Orchid Pharma Ltd. Vs Special Director (Appellate Tribunal Under SAFEMA Delhi)
IBC Resolution Plan Overrides FEMA Penalty-SAFEMA Tribunal Quashes ₹8 Cr Penalty Against Orchid Pharma After Change in Management
The SAFEMA Appellate Tribunal allowed the appeal of M/s Orchid Pharma Ltd. & set aside FEMA penalties imposed for alleged export-related contraventions, holding that post-IBC resolution the corporate debtor was entitled to immunity. The Enforcement Directorate had imposed penalties exceeding ₹8 crore for alleged violations of s.7 of FEMA relating to non-realisation & export compliance.
The Tribunal noted that during CIRP, management of the company changed completely pursuant to approval of the Resolution Plan by NCLT, later upheld by the Supreme Court, and implemented before the impugned FEMA order was passed. Relying on s.32A of IBC & Supreme Court rulings in JSW Ispat Special Products Ltd. and Ghanashyam Mishra, it held that liabilities relating to pre-CIRP period stand extinguished against the corporate debtor where new management takes over.
Since the Enforcement Directorate failed to show involvement of the new management in the alleged offences, the Tribunal held that continuation of proceedings against the corporate debtor was unsustainable and accordingly quashed the impugned order, granting full relief to the appellant company.
FULL TEXT OF THE JUDGMENT APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI
