Contents E G A P
Chapter-wise Marks Distribution
I-9
Chapter-wise Comparison with Study Material
I-13
PART A FOREIGN EXCHANGE MANAGEMENT & NBFCs Chapter 1 1.3
u RESERVE BANK OF INDIA ACT, 1934
Chapter 2 u FOREIGN EXCHANGE MANAGEMENT ACT, 1999
2.1
Chapter 3 u FEMA - CURRENT & CAPITAL ACCOUNT TRANSACTIONS, LIBERALIZED
REMITTANCE SCHEME
3.1
Chapter 4 u FEMA - FOREIGN DIRECT INVESTMENT IN INDIA
4.1
Chapter 5 u FEMA - DIRECT INVESTMENT OUTSIDE INDIA
5.1
Chapter 6 u EXTERNAL COMMERCIAL BORROWINGS (ECB)
I-5
6.1
S T N E T N O C
I-6
E G A P
Chapter 7 u FOREIGN CONTRIBUTION (REGULATION) ACT, 2010
7.1
Chapter 8 u FOREIGN TRADE POLICY & PROCEDURES
8.1
Chapter 9 u NON-BANKING FINANCE COMPANIES (NBFC)
9.1
Chapter 10 u SPECIAL ECONOMIC ZONES ACT, 2005
10.1
PART B COMPETITION LAW Chapter 11 11.3
u COMPETITION ACT, 2002
PART C COMMERCIAL LAWS Chapter 12 u CONSUMER PROTECTION ACT, 2019
12.3
Chapter 13 u ESSENTIAL COMMODITIES ACT, 1955
13.1
Chapter 14 14.1
u LEGAL METROLOGY ACT, 2009
PART D PROPERTY LAWS Chapter 15 u TRANSFER OF PROPERTY ACT, 1882
15.3
Chapter 16 u REAL ESTATE (REGULATION & DEVELOPMENT) ACT, 2016
16.1
S T N E T N O C
I-7 E G A P
PART E ANTI-CORRUPTION LAWS Chapter 17 u BENAMI TRANSACTION (PROHIBITION) ACT, 1988
17.3
Chapter 18 u PREVENTION OF MONEY LAUNDERING ACT, 2002
18.1
PART F BUSINESS LAWS Chapter 19 u CONTRACT ACT, 1872
19.3
Chapter 20 u SPECIFIC RELIEF ACT, 1963
20.1
Chapter 21 u SALE OF GOODS ACT, 1930
21.1
Chapter 22 u PARTNERSHIP ACT, 1932
22.1
Chapter 23 u NEGOTIABLE INSTRUMENTS ACT, 1881
SOLVED PAPER : DECEMBER 2020 (NEW SYLLABUS)
23.1 P.1
SOLVED PAPER : JUNE 2021 (NEW SYLLABUS)
P.21
SOLVED PAPER : DECEMBER 2021 (NEW SYLLABUS)
P.41
2
CHAPTER
5>A486= 4G270=64 <0=064<4=C 02C (((
OBJECTIVES & SCOPE OF FEMA Q1. “FEMA is to facilitate external trade and payments and promotion of orderly development and maintenance of foreign exchange market in India.” Discuss. [June 2014 (5 Marks)] Ans.: (a) Objective as per Preamble 4HE OBJECTIVE IS TO CONSOLIDATE AND AMEND THE LAW RELATING TO FOREIGN EXCHANGE WITH VIEW TO &ACILITATE EXTERNAL TRADE AND PAYMENTS
&OR PROMOTING DEVELOPMENT MAINTENANCE OF FOREIGN EXCHANGE MARKET IN )NDIA
(b) Scope: 4HE !CT EXTENDS TO THE whole of India )T ALSO APPLIES TO
!LL BRANCHES OFFICES AND AGENCIES OUTSIDE )NDIA OWNED OR CONTROLLED BY A PERSON RESIDENT IN )NDIA 02) AND
!NY CONTRAVENTION COMMITTED OUTSIDE )NDIA BY ANY PERSON TO WHOM THIS !CT APPLIES
(c) Central Legislation )T DEALS WITH INBOUND INVESTMENTS INTO )NDIA AND OUTBOUND INVESTMENTS FROM )NDIA AND DEAL WITH TRADE AND BUSINESS BETWEEN )NDIA AND THE OTHER COUNTRIES (d) Provisions &OREIGN %XCHANGE -ANAGEMENT !CT MAKES PROVISIONS FOR DEALINGS IN FOREIGN EXCHANGE "ROADLY ALL #URRENT !CCOUNT 4RANSACTIONS ARE FREE (OWEVER #ENTRAL 'OVERNMENT CAN IMPOSE REASONABLE RESTRICTIONS BY ISSUING 2ULES #APITAL !CCOUNT 4RANSACTIONS ARE PERMITTED TO THE EXTENT SPECIFIED BY 2ESERVE "ANK OF )NDIA 2") BY ISSUING 2EGULATIONS (e) RBI &OREIGN %XCHANGE -ANAGEMENT !CT ENVISAGES THAT 2") SHALL HAVE A CONTROLLING ROLE IN MANAGEMENT OF FOREIGN EXCHANGE 3INCE 2") CANNOT DIRECTLY HANDLE FOREIGN EXCHANGE TRANSACTIONS IT AUTHORIZES h!UTHORISED 0ERSONSv TO DEAL IN FOREIGN EXCHANGE 2.1
