Union of India Vs Nihar Ranjan Samantara (Appellate Tribunal Under SAFEMA Delhi)
SAFEMA Tribunal Refuses to Enhance FEMA Penalty on IGNIS Director; Holds Quantum of Penalty Lies Within Adjudicating Authority’s Discretion
The Appellate Tribunal under SAFEMA dismissed the Enforcement Directorate’s appeal seeking enhancement of the ₹70 lakh penalty imposed on Nihar Ranjan Samantara, Director and CEO of IGNIS Technology Solutions Pvt. Ltd., for FEMA contraventions relating to foreign remittances made towards an alleged software import that never materialised. The Directorate contended that the respondent, being a Director, authorised signatory and joint signatory to the outward remittances of USD 75.25 lakh (approximately ₹33.42 crore), had actively participated in the transactions and therefore deserved a substantially higher penalty under Section 13(1) of FEMA.
The Tribunal observed that the sole ground urged by the Directorate was that the penalty imposed was too low in comparison with the magnitude of the contravention. It held that Section 13(1) of FEMA prescribes only the maximum permissible penalty-up to three times the amount involved-but does not prescribe any minimum or mandatory penalty. Consequently, determination of the quantum of penalty is a matter of judicial discretion to be exercised by the Adjudicating Authority after considering the facts and evidence in each case. The Tribunal found that the Adjudicating Authority had passed a detailed, reasoned order after evaluating the evidence and that there was no material to show that such discretion had been exercised arbitrarily or perversely.
Relying on the Supreme Court’s decision in State of M.P. v. Bharat Heavy Electricals, the Tribunal reiterated that where a statute prescribes only a maximum penalty, the adjudicating authority is not bound to impose the maximum amount. Since the Directorate failed to demonstrate why the penalty of ₹70 lakh was inadequate or why the Adjudicating Authority’s exercise of discretion required appellate interference, the Tribunal declined to enhance the penalty. Accordingly, the Enforcement Directorate’s appeal was dismissed, leaving the penalty imposed on the Director undisturbed.
Cases Discussed
- State of MP and Ors. Vs. Bharat Heavy Electricals (SC), (1997) 7 Supreme Court Cases 1
FULL TEXT OF THE JUDGMENT APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI
This Order disposes of the Appeal No. FPA-FE-105/CHN/2020 filed by the Union of India through Deputy Legal Adviser, Directorate of Enforcement, Chennai against part of the Adjudication Order No. SDE/SRO/BGZO/07/2020(SK) dated 30.06.2020 (Impugned Order), passed by the Special Director, Enforcement Directorate, Government of India, Chennai. The Ld. Adjudicating Authority (AA) imposed penalty of Rs. 7,00,00,000/-
