WHISTLE BLOWN BY THE INDEPENDENT DIRECTOR OF FIVE CRORE ELECTRONICS LTD

WHISTLE BLOWN BY THE
INDEPENDENT DIRECTOR OF FIVE CRORE ELECTRONICS LTD

PROMOTORS OF FIVE CORE
ELECTRONICS Limited (FCEL) ARE BARRED FROM PARTICIPATION IN THE SECURITY MARKET
ACTIVITIES

SEBI has received
certain complaints against Five Core Electronics Limited (FCEL), which are as
under:

(a) Letter dated May 05,
2019 from one Aditya Agarwal, then Independent Director of the company
intimating his resignation from the said post on account of 'unethical
behaviour and practice of the management'.

(b) Letter dated August
09, 2019 from the Ministry of Corporate Affairs (“MCA”) forwarding therewith
complaint of one Anand Lakhotia (“The Complainant”), Director of Acepro
Advisers Pvt. Ltd.

(c) Letter dated August
20, 2019 from Economic Offences Wing forwarding the complaint of Anand Lakhotia

The gist of the
allegations in these complaints is as under:

(a) Mis-utilization and
mis-appropriation of Initial Public Offer (“IPO”) proceeds amounting to INR
46.66 Crore;

(b) Resignation by all
KMPs and directors of the company;

(c) No business activity
carried out by the company; the registered office of the company is also
closed;

(d) Non-availability of
the Managing Director (MD) and other non-executive directors (NEDs) since
February 2019 and

(e) Investigations
carried out by Director of Revenue Intelligence (DRI)

The complaints were
forwarded by SEBI to NSE for examination of the aforesaid allegations with
respect to provisions of SEBI (LODR Regulations). In response, NSE vide email
dated November 18, 2019 inter alia submitted that it had conducted an analysis
on functioning of the company and undertaken suspension of company based on the
same.

SEBI's preliminary
observations are as under

(a) Failure to make
announcements on the exchange website in line with Regulation 30 of LODR
Regulations

(b) Non-compliance with
other provisions of the LODR Regulations

(c) Mis-utilization of
funds and Intent to defraud the investors

SEBI found that
promotors have prima facie violated the provisions of Regulation 3(d) of the
SEBI (PFUTP) Regulations, 2003 read with Section 12A(c) of the SEBI Act, 1992

In view of the
foregoing, in order to protect the interest of investors and the integrity of
the securities market, WTM in exercise of the powers conferred upon them under
Section 19 read with Sections 11, 11(4) and 11B of the SEBI Act, 1992, hereby
issue the following directions:

(a) The Noticee nos. 1
to 7 are restrained from accessing the securities market and are further
prohibited from buying, selling or otherwise dealing in securities in any
manner whatsoever, either directly or indirectly, till further orders.

(b) The Noticee nos. 1
to 7 are restrained from being associated with any intermediary registered with
SEBI or any listed entity or its material unlisted subsidiary, till further
orders.

(c) The Noticee nos. 1
to 7, are restrained from disposing, selling or alienating, in any other
manner, their assets or divert funds, till further orders.

(d) NSE shall appoint an
independent Auditor/ Audit Firm for conducting a detailed forensic audit of the
books of accounts of the company to confirm mis-utilization of IPO proceeds by
the company. Such appointment of forensic auditor shall be done within 30 days
of this order.

(e) The Noticee nos. 1
to 7 shall extend necessary co–operation to the independent Auditor/Audit Firms
appointed as per this Order and shall furnish all information/documents sought
from them from time to time.

(f) The independent
Auditor/ Audit Firm so appointed as per this Order shall submit a Report to
SEBI through NSE within 3 months of date of its appointment.

WHISTLE BLOWN BY THE INDEPENDENT DIRECTOR OF FIVE CRORE ELECTRONICS LTD

WHISTLE BLOWN BY THE
INDEPENDENT DIRECTOR OF FIVE CRORE ELECTRONICS LTD

PROMOTORS OF FIVE CORE
ELECTRONICS Limited (FCEL) ARE BARRED FROM PARTICIPATION IN THE SECURITY MARKET
ACTIVITIES

SEBI has received
certain complaints against Five Core Electronics Limited (FCEL), which are as
under:

(a) Letter dated May 05,
2019 from one Aditya Agarwal, then Independent Director of the company
intimating his resignation from the said post on account of 'unethical
behaviour and practice of the management'.

