Beeravelli Ranjith Kumar Vs Joint Director (Appellate Tribunal Under SAFEMA Delhi)
The Appellate Tribunal under SAFEMA partly allowed the appeal filed by Beeravelli Ranjith Kumar against the penalty imposed under the Foreign Exchange Management Act (FEMA) for engaging in unauthorized online foreign exchange trading.
The case involved transactions carried out by the appellant between 2011 and 2018 on the “Easy Market” online forex trading platform, where he used credit and debit cards linked to his HDFC Bank account to remit funds abroad for trading in foreign exchange derivatives. The total value of such transactions amounted to about ₹5.21 crore.
The Enforcement Directorate alleged that such transactions violated:
- Section 47(2)(h) FEMA,
- Regulation 3 of the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000, and
- RBI circulars prohibiting overseas forex trading through internet platforms without RBI permission.
The appellant argued that:
- He believed online forex trading was similar to equity trading and was unaware of FEMA restrictions.
- The website was freely accessible and the bank did not warn him about the illegality.
- He had actually suffered losses of over ₹3.25 crore and did not derive any profit.
The Tribunal held:
- The appellant admitted engaging in foreign exchange trading transactions worth ₹5.21 crore through an overseas portal, which clearly violated FEMA and RBI regulations.
- Ignorance of law cannot be accepted as a defence, and accessibility of websites does not make such trading legal.
- Under Section 13 FEMA, penalty for breach of statutory obligations is a civil liability and does not require proof of mens rea.
However, considering the mitigating circumstances—particularly that the appellant suffered substantial losses and had not derived profit—the Tribunal reduced the penalty.
Result: The Tribunal upheld the FEMA contravention but reduced the penalty from ₹5.20 crore to ₹20 lakh, directing adjustment of the pre-deposit already made.
FULL TEXT OF THE ORDER OF APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI
This Order disposes of the Appeal No. FPA-FE-129/HYD/2020 filed by Shri Beeravelli Ranjith Kumar, against the Order No. JD/AG/05/HYZO/2020 dated 27.10.2020 (Impugned Order), passed by the Joint Director, Enforcement Directorate, Government of India, Hyderabad. The Ld. Adjudicating Authority (AA) imposed the penalty of Rs. 5,20,00,000/- on the Appellant for the contraventions of Section 47 (2) (h) of the Foreign Exchange Management Act, 1999 (FEMA) read with Regulation 3 of Foreign Exchange Management (Foreign Exchange Derivatives Contracts) Regulations, 2000, further read with Reserve Bank of India (RBI) AP DIR (Series) No. 53 dated 07.04.2011 and RBI AP DIR (Series) No. 46 dated 17.09.2013, vide the Impugned Order.