TAXMANN®
2.2
0!24 ! &/2%)'. %8#(!.'% -!.!'%-%.4 ."&#S
(f) Penalty, Adjudication, Appeal &OREIGN %XCHANGE -ANAGEMENT !CT ALSO MAKES PROVISIONS FOR ENFORCEMENT PENALTIES ADJUDICATION AND APPEAL ALSO CONTAINS ONLY BASIC LEGAL FRAMEWORK 4HE PRACTICAL ASPECTS ARE COVERED IN 2ULES MADE BY #ENTRAL 'OVERNMENT AND 2EGULATIONS MADE BY 2") Q2. Discuss the objectives of enacting the Foreign Exchange Management Act, 1999. Explain in brief the scheme of Foreign Exchange Management Act, 1999. [June 2019 (4 Marks)] Ans.: Please refer to answer of Question No. 1.
DEFINITIONS Q3. Distinguish between: Foreign Exchange & Foreign Security. [Dec. 2010 (5 Marks)] Ans.: TAXMANN®
Foreign Exchange: Section 2(n): a &OREIGN EXCHANGE MEANS FOREIGN CURRENCY b &OREIGN EXCHANGE INCLUDES i $EPOSITS CREDITS AND BALANCES PAYABLE IN ANY FOREIGN CURRENCY ii $RAFTS TRAVELLERS CHEQUES LETTERS OF CREDIT OR BILLS OF EXCHANGE EXPRESSED OR DRAWN IN )NDIAN CURRENCY BUT payable in any foreign currency iii $RAFTS TRAVELLERS CHEQUES LETTERS OF CREDIT OR BILLS OF EXCHANGE DRAWN BY BANKS INSTITUTIONS OR PERSONS OUTSIDE )NDIA BUT payable in Indian currency c !NY DRAFT TRAVELLERS CHEQUE LETTERS OF CREDIT OR BILLS OF EXCHANGE DRAWN BY BANKS INSTITUTIONS OR PERSONS OUTSIDE )NDIA BUT PAYABLE IN )NDIAN CURRENCY HAS ALSO BEEN INCLUDED IN THE DEFINITION OF FOREIGN EXCHANGE Foreign Security: Section 2(o): a &OREIGN SECURITY MEANS ANY SECURITY IN THE FORM OF SHARES STOCKS BONDS DEBENTURES OR ANY OTHER INSTRUMENT IN FOREIGN CURRENCY b )T ALSO INCLUDES SECURITIES EXPRESSED IN FOREIGN CURRENCY BUT WHERE REDEMPTION OR ANY FORM OF RETURN SUCH AS INTEREST OR DIVIDENDS IS PAYABLE IN )NDIAN CURRENCY Q4. Distinguish between: Appellate Tribunal & Court. [Dec. 2011 (5 Marks)]
#( &/2%)'. %8#(!.'% -!.!'%-%.4 !#4
2.3
Ans.: &OLLOWING ARE THE MAIN POINTS OF DIFFERENCE BETWEEN !PPELLATE 4RIBUNAL #OURT Points
Appellate Tribunal
Meaning
4HE TERM @#OURTS REFERS TO PLACES WHERE JUSTICE IS ADMINISTERED OR REFERS TO *UDGES WHO EXERCISE JUDICIAL FUNCTIONS
4RIBUNALS ARE SPECIAL ALTERNATIVE INSTITUTIONAL MECHANISMS USUALLY BROUGHT INTO EXISTENCE BY OR UNDER A STATUTE TO DECIDE DISPUTES ARISING WITH REFERENCE TO THAT PARTICULAR STATUTE OR TO DETERMINE CONTROVERSIES ARISING OUT OF ANY ADMINISTRATIVE LAW
Type
#OURTS REFER TO THE #IVIL #OURTS 4RIBUNALS CAN BE EITHER PRI#RIMINAL #OURTS AND (IGH VATE TRIBUNALS SUCH AS ARBITRAL TRIBUNALS OR 4RIBUNALS CONSTI#OURTS TUTED UNDER THE #ONSTITUTION OR 4RIBUNALS AUTHORIZED BY THE #ONSTITUTION OR 3TATUTORY 4RIBUNALS WHICH ARE CREATED UNDