reserve Bank may specify, if such foreign exchange was acquired by way of gift or inheritance from a person referred to in clause (c), including any income arising there from; (e) Foreign exchange acquired from employment, business, trade, vocation, services, honorarium, gifts, inheritance or any other legitimate means up to such limit as the Reserve Bank may specify; and (f) Such other receipts in foreign exchange as the Reserve Bank may specify.

Authorised person Section 10

(1) The Reserve Bank may, on an application in writing authorise any person to be known as authorised person to deal in foreign exchange or in foreign securities, as an authorised dealer, money changer or off-shore banking unit or in any other manner as it deems fit. (2) An authorisation granted may be revoked by the Reserve Bank at any time if the Reserve Bank is satisfied that (a) It is in public interest; or (b) The authorised person has failed to comply with the condition subject to which the authorisation was granted or has contravened any of the provisions of the Act or any rule, regulation, notification, direction or order made there under: Provided the authorised person has been given a reasonable opportunity of making a representation in the matter. (3) An authorised person shall, in all his dealings in foreign exchange or foreign security, comply with such general or special directions or orders as the Reserve Bank and, except with the previous permission of the Reserve Bank, he shall not engage in any transaction involving any foreign exchange or foreign security which is not in conformity with the terms of his authorisation (4) An authorised person shall, before undertaking any transaction in foreign exchange on behalf of any person, require that person to make such declaration and to give such information as will reasonably satisfy him that the transaction will not involve, and is not designed for the purpose of any contravention or evasion of the provisions of this Act or of any rule, regulation, notification, direction or order made there under, and where the said person refuses to comply with any such requirement or makes only unsatisfactory compliance therewith, the authorised person shall refuse in writing to undertake the transaction and shall, if he has reason to believe that any such contravention or evasion as aforesaid is contemplated by the person, report the matter to the Reserve Bank. (5) Any person, other than an authorised person, who has acquired or purchased foreign exchange for any purpose mentioned in the declaration does not use it for such purpose or does not surrender it to authorised person within the specified period or uses the foreign exchange so acquired or purchased for any other purpose for which purchase or acquisition of foreign exchange is not permissible shall be deemed to have committed contravention of the provisions of the Act

Reserve Banks powers to issue directions to authorised person. Section 11

(1) The Reserve Bank may give to the authorised persons any direction in regard to making of payment or the doing or desist from doing any act relating to foreign exchange or foreign security. (2) The Reserve Bank may direct any authorised person to furnish such information, in such manner, as it deems fit. (3) Where any authorised person contravenes any direction given by the Reserve Bank or fails to file any return as directed by the Reserve Bank, the Reserve Bank may, after giving reasonable opportunity of being heard, impose on the authorised person (i) A penalty which may extend to Rs 10,000 and (ii) In the case of continuing contravention with an additional penalty of Rs 2,000 for every day the contravention continues.

Power of Reserve Bank to inspect authorised person. Section 12

(1) The Reserve Bank may cause an inspection of the business of the authorised person by any of its officers if necessary for the purpose of (a) Verifying the correctness of any statement, information or particulars furnished to the Reserve Bank; (b) Obtaining any information or particulars which such authorised person has failed to furnish on being called upon to do so; (c) Securing compliance with the provisions of this Act or of any rules, regulations, directions or orders made there under. (2) It shall be the duty of every authorised person to produce books, accounts and other documents in his custody and to furnish any statement or information relating to the affairs of such person, company or firm to any officer making an inspection.

Contravention & Penalties Section 13

Section No. Section 11 Contravention Of any direction by the Authorised person or failure to file any return as directed by RBI Penalty Up to Rs. 10,000

If continued offense additional penalty up to Rs. 2,000 per day

Section 13

Of any provision of the Act, or any rule, regulation notification, direction or order of any condition subject to which an authorisation is issued

Up to thrice the sum involved, if it is quantifiable

Up to Rs. 2 lakh, if the amount is not quantifiable

If continuing further, penalty up to Rs. 5000 per day Section 14 Failure to pay penalty as above Where demand is of an amount exceeding Rs.1 crore. In any other case Civil imprisonment Upto 3 years

Upto 6 months.

Enforcement of the orders of Adjudicating Authority. Section 14

(1) If any person fails to make full payment of the penalty imposed on him under section 13 within a period of ninety days from the date on which the notice for payment of such penalty is served on him, he shall be liable to civil imprisonment. (2) No order for the arrest and detention in civil prison of a defaulter shall be made unless the Adjudicating Authority has issued and served a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and to show cause why he should not be committed to the civil prison, and unless the Adjudicating Authority, for reasons in writing, is satisfied (a) That the defaulter, with the object or effect of obstructing the recovery of penalty, has after the issue of notice by the Adjudicating Authority, dishonestly transferred concealed, or removed any part of his property, or (b) That the defaulter has, or has had since the issuing of notice by the Adjudicating Authority, the means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same. (3) A warrant for the arrest of the defaulter may be issued by the Adjudicating Authority if the Adjudicating Authority is satisfied, by affidavit or otherwise, that with the object or effect of delaying the execution of the certificate the defaulter is likely to abscond or leave the local limits of the jurisdiction of the Adjudicating Authority. (4) Where appearance is not made pursuant to a notice issued and served ,the Adjudicating Authority may issue a warrant for the arrest of the defaulter. (5) A warrant of arrest issued by the Adjudicating Authority under sub-section (3) or subsection (4) may also be executed by any other Adjudicating Authority within whose jurisdiction the defaulter may for the time being be found. (6) Every person arrested in pursuance of a warrant of arrest under this section shall be brought before the Adjudicating Authority issuing the warrant as soon as practicable and in any event within twenty-four hours of his arrest (exclusive of the time required for the journey): Provided that, if the defaulter pays the amount entered in the warrant of arrest as due and the costs of the arrest to the officer arresting him, such officer shall at once release him.

(7) When a defaulter appears before the Adjudicating Authority pursuant to a notice to show cause or is brought before the Adjudicating Authority under this section, the Adjudicating Authority shall give the defaulter an opportunity showing cause why he should not be committed to the civil prison. (8) Pending the conclusion of the inquiry, the Adjudicating Authority may, in his discretion, order the defaulter to be detained in the custody of such officer as the Adjudicating Authority may think fit or release him on his furnishing the security to the satisfaction of the Adjudicating Authority for his appearance as and when required. (9) Upon the conclusion of the inquiry, the Adjudicating Authority may make an order for the detention of the defaulter in the civil prison and shall in that event cause him to be arrested if he is not already under arrest: Provided that in order to give a defaulter an opportunity of satisfying the arrears, the Adjudicating Authority may, before making the order of detention, leave the defaulter in the custody of the officer arresting him or of any other officer for a specified period not exceeding fifteen days, or release him on his furnishing security to the satisfaction of the Adjudicating Authority for his appearance at the expiration of the specified period if the arrears are not satisfied. (10) When the Adjudicating Authority does not make an order of detention he shall, if the defaulter is under arrest, direct his release. (11) Every person detained in the civil prison in execution of the certificate may be so detained, (a) Where the certificate is for a demand of an amount exceeding rupees one crore, up to three years, and (b) In any other case, up to six months: Provided that he shall be released from such detention on the amount mentioned in the warrant for his detention being paid to the officer-in-charge of the civil prison. (12) A defaulter released from detention under this section shall not, merely by reason of his release, be discharged from his liability for the arrears, but he shall not be liable to be arrested under the certificate in execution of which he was detained in the civil prison. (13) A detention order may be executed at any place in India in the manner provided for the execution of warrant of arrest under the Code of Criminal Procedure, 1973 (2 of 1974).

Power to compound contravention. Section 15

Compounding refers to the process of voluntarily admitting the contravention, pleading guilty and seeking redressal. (1) Any contravention under section 13 may, on an application made by the person committing such contravention, be compounded within one hundred and eighty days from the date of receipt of application by the Director of Enforcement or such other officers of the Directorate of Enforcement and Officers of the Reserve Bank as may be authorised in this behalf by the Central Government in such manner as may be prescribed. (2) Where a contravention has been compounded under sub-section (1), no proceeding or further proceeding, as the case may be, shall be initiated or continued, as the case may be, against the person committing such contravention under that section, in respect of the contravention so compounded.

Adjudication and appeal Appointment of Adjudicating authority section 16 (1) The Central Government may, by an order published in the Official Gazette, appoint as many officers of the Central Government as it may think fit, as the Adjudicating Authorities for holding an inquiry (2) The Central Government shall also specify in the Official Gazette, their respective jurisdictions. (3) No Adjudicating Authority shall hold an enquiry under sub-section (1) except upon a complaint in writing made by any officer authorised by a general or special order by the Central Government. (4) The said person may appear either in person or take the assistance of a legal practitioner or a chartered accountant of his choice for presenting his case before the Adjudicating Authority. (5) Every Adjudicating Authority shall have the same powers of a civil court which are conferred on the Appellate Tribunal under sub-section (2) of section 28 and (a) All proceedings before it shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code (45 of 1860);

(b) Shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974). (6) Every Adjudicating Authority shall deal with the complaint under sub-section (2) as expeditiously as possible and endeavour shall be made to dispose of the complaint finally within one year from the date of receipt of the complaint : Provided that where the complaint cannot be disposed off within the said period, the Adjudicating Authority shall record periodically the reasons in writing for not disposing off the complaint within the said period.

Section No. Section 14

Obligation Penalty to be paid

Time Limit Within 90 days from the date on which notice for payment of penalty is served. Within 180 days of receipt of application by Directorate of Enforcement. Within 1 year of receipt of complaint. Within 45 days from receipt of order. Within 45 days from receipt of order. Will try to dispose off the appeal within 180 days from receipt of appeal. Within 60 days of communication of order or decision.