(b) Letter dated August
09, 2019 from the Ministry of Corporate Affairs (“MCA”) forwarding therewith
complaint of one Anand Lakhotia (“The Complainant”), Director of Acepro
Advisers Pvt. Ltd.

(c) Letter dated August
20, 2019 from Economic Offences Wing forwarding the complaint of Anand Lakhotia

The gist of the
allegations in these complaints is as under:

(a) Mis-utilization and
mis-appropriation of Initial Public Offer (“IPO”) proceeds amounting to INR
46.66 Crore;

(b) Resignation by all
KMPs and directors of the company;

(c) No business activity
carried out by the company; the registered office of the company is also
closed;

(d) Non-availability of
the Managing Director (MD) and other non-executive directors (NEDs) since
February 2019 and

(e) Investigations
carried out by Director of Revenue Intelligence (DRI)

The complaints were
forwarded by SEBI to NSE for examination of the aforesaid allegations with
respect to provisions of SEBI (LODR Regulations). In response, NSE vide email
dated November 18, 2019 inter alia submitted that it had conducted an analysis
on functioning of the company and undertaken suspension of company based on the
same.

SEBI's preliminary
observations are as under

(a) Failure to make
announcements on the exchange website in line with Regulation 30 of LODR
Regulations

(b) Non-compliance with
other provisions of the LODR Regulations

(c) Mis-utilization of
funds and Intent to defraud the investors

SEBI found that
promotors have prima facie violated the provisions of Regulation 3(d) of the
SEBI (PFUTP) Regulations, 2003 read with Section 12A(c) of the SEBI Act, 1992

In view of the
foregoing, in order to protect the interest of investors and the integrity of
the securities market, WTM in exercise of the powers conferred upon them under
Section 19 read with Sections 11, 11(4) and 11B of the SEBI Act, 1992, hereby
issue the following directions:

(a) The Noticee nos. 1
to 7 are restrained from accessing the securities market and are further
prohibited from buying, selling or otherwise dealing in securities in any
manner whatsoever, either directly or indirectly, till further orders.

(b) The Noticee nos. 1
to 7 are restrained from being associated with any intermediary registered with
SEBI or any listed entity or its material unlisted subsidiary, till further
orders.

(c) The Noticee nos. 1
to 7, are restrained from disposing, selling or alienating, in any other
manner, their assets or divert funds, till further orders.

(d) NSE shall appoint an
independent Auditor/ Audit Firm for conducting a detailed forensic audit of the
books of accounts of the company to confirm mis-utilization of IPO proceeds by
the company. Such appointment of forensic auditor shall be done within 30 days
of this order.

(e) The Noticee nos. 1
to 7 shall extend necessary co–operation to the independent Auditor/Audit Firms
appointed as per this Order and shall furnish all information/documents sought
from them from time to time.

(f) The independent
Auditor/ Audit Firm so appointed as per this Order shall submit a Report to
SEBI through NSE within 3 months of date of its appointment.

WHETHER SECTION 32A OF IBC IS A BOON OR CURSE?

WHETHER SECTION 32A OF IBC IS A BOON OR CURSE?

 HOW SECTION 32A OF IBC CODE OFFERS IMMUNE FROM ATTACHMENT BY THE ENFORCEMENT DIRECTORATE TO THEASSETS OF CORPORATE DEBTOR

WHETHER
SECTION 32A OF IBC IS A BOON OR CURSE?

Section 32A of IBC code which was inserted through IBC Amendment Act
2020  seeks to provide immunity to a
corporate debtor and its assets from any prosecution, action, attachment,
seizure, retention or confiscation upon approval of a resolution plan if the
resolution plan results in the change in the management or control of the
corporate debtor.

The Section 32A appears to have been introduced as a result of the
litigation and ambiguity surrounding JSW Steel Limited’s resolution plan for
Bhushan Power & Steel Limited.

In the aforesaid corporate insolvency resolution process, JSW Steel’s
resolution plan was approved by the Adjudicating Authority with certain
modifications on September 5, 2019. Shortly thereafter, on October 10, 2019,
the Enforcement Directorate attached certain assets of Bhushan Power under
Section 5 of the Prevention of Money Laundering Act, 2002 (PMLA).

JSW VS ENFORCEMENT DIRECTORATE

The attachment by the Enforcement Directorate was challenged by JSW Steel
before the National Company Law Appellate Tribunal (NCLAT).

Whilst JSW Steel’s Appeal was pending adjudication, the Insolvency and
Bankruptcy Code (Amendment) Ordinance, 2019 was promulgated. As a result, the
NCLAT took into account the Ordinance and the proposed Section 32A therein and inter alia called upon
the Enforcement Directorate to clarify as to whether or not JSW Steel’s
Resolution Plan would be covered under Section 32A.

In response, the Enforcement Directorate took a stand that the newly introduced
Section 32A would not apply to JSW Steel’s resolution plan for various reasons
including its assertion that JSW Steel is a related party to Bhushan Power.

APPEAL TO SUPREME COURT AGAINST NCLAT’S ORDER

Consequently, the Enforcement Directorate took a stand that the benefit
of Section 32A (2) would not be available to Bhushan Power’s properties
attached by the Enforcement Directorate under the PMLA.

Rejecting the Enforcement Directorate’s arguments, the NCLAT held that
the Enforcement Directorate’s attachment was illegal and without jurisdiction.
Relying on Section 32A, the NCLAT further held that Bhushan Power’s assets are
immune from attachment by the Enforcement Directorate.

Whilst parting, the NCLAT clarified that its decision will not come in
the Enforcement Directorate’s way to proceed with investigation or to take any
action in accordance with law against Bhushan Power’s erstwhile promoters and
officers.

NCLAT’s aforesaid order is currently challenged before the Supreme Court
of India and is sub-judice (Civil Appeals)

Anil Goel vs. Dy Director, Enforcement
Directorate, New Delhi

Introduction of Section 32A of IBC is quite a dominant and overriding
amendment to IBC read with its Section 238 of IBC 2016 having the ability to
cease any/all prosecution, attachment and/or seizure against the corporate
debtor under any law for the time being in force

Section 32A is a sweeping amendment in every sense. Not only does it
override the PMLA as in the JSW Steel case, but in a given case; has the
ability to cease any prosecution, action, attachment, seizure, retention or
confiscation against a corporate debtor and its property/assets under any law
for the time being in force. Section 32A being a non-obstante provision itself,
read with Section 238 of the Code, is arguably the Code’s most powerful and
overriding amendment till date.

Hon'ble NCLT, Kolkata Bench, in the case of Anil Goel vs. Dy Director,
Enforcement Directorate, New Delhi in the case of Varrsana Ispat Limited
whereby the Liquidator is permitted to sell the assets which are attached by
Enforcement Directorate under Prevention of Money Laundering Act.

Anil Goel vs. Dy Director, Enforcement Directorate, New Delhi

The Corporate Debtor is a steel plant and is being run as a going
concern doing a turnover of about 900 Crores p.a.

Now we would be selling the Corporate Debtor as a going
concern and then will apply to NCLT under newly inserted section 32A of IBC for
de-attachment and protection of the buyer. This is  said to be the first order of its kind in the
Country after the promulgation of section 32A in IBC

whether a legislation with primarily civil and commercial consequences,
can, in such manner, override any and all other legislations governing their
respective individual fields. Pertinently, the NCLAT, has, in Shah Bros. Ispat (P) Ltd.[3] held that criminal
proceedings such as proceedings

RELIEF OFFERED BY NEW SECTION 32A OF IBC PROVISIONS

Section 32A will also have to be tested on whether it can extinguish
avenues available to complainants / authorities / enforcement agencies under
various criminal statutes in such manner by the mere approval of a resolution
plan. This would amount to Section 32A overriding such statutory remedies.

Section 32A would bar the attachment of a corporate debtor’s property albeit it being a property
acquired through ‘proceeds of crime’. It could even be
possible that such property was acquired shortly prior to the commencement of
the corporate insolvency resolution process and therefore, the Enforcement
Directorate and/or any other authority was unable to conclude its investigation
till such time that the resolution plan was approved.

Varrsana Ispat
Limited VS NCLT, Kolkata

Hon'ble NCLT, Kolkata Bench, in the case of Anil Goel vs. Dy Director,
Enforcement Directorate, New Delhi in the case of Varrsana Ispat Limited
whereby the Liquidator is permitted to sell the assets which are attached by
Enforcement Directorate under Prevention of Money Laundering Act.

The Corporate Debtor is a steel plant and is being run as a going
concern doing a turnover of about 900 Crores p.a.

Now we would be selling the Corporate Debtor as a going
concern and then will apply to NCLT under newly inserted section 32A of IBC for
de-attachment and protection of the buyer. This is  said to be the first order of its kind in the
Country after the promulgation of section 32A in IBC

NCLAT further held that Bhushan
Power’s assets are immune from attachment by the Enforcement Directorate.

LESSONS LEARNED

Section 32A of IBC can be used for de-attachment of attachment order
issued by any enforcing authorities and also offers protection to the buyer who
buys the property under Insolvency proceedings

The NCLAT in JSW steel case that its decision will not come in the
Enforcement Directorate’s way to proceed with investigation or to take any
action in accordance with law against Bhushan Power’s erstwhile promoters and
officers.

Such instances would result in the assets/properties
purchased illegally at the outset, being legalized in the hands of the
successful resolution applicant and; as an additional safeguard, provide the
successful resolution applicant with immunity against any and all future action
against such illegally acquired property.

Whether
by virtue of Section 32A of IBC all the statutory remedy under the criminal
statutes will come to a halt by mere approval of resolution plan which is a
purely a civil and commercial action.

LESSONS LEARNED

How
will the amendment address the law laid by Delhi High Court in the case of the Deputy director of Directorate of Enforcement vs Axis Bank wherein it was held
that objective of PMLA is for distinct purpose and IBC cannot prevail over the
former.

What
would be the fate of the attachment of assets under the Negotiable Instrument
Act, 1881, if the attachment is pending while resolution plan is approved when
the NCLAT has in Shah Brothers Ispat Pvt. Ltd vs
P. Mohanraj & Ors. exempted proceedings under Negotiable Instrument Act,
1881 from the scope of IBC.

Another
absurdity which is staring for adjudication by the higher courts/legal
authorities is that what would happen to attachments of the assets of the
corporate debtor which are acquired through “proceeds of crime” and the
investigation by ED is underway while the resolution plan is approved.

SECTION 32A OF IBC IS really A BOON to all the stakeholders

It facilitates to sell the debtors properties as a going concern
despite of any attachment order which will be helpful to employees working in
such factories , shareholders , creditors and public .

Top 10 Indian Merger and Acquisition Deals In India

Top 10 Indian Merger and Acquisition Deals

NFRA bars ex-Deloitte CEO for 7 years, slaps Rs 25L fine for his role in...

NFRA bars ex-Deloitte CEO for 7 years, slaps Rs
25L fine for his role in IL&FS fraud

CASE STUDY OF ACQUISITION OF RUCHI SOYA BY PATANJALI

Have you invested just
Rs 1,15,000 in RUCHI SOYA shares , You would have earned Rs 1 Crore  , a jump of 8929%

CASE STUDY OF ACQUISITION OF RUCHI SOYA BY
PATANJALI GROUP

Ruchi
Soya Industries, a company which sells edible oil and soya products under
popular brands like Mahakosh, Ruchi gold and Nutrela brands, was delisted in
November 2019, about two years after the insolvency proceedings against the
company were initiated in 2017 by the lenders.

The
sale transaction was completed in December 2019 and Patanjali Ayurved paid Rs
4,350 crore to take over. The company was relisted in January this year. However,
existing shareholders of Ruchi Soya got only one share for every 100 shares
held in the newly formed entity.

RELISTING OF SHARES

On
27 January 2020, the day the edible oil maker relisted after Patanjali acquired
it under the provisions in the Insolvency and Bankruptcy Code, the Ruchi Soya
share price was at Rs 17. It skyrocketed over the next few months to touch Rs
1,535 on 29 June — a jump of 8929 per cent.

A
leap of 8929 per cent in five months of relisting after insolvency, and then a
steep fall for six consecutive trading days — the stock movement of Baba
Ramdev’s Patanjali Ayurved-acquired Ruchi Soya Industries has left markets
perplexed and raised questions over leeway to companies that have come out of
the insolvency process.

A sharp fall in share prices

The
market cap of this lesser-known firm also rose to over Rs 45,000 crore . The
sharp increase in Ruchi Soya’s stock price came at a time the benchmark Sensex
fell 11 per cent over the last five months.

But
since 29 June 2020 , the stock consistently fell by 5 per cent for six
consecutive days, triggering the lower circuit — the levels where trading
activity in a stock are suspended following a sharp fall in share prices — on
six trading days until Monday.