Section 15

Compounding of contravention Complaint under Section 16(1) to be dealt by Adjudicated Authority Appeal to Special director(Appeals) Appeal to Appellate Tribunal Appeal to be dealt with by Appellate Tribunal Appeal to High Court.

Section 16 Section 17 Section 19

Section 19(5)

Section 35

Establishment of Appellate Tribunal. Section 18

The Central Government shall, by notification, establish an Appellate Tribunal to be known as the Appellate Tribunal for Foreign Exchange to hear appeals against the orders of the Adjudicating Authorities and the Special Director (Appeals) under this Act.

Composition of Appellate Tribunal. Section 20

(1) The Appellate Tribunal shall consist of a Chairperson and such number of Members as the Central Government may deem fit. (2) Subject to the provisions of this Act, (a) The jurisdiction of the Appellate Tribunal may be exercised by Benches thereof; (b) A Bench may be constituted by the Chairperson with one or more Members as the Chairperson may deem fit; (c) The Benches of the Appellate Tribunal shall ordinarily sit at New Delhi and at such other places as the Central Government may, in consultation with the Chairperson, notify; (d) The Central Government shall notify the areas in relation to which each Bench of the Appellate Tribunal may exercise jurisdiction. (3) Notwithstanding anything contained in sub-section (2), the Chairperson may transfer a Member from one Bench to another Bench. (4) If at any stage of the hearing of any case or matter it appears to the Chairperson or a Member that the case or matter is of such a nature that it ought to be heard by a Bench consisting of two Members, the case or matter may be transferred by the Chairperson or, as the case may be, referred to him for transfer, to such Bench as the Chairperson may deem fit.

Qualifications for appointment of Chairperson, Member and Special Director (Appeals).section21.

(1) A person shall not be qualified for appointment as the Chairperson or a Member unless he (a) In the case of Chairperson, is or has been, or is qualified to be, a Judge of a High Court; and (b) In the case of a Member, is or has been, or is qualified to be, a District Judge. (2) A person shall not be qualified for appointment as a Special Director (Appeals) unless he (a) Has been a member of the Indian Legal Service and has held a post in Grade I of that Service; or (b) Has been a member of the Indian Revenue Service and has held a post equivalent to a Joint Secretary to the Government of India.

Term of office.section22.
The Chairperson and every other Member shall hold office as such for a term of five years from the date on which he enters upon his office : Provided that no Chairperson or other Member shall hold office as such after he has attained, (a) In the case of the Chairperson, the age of sixty-five years; (b) In the case of any other Member, the age of sixty-two years.

Terms and conditions of service. section23.

The salary and allowances payable to and the other terms and conditions of service of the Chairperson, other Members and the Special Director (Appeals) shall be such as may be prescribed: Provided that neither the salary and allowances nor the other terms and conditions of service of the Chairperson or a Member shall be varied to his disadvantage after appointment.

Vacancies. section24.
If, for reason other than temporary absence, any vacancy occurs in the office of the Chairperson or a Member, the Central Government shall appoint another person in accordance with the provisions of this Act to fill the vacancy and the proceedings may be continued before the Appellate Tribunal from the stage at which the vacancy is filled.

Resignation and removal.section25.

(1) The Chairperson or a Member may, by notice in writing under his hand addressed to the Central Government, resign his office: Provided that the Chairperson or a Member shall, unless he is permitted by the Central Government to relinquish his office sooner, continue to hold office until the expiry of three months from the date of receipt of such notice or until a person duly appointed as his successor enters upon his office or until the expiry of term of office, whichever is the earliest. (2) The Chairperson or a Member shall not be removed from his office except by an order by the Central Government on the ground of proved misbehaviour or incapacity after an inquiry made by such person as the President may appoint for this purpose in which the Chairperson or a Member concerned has been informed of the charges against him and given a reasonable opportunity of being heard in respect of such charges.

Member to act as Chairperson in certain circumstances.section26.

(1) In the event of the occurrence of any vacancy in the office of the Chairperson by reason of his death, resignation or otherwise, the senior-most Member shall act as the Chairperson until the date on which a new Chairperson, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office.

(2) When the Chairperson is unable to discharge his functions owing to absence, illness or any other cause, the senior most Member shall discharge the functions of the Chairperson until the date on which the Chairperson resumes his duties.

Staff of Appellate Tribunal and Special Director (Appeals).section27.

(1) The Central Government shall provide the Appellate Tribunal and the Special Director (Appeals) with such officers and employees as it may deem fit. (2) The officers and employees of the Appellate Tribunal and office of the Special Director (Appeals) shall discharge their functions under the general superintendence of the Chairperson and the Special Director (Appeals), as the case may be. (3) The salaries and allowances and other conditions of service of the officers and employees of the Appellate Tribunal and office of the Special Director (Appeals) shall be such as may be prescribed.

Procedure and powers of Appellate Tribunal and Special Director (Appeals)section28.

(1) The Appellate Tribunal and the Special Director (Appeals) shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908) but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, the Appellate Tribunal and the Special Director (Appeals) shall have powers to regulate its own procedure. (2) The Appellate Tribunal and the Special Director (Appeals) shall have, for the purposes of discharging its functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908); while trying a suit, in respect of the following matters, namely: (a) Summoning and enforcing the attendance of any person and examining him on oath; (b) Requiring the discovery and production of documents; (c) Receiving evidence on affidavits; (d) Subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872 (1 of 1872) requisitioning any public record or document or copy of such record or document from any office; (e) Issuing commissions for the examination of witnesses or documents; (f) Reviewing its decisions; (g) Dismissing a representation of default or deciding it ex parte; (h) Setting aside any order of dismissal of any representation for default or any order passed by it ex parte; and (i) Any other matter which may be prescribed by the Central Government. (3) An order made by the Appellate Tribunal or the Special Director (Appeals) under this Act shall be executable by the Appellate Tribunal or the Special Director (Appeals) as a decree of civil court and, for this purpose, the Appellate Tribunal and the Special Director (Appeals) shall have all the powers of a civil court. (4) Notwithstanding anything contained in sub-section (3), the Appellate Tribunal or the Special Director (Appeals) may transmit any order made by it to a civil court having local jurisdiction and such civil court shall execute the order as if it were a decree made by that court. (5) All proceedings before the Appellate Tribunal and the Special Director (Appeals) shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code (45 of 1860) and the Appellate Tribunal shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974)

Distribution of business amongst Benches.section29.

Where Benches are constituted, the Chairperson may, from time to time, by notification, make provisions as to the distribution of the business of the Appellate Tribunal amongst the Benches and also provide for the matters which may be dealt with by each Bench.

Power of Chairperson to transfer cases.section30.

On the application of any of the parties and after notice to the parties, and after hearing such of them as he may desire to be heard, or on his own motion without such notice, the Chairperson may transfer any case pending before one Bench, for disposal, to any other Bench.

Decision to be by majority.section31.
If the Members of a Bench consisting of two Members differ in opinion on any point, they shall state the point or points on which they differ, and make a reference to the Chairperson who shall either hear the point or points himself or refer the case for hearing on such point or points by one or more of the other Members of the Appellate Tribunal and such point or points shall be decided according to the opinion of the majority of the Members of the Appellate Tribunal who have heard the case, including those who first heard it.

Right of appellant to take assistance of legal practitioner or chartered accountant and of Government, to appoint presenting officers.section32.
(1) A person preferring an appeal to the Appellate Tribunal or the Special Director (Appeals) under this Act may either appear in person or take the assistance of a legal practitioner or a chartered accountant of his choice to present his case before the Appellate Tribunal or the Special Director (Appeals), as the case may be. (2) The Central Government may authorise one or more legal practitioners or chartered accountants or any of its officers to act as presenting officers and every person so authorised may present the case with respect to any appeal before the Appellate Tribunal or the Special Director (Appeals), as the case may be.

Members, etc. to be public servants.section33.

The Chairperson, Members and other officers and employees of the Appellate Tribunal, the Special Director (Appeals) and the Adjudicating Authority shall be deemed to be public servants within the meaning of section 21 of the Indian Penal Code (45 of 1860).

Civil court not to have jurisdiction.section34.

No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which an Adjudicating Authority or the Appellate Tribunal or the Special Director (Appeals) is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.

Appeal to High Court section35.

Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal on any question of law arising out of such order: Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days. In this section High Court means (a) the High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain; and (b) where the Central Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one respondent, any of the respondents, ordinarily resides or carries on business or personally works for gain.

Directorate of Enforcement
Section 36 to 38 provide for establishment of Directorate of Enforcement, powers to be exercised by the officers of Directorate of Enforcement and other officers authorized by the Central Government in respect of search, seizure etc. Section 36 (1) empowers Central Government to establish a Directorate of Enforcement with a Director and such other officers to be called Officers of Enforcement. Section 36(2) allows Central Government to authorize the Director of Enforcement or Additional Director of Enforcement or Deputy Director of Enforcement to appoint officers of Enforcement below the rank of assistant Director of Enforcement. Central

Government can impose conditions and limitations under which an officer of Enforcement can exercise his powers and discharge his duties. Power of search seizure etc Section 37 (1) It provides that only then Director of Enforcement and other officers of Enforcement not below the rank of Assistant Director can take up investigation of contravention under section 13 of the Act. (2) also empowers Central Government to authorized by notification, any of the Central Government, State Government or Reserve Bank of India not below the rank of Under Secretary to investigate any contravention under Section 13 (3) clarifies that such investigating officers will have the same powers which are conferred on Income-Tax authorities under IT Act 1961 and can exercise such powers subject to limitations laid down under IT Act 1961. Empowering other officers Section 38 It empowers Central Government to authorize any officer of Customs, Central Exercise Department or State Department to exercise such powers and discharge the duties of the Director of Enforcement or any other officers of Enforcement under the Act. Section 38 (2) clarifies that such officers can exercise the same powers which are conferred on income tax Authorities under income tax Act 1961 subject to such other conditions and limitations imposed by the central Government. Miscellaneous Presentation as to documents in certain cases Section 39 It deals with presumption, authenticity and admissibility of a document which is either Produced or furnished by any person Seized from custody or control of any person Received from abroad and is duly authenticated. The court or Adjudicating Authority can also presume the truth of the contents of the documents and as also the signature of the party unless contrary is proved. The Central Government has made the following rules to govern the procedure of authentication of documents under the rule called the Foreign Exchange (Authentication of Documents) Rules, 2000. Under rule 2 it is provided that any document received from any place outside India purporting to have affixed, impressed submitted thereon or thereto the seal or signature of any person who is authorized by section 3 of the Diplomatic Consular or Officer (Oaths and Fees) Act, 1948 to do any notarial acts shall be deemed duly authenticated for the purpose of section 39 of the Act. Thus this section brings in various presumptions which are otherwise not permitted under the Indian Evidence Act. Suspension of operation section 40 Subsection (1) of clause 40 empowers the Central Government in in the public interest by notification, to suspend or relax the provisions of the Act in certain circumstances. Subsection (3) provides that notification is issued for suspension or relaxation shall be laid before each house of the Parliament. Power of central government Section 41 It empowers the central government to give general or special directions to the Reserve Bank. Contravention by companies Section 42 It provides that where contravention of any of the provisions of this enactment is committed by the company, the person responsible for the conduct of its business shall be deemed guilty of the contravention.

Section 43. Death or insolvency in certain cases.

If any right, obligation, liability, proceeding or appeal arises in relation to the provisions of section 13 then such rights and obligations shall devolve on the legal representative of such person or the official receiver or the official assignee, as the case may be Provided that a legal representative of the deceased shall be liable only to the extent of the inheritance or estate of the deceased.

Section 44. Bar of legal proceedings.

No suit, prosecution or other legal proceeding shall lie against: Central Government RBI Officer of Central Government or RBI Any other person If they discharge any function or perform any duty under this Act in good faith

Section 45. Removal of difficulties.

If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, do anything not inconsistent with the provisions of this Act Provided that no such order shall be made under this section after the expiry of two years from the commencement of this Act Every order made under this section shall be laid before each House of Parliament for a total period of thirty days which may be comprised in one session or in two or more successive sessions. (Section 48)

Section 46. Power to make rules.

The Central Government may, by notification, make rules to carry out the provisions of this Act. The Central Government may, by notification, make rules to carry out the provisions of this Act. The rules provide for the imposition of reasonable restrictions on current account transactions the manner of holding an inquiry by the Adjudicating Authority the form of appeal and fee for filing such appeal the salary and allowances payable to and the other terms and conditions of service of the Chairperson and other Members of the Appellate Tribunal and the Special Director (Appeals) the salaries and allowances and other conditions of service of the officers and employees of the Appellate Tribunal and the office of the Special Director(Appeals) the additional matters in respect of which the Appellate Tribunal and the Special Director (Appeals) may exercise the powers of civil court the manner in which any document may be authenticated

Section 47. Power to make regulations.

The Reserve Bank may, by notification, make regulations to carry out the provisions of this Act and the rules made there under. The regulations provide to the permissible classes of capital account transactions, the limits of admissibility of foreign exchange for such transactions, and the prohibition, restriction or regulation of certain capital account transactions the manner and the form in which the declaration is to be furnished the period within which and the manner of repatriation of foreign exchange the limit up to which any person may possess foreign currency or foreign coins the class of persons and the limit up to which foreign currency account may be held or operated the limit up to which foreign exchange acquired may be exempted the limit up to which foreign exchange acquired may be retained any other matter which is required to be, or may be, specified.

Section 49. Repeal and saving.

(1) The Foreign Exchange Regulation Act, 1973 (46 of 1973) is hereby repealed and the Appellate Board constituted under subsection (1) of section 52 of the said Act (hereinafter referred to as the repealed Act) shall stand dissolved. (2) On the dissolution of the said Appellate Board, the person appointed as Chairman of the Appellate Board and every other person appointed as Member and holding office shall vacate their respective offices and shall not be entitled to claim any compensation for the premature termination of the term of his office or of any contract of service. (3) No court shall take cognizance of an offence under the repealed Act and no adjudicating officer shall take notice of any contravention under section 51 of the repealed Act after the expiry of a period of two years from the date of the commencement of this Act.