A Loss of Rs 41 Crore in March 2020

Ruchi
Soya Industries reported a loss of Rs 41 crore in the quarter ended March 2020
and total revenues of Rs 3,190 crore — the first quarterly results after the
acquisition

At
the time of announcement of the results, the company said the pandemic has
impacted capacity utilisation at its plants due to unavailability of labour and
transportation as well as procurement of packing materials. However, it expressed
confidence of recovering its trade receivables.

99% of Shares 
of Listed Company Held by Promoters after Takeover

BSE data
shows that of the total 29.58 crore equity shares, the promoters owned 29.29
crore shares or 99 per cent. This left only about 1 per cent with the public.
The low level of public shareholding has also translated into low trading
volumes for the stock.

According to
existing listing guidelines, companies have to ensure 25 per cent public
shareholding. However, since Ruchi Soya Industries was relisted following the
resolution process, the promoters have 18 months to raise the non-promoter
shareholding to 10 per cent and 3 years to take it to 25 per cent.

IS REVERSE
MERGER POSSIBLE?

Such high levels of promoter
shareholding also led to speculation that Patanjali Ayurved, a private unlisted
company, may be considering a reverse merger with Ruchi Soya, a claim that
the latter denied as factually incorrect in a disclosure to the stock
exchanges.

A reverse merger is a situation
where a private company could take over a publicly listed company thus
indirectly listing itself without undergoing the lengthy process of an initial
public offer.

Acharya Balkrishna is the chairman
and managing director of Ruchi Soya. Yoga guru Baba Ramdev is a board member.
Both are also the founders of Patanjali Ayurved, a company that posted revenues
of more than Rs 8,000 crore in 2018-19.

Lessons Learned

There
is a demand supply mismatch and there are no valuation metrics available.

Any
company that comes out of the insolvency process is like a black box with no
clear picture about its present financial position or the plan of the
promoters.

All
such stocks should not be allowed to be traded until an information memorandum
akin to a prospectus is put in the public domain so that the public can make an
informed decision. In addition, the time limit to increase the public float
should be curtailed

When
the new promoters came in, there was a reduction in capital by 99 per cent as
for every 100 shares held, an investor got one share. So the increase in price
is not as substantial if one considers that.

“The
current high valuation will not remain when the free float of the company will
increase,”

Case Studies of Compounding under FEMA- Why Compliance is important unde...

COMPOUNDING UNDER
FEMA

Why Compliance is
important under FEMA?

When
an Indian company receive FDI from foreign country , it has to be reported by
filing Form FC-GPR to RBI within 30 days of allotment of shares through your AD.

When
shares are transferred between a non-resident and resident and vice-versa, it
has to be reported in FC-TRS within 60 days to RBI through your AD.

Below
is the List of important compliance to be followed under the provisions of
FEMA:

1.   
Annual Return on
Foreign Liabilities and Assets

2.   
Annual Performance
Report (APR)

3.   
External
Commercial Borrowings

4.   
Single Master Form
(w.e.f. 30.06.2018)

5.   
Advance Reporting
Form (ARF) (now merged with the FC-GPR)

6.    Form FC-GPR

7.    Form FC-TRS

8.   
Form ODI

Option Available for Rectification of Non-Compliances
under FEMA

If any omission or commission in reporting the above to
RBI by an Indian Company or LLP , it has two options to rectify the same:

1.   
Payment of LSF
(Late Submission Fee)

Or

2.   
Compounding

WHAT IS COMPOUNDING
?

Compounding
is the voluntarily admitting the contravention, pleading guilty and seeking
redressal.

Any
contravention of the Act, any rules, regulations, notification, orders,
directions, circulars issued thereunder can be compounded.

The
Reserve Bank has the power to compound any contravention under the Act under
section 13 of the Act except the contraventions mentioned under section 3(a).

It
compounds the contravention for a specified sum after offering an opportunity
of personal hearing to the applicant.

Which Offences are
not compoundable?

Compounding
of offences under FEMA is not possible under section 3 (a) if the contravention
relates to serious contravention suspected of money laundering, terror
financing or affecting sovereignty and integrity of the nation, such cases will
not be compounded by the Reserve Bank.

Any
individual or corporate, who contravenes any provision of the FEMA, 1999 and  compounding may be applied suo moto or on making aware of the contravention by RBI,
or any other authority or by any other means.

Compounding
orders passed on or after June 1, 2019 are be published on the RBI’s website on
monthly basis.