(4) All offences committed under the repealed Act shall continue to be governed by the provisions of the repealed Act as if that Act had not been repealed. (5) Notwithstanding such repeal, (a) Anything done or any action taken or purported to have been done or taken including any rule, notification, inspection, order or notice made or issued or any appointment, confirmation or declaration made or any licence, permission, authorization or exemption granted or any document or instrument executed or any direction given under the Act shall be deemed to have been done or taken under this Act provided it is not inconsistent with the provisions of this Act (b) Any appeal to the Appellate Board under sub-section (2) of section 52 of the repealed Act but not disposed of before the commencement of this Act shall stand transferred to and shall be disposed of by the Appellate Tribunal (c) Every appeal from any decision or order of the Appellate Board shall, if not filed before the commencement of this Act, be filed before the High Court within a period of sixty days of such commencement : Provided that the High Court may entertain such appeal after the expiry of the said period of sixty days if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period.

Case Studies: RBI slapped Rs.125 crores on Reliance

The Reserve Bank of India (RBI) has asked the Anil Dhirubhai Ambani Group firm, Reliance Infrastructure (earlier, Reliance Energy), to pay just under Rs 125 crore as compounding fees for parking its foreign loan proceeds worth $300 million with its mutual fund in India for 315 days, and then repatriating the money abroad to a joint venture company. These actions, according to an RBI order, violated various provisions of the Foreign Exchange Management Act (FEMA). In its order, RBI said Reliance Energy raised a $360-million ECB on July 25, 2006, for investment in infrastructure projects in India. The ECB proceeds were drawn down on November 15, 2006, and temporarily parked overseas in liquid assets. On April 26, 2007, Reliance Energy repatriated the ECB proceeds worth $300 million to India while the balance remained abroad in liquid assets. It then invested these funds in Reliance Mutual Fund Growth Option and Reliance Floating Rate Fund Growth Option on April 26, 2007. On the following day, i.e., on April 27 2007, the entire money was withdrawn and invested in Reliance Fixed Horizon Fund III Annual Plan series V. On March 5, 2008, Reliance Energy repatriated $500 million (which included the ECB proceeds repatriated on April 26, 2007, and invested in capital market instruments) for investment in capital of an overseas joint venture called Gourock Ventures based in British Virgin Islands. RBI said, under FEMA guidelines issued in 2000, a borrower is required to keep ECB funds parked abroad till the actual requirement in India. Further, the central bank said a borrower cannot utilize the funds for any other purpose. The conduct of the applicant was in contravention of the ECB guidelines and the same are sought to be compounded, the RBI order signed by its chief general manager Salim Gangadharan said. During the personal hearing on June 16, 2008, Reliance Energy, represented by group managing director Gautam Doshi and Price waterhouse Coopers executive director Sanjay Kapadia, admitted the contravention and sough compounding. The company said due to unforeseen circumstances, its Dadri power project was delayed. Therefore, the ECB proceeds of $300 million were bought to India and was parked in liquid debt mutual fund schemes, it added. Rejecting Reliance Energys contention, RBI said it took the company 315 days to realise that the ECB proceeds are not required for its intended purpose and to repatriate the same for alternate use of investment in an overseas joint venture on March 5, 2008. Reliance also contended that they invested the ECB proceeds in debt mutual fund schemes to ensure immediate availability of funds for utilisation in India. I do not find any merit in this contention also as the applicant has not approached RBI either for utilising the proceeds no t provided for in the ECB guidelines, or its repatriation abroad for investment in the capital of the JV, the RBI official said in the order. In its defence, the company said the exchange rate gain on account of remittance on March 5 2008, would be a notional interim rate gain as such exchange rate gain is not crystallised. But RBI does not think so. They have also stated that in terms of accounting standard 11 (AS 11), all foreign exchange loans have to be restated and the difference between current exchange rate and the rate at which the same were remitted to India, has to be shown as foreign exchange loss/gain in profit and loss accounts. However, in a scenario where the proceeds of the ECB are parked overseas, the exchange rate gains or losses are neutralized as the gains or losses restating of the liability side are offset with corresponding exchange losses or gains in the asset. In this case, the exchange gain had indeed been realised and that too the additional exchange gain had accrued to the company through an unlawful act under FEMA, the order said. It said as the company has made additional income of Rs 124 crore, it is liable to pay a fine of Rs 124.68 crore. On August this year, the company submitted another fresh application for compounding and requested for withdrawal of the present application dated April 17, 2008, to include contravention committed in respect of an another transaction of ECB worth $150 million. But RBI said the company will have to make separate application for every transaction and two transactions are different and independent and cannot be clubbed together.

BCCI blames Modi for FEMA violations in IPL

The BCCI was asked about the funding pattern of the IPL and the methods adopted for payment to foreign and Indian players. Under fire over allegations of foreign exchange violations in IPL, BCCIs top officials on Wednesday blamed sacked Commission er Lalit Modi for mistakes as they told a Parliamentary panel that they had given approvals at his behest in good faith. BCCI president Shashank Manohar, secretary N. Srinivasan and IPL chairman Chirayu Amin were quizzed by the Parliamentary Standing Committee on Finance for about two-and-a-half hours about the alleged FEMA violations. The BCCI was asked about the funding pattern of the highly popular IPL and the methods adopted for payment to foreign and Indian players. The Committee also sought details of the expenses incurred on the conduct of the second edition of the Twenty20 tournament in South Africa in 2009. The IPL was held in the African nation in 2009 due to a clash of dates with the general elections in India. Making a case of FEMA violation against the BCCI, the Committee said the Board had not taken permission from RBI and Income Tax Department for opening and operating foreign current account in South Africa. It said opening and operating of the account through an explicit agreement with the Cricket South Africa (CSA) could be construed as FEMA violation as the operations of the account were controlled by BCCI. Amin did not take questions from reporters after the hearing but sources say BCCI while replying to the queries said that it was not aware that by opening an account in South Africa it was actually indulging in FEMA violations. They admitted that some mistakes were made, said a source. Some of the officials are also believed to have told the Committee that certain transactions were done by Modi and they approved those in good faith, the source added. The Committee also asked how much money was credited into the CSA account and who did it?. The Committee also asked the BCCI officials if they were aware about a government report that investments made by IPL franchisees such as Rajasthan Royals, Kolkata Knight Riders, Kings XI Punjab and Mumbai Indians were routed from outside India through entities, located in countries such as Mauritius, Bahamas, British Virgin Island. They asked why the BCCI did not take approval from RBI, SIPB and other agencies for the foreign exchange transactions. It also asked how does the BCCI ensure that FDI received by the franchisees is not tainted money. Do you agree that large scale FEMA violations have been committed by the IPL Franchisees and their associates? If so what are the reasons thereof? What is the approach of the BCCI in this issue?, was another query. The BCCI was also asked to explain the ownership and shareholding pattern of the IPL franchisees, saying that it has noticed that in certain cases the investment have been made by some person/entity but share for corresponding money have been issued in the name of some other persons/entities. The Committee had also summoned IPL Governing Council member and former cricketer Ravi Shastri as a witness but did not turn up at the hearing.

Bharti Airtel under scrutiny for FEMA violations

India's largest private telecom company Bharti Airtel has come under the scrutiny of the Enforcement Directorate (ED) for suspected violation of provisions of the Foreign Exchange Management Act (FEMA). "The Securities and Exchange Broad of India (SEBI) has received complaints inter-alia alleging that shareholding of promoter group of Bharti Airtel Limited was increased from 60.91 per cent as on June 30, 2007 to 67.15 per cent as on September 30, 2008 without providing an open offer," Namo Narain Meena, Minister of State for Finance said in a written reply to Rajya Sabha today. The complaint alleged that this is in violation of Regulation 11 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. The Minister added that Central Board of Direct Taxes has received a reference containing allegations regarding improper accounting treatment of licence fee and spectrum charges by the company.

"The Directorate of Enforcement has also initiated enquiries about suspected contraventions of the provisions of the Foreign Exchange Management Act by Bharti Airtel," Meena said. When contacted Bharti Airtel, the company said that it adheres to standards of corporate governance and always complies with all the rules and regulations laid down by various agencies and the licensor namely DoT. The company said that it will co-operate with authorities in the investigation. "We will provide all relevant details to the concerned authorities as and when required and will offer full assistance to clarify any concern," the company's spokesperson said. Shares of the company were trading at Rs 396.85 a piece, up by 1.94 per cent, during second half of the day on BSE.

Etisalat DB under ED scanner for FEMA violation

The Enforcement Directorate (ED) has been slapped a 7,100 crore penalty on Etisalat DB India for violating the Foreign Exchange Management Act (FEMA). The firm is issued a show cause notice for not reporting funds from abroad to the Reserve Bank of India. Etisalat DB (earlier Swan Telecom) is a joint venture between UAEs Etisalat and Indias DB Realty. Licenses were issued to offer mobile services in 13 circles in 2008 during the tenure of A Raja. Etisalat DB chief Shahid Usman Balwa and Director Vinod Goenka along with the minister A Raja are in judicial custody in the 2G scam. The company is given 30 days to explain why it should not be fined. Both Etisalat and DB Realty refused to make any comments on the issue. Etisalat bought a 45 per cent stake in Swan Telecom for about Rs 4,150 crore. Presently, Etisalat DB has 6,52,370 subscribers and a market share of 0.17 per cent in the GSM market.

2G Spectrum scam
The 2G spectrum scam in India revolved around issue of 122 licenses to 85 companies, which included many new companies with little or no experience in the telecom sector at a price set in the year 2001. The main allegations involved under pricing of 2G spectrum that resulted in a heavy loss to the exchequer and the allocation process adopted by the then minister A Raja to favor select companies. The issue came to light after the auction of spectrum for 3G services. The Comptroller and Auditor General based on the money collected estimated the loss to the exchequer from 2G spectrum sale. CAG said that the loss is estimated to the tune of Rs 1.76 lakh crore to the government. The Central Bureau of Investigation is probing the matter, while the Supreme Court is monitoring the probe.