Company’s Name	Contravention under FEMA	Fine Amount
Datamatics Global Services Ltd	Failure to file APR for ODI in WOS in Germany for 10 years (from 2007 to 2016)	₹ 7,72,500/-
Bennett Coleman & Co.Ltd	Failure to file APR for ODI in WOS The applicant company had also delayed the filing of its APRs with respect to its overseas JV for 8 years, i.e. from 2009 to 2016.	₹ 4,35,833/-
Everest Kanto Cylinder Ltd.	company failed to receive the amount of interest (USD 38,18,654) for multiple loan remittances due on various dates (from March 2008 to September 2018) from the overseas WOS within the prescribed time period of 60 days, company submitted the annual performance reports (APRs) for the years 2007, 2017 and 2018, with a delay	Rs 11,60,000/-
Indospace Capital Advisors Pvt Ltd	·     delay in reporting of receipt of inward remittances ·     delay in submission of Form FC-GPR ·     delay in refund of excess consideration ·     taking on record transfer of shares in the books of the company without certified FCTRS	V
Valcon Management Consultants Pvt Ltd	As above	₹6,91,115/-
Hydco Engineering Pvt. Ltd.	delay in issue of shares delay in filing the Annual Return in respect of the Foreign Liabilities and Assets	₹4,38,371/-
Shri Mohana R Velagapudi	Delay in filing FC-TRS	₹ 5,22,500/-
Puissant Towers (India) Pvt Ltd	₹Delay in reporting inward remittance and FC-GPR Rs 14,24,69,864.85	As per section 13 of the FEMA, RBI can levy penalty up to thrice the sum involved in such contravention. But levied only a fine of ₹8,71,049/
Yalamanchili Software Exports Ltd	ODI Reporting delays ranging from 8.4 years to 11.2 years. Delays of upto one year were observed in submission of Share-certificates on five occasions and all 11 APRs were submitted beyond the due date	₹ 2,72,499/-
Efficient Light Source Technologies Pvt Ltd.	2,21,61,250FC-GPR as indicated above with a delay of 13 years one month approximately beyond the stipulated time of 30 days.	₹12,95,000/
Shri K Gokhul Kalyana Sundaram	The applicant filed the Form FC TRS with a delay of one year three months approximately beyond the prescribed period of 60 days from the date of receipt of consideration	₹ 11,250/-
Healthcare Global Enterprises Limited (I)	Applicant was not eligible to raise ECB under the Automatic Route on the date of the transaction. AIC ceiling breached and LRN not obtained. Contravention of Regulation 6 of the Regulations	₹ 17,69,000/-
Atria Convergence Technologies Pvt. Ltd.	Non-reporting of downstream investments by the applicant to the Reserve Bank of India (RBI) – The applicant did not report its downstream investments (both direct and indirect) in the following Indian companies to the RBI subsequent to receiving indirect foreign investment from IVF III A in contravention of the provisions of Regulation 14(6)(ii)(a) of Notification No. FEMA 20/2000-RB read with A.P. (DIR Series) Circular No.01 dated July 04, 2013. Further downstream investments by the applicant were also not reported to the FIPB as prescribed. The period of contravention ranges from March 25, 2009 to the date of regularization by FIPB vide letter dated June 23, 2015 for the contravention amount of Rs.110,55,08,039/-	₹ 73,41,300/-
S. Narendra	Applicant engaged in the business of import and export of diamonds since approximately the last 50 years. The applicant had imported rough diamonds on credit, but did-not effect the re-payment within the stipulated period of 180 days Non-repayment of foreign currency credit, extended by the overseas supplier of goods, for a period exceeding six months on a couple of occasions. Sometimes, settlement of import dues may be delayed due to disputes, financial difficulties, etc. Authorised dealers may make remittances in such cases even if the period of six months has expired, one of the banks terminated their working capital limits abruptly, which prevented them from arranging working limits	₹ 4,55,726/-

Conclusion

•     Under Compounding , the
applicant and his advisor can appear in person and explain the reasons with the
RBI compounding officials which is not available under LFS.

•     I have seen a long list
of compounding orders in the RBI website. 
I wonder why Auditors of the company or Secretarial Auditors  have not pointed these FEMA issues in their
report. Had they reported , these violations could have been corrected at the
earlier stages and not after 10 years or so.

•     Like Secretarial or
Statutory Audit , FEMA Audit should be prescribed by RBI under FEMA  for those companies which has FDI, ODI , ECB
etc so that violations can be stopped at the initial stage itself.