Rahat Fateh Ali Khan, manager slapped with Fema

Pakistani singer Rahat Fateh Ali Khan and his manager were on Saturday charged under FEMA and violation of the Customs Act by the Directorate of Revenue Intelligence. Sources said that this could pave the way for an early resolution of the case against the singer and his manager and they can walk free after paying a heavy redemption penalty and fine to be decided by the adjudicating authority. But investigating agencies are likely to pursue the domestic leads that have emerged in the case. The Directorate of Revenue Intelligence (DRI) had detained Rahat and his entire 16-member troupe, including his manager Maroof, from the Indira Gandhi International Airport on February 13 for allegedly carrying undeclared cash worth Rs 60 lakh in foreign currency. The troupe was on its way to Lahore via Dubai. Government sources said the case has now been handed over for adjudication to the Commissioner Customs (Airports). The sources said under the adjudication process a huge penalty could be levied. "There is no show cause notice under this process. They can pay the redemption fine and penalty to be decided by the adjudicating officer," the sources said. The case is

likely to come up for adjudication before the Commissioner Customs (Airports) next week. Rahat was released after the Pakistan High Commission had assured that he will cooperate with the probe. Pakistan interior minister Rahman Malik had thanked home minister P Chidambaram for Rahat's release. Investigating agencies have also questioned a number of other persons in the case. Meanwhile, in Mumbai sleuths have swooped down on the premises of Eyeline Telefilm and Events, owned by Chitresh Shrivastava, elder brother of Bollywood singer Aadesh Shrivastava. Sources privy to the investigations claimed that during the searches the sleuths found Rs 51 lakh in cash which was seized. They also recovered some documents which could be helpful in the probe being carried out by the DRI. As per norms, no one can carry beyond $5,000 in cash and $5,000 in other instruments. A person has to declare the amount if he is carrying more than this to the Customs Department. According to sources, the payments by an event manager to Rahat were made in Indian currency and US dollars and these people were allegedly found converting the dollars to Indian rupees "through unauthorised channels".

Ramdev under ED scanner

The Enforcement Directorate (ED) is investigating Baba Ramdevs foreign assets and investments by seeking details about them from all available official sources, including the Reserve Bank of India. The probe is taking place under the Foreign Exchange Management Act (Fema). An island Little Cumbrae was gifted to Baba Ramdev by a couple who are said to be his devotees in Scotland. According to sources, the cost of the island is around 2 million. Baba Ramdev has renamed it Peace Island. The island and Babas yoga camps abroad have also come under the ED scanner. The agency is seeking information about trusts run by Baba and his aides in India and abroad. According to sources, five trusts are under the scanner. Apart from these trusts, the ED will seek details about all companies being run by Baba Ramdev and his associates. The ED will also look into details of fund transfer in these companies and their foreign dealings. According to ED sources, huge expenditure takes place when Baba organises yoga camps in foreign destinations. The ED is seeking details about these expenditures. If any violation of Fema is found out, the ED can formally register a case in the matter at a later stage. Apart from the ED, the CBI has also started probe on allegations of flouting the Passport Act against Acharya Balakrishna, a close aide of Baba Ramdev. According to government sources, the CBI is conducting a preliminary enquiry (PE) into the passport issue. If the CBI finds any violation of passport act, the probe agency might go for registration of a regular case against Balakrishna. July 6,2011: NEW DELHI: The Enforcement Directorate has launch ED an inquiry against yoga guru Ramdev who claims to have a turnover of more than Rs 1,000 crore and lords over half-a-dozen trusts and businesses associated with them. The agency is looking into complaints of violations of foreign exchange laws and suspected money laundering, a senior official said. The ED has already written to the corporate affairs ministry and thePunjab National Bank to provide transaction details of all business ventures associated with the yoga guru and his close aide Balkrishna. A senior ED official said they had also started overseas inquiries to verify details of Ramdev's investments abroad and channels of his fund raising. The ED probe comes less than a month after the midnight crackdown on Ramdev's supporters at Ramlila grounds here after he refused to call off an indefinite hunger strike demanding a commitment from the government to bring back black money stashed abroad. TOI had in its June 10 edition reported that Ramdev's flagship Patanjali Ayurveda had raised money through unrelated business transactions. It had taken deposits from retailers to sell their products. The sales graph of the company also showed uneven transactions. For instance, the proceeds from just two products, Amla and Aloe Vera juices, were to the tune of Rs 25 crore in one year. ED will look into all export shipments made by Ramdev's ventures and verify the authenticity of recipients and money transactions. It may call for records from the Customs department to verify claims. The inquiries are being made under the Foreign Exchange Management Act (FEMA). No case has yet been registered. Ramdev owns an island in Scotland "gifted" by one of his followers. Sources said the agency will go into the transaction details of the Poddar couple who gifted the island to the yoga guru and look into their linkage with Ramdev's trusts. As per the records of Patanjali Ayurveda Ltd with the Registrar of Companies, the Poddar couple hold nearly 25 lakh shares in the company or roughly 7% stake in the flagship venture. The other big stakeholder in Patanjali is Balkrishna who holds 92% of the shares.

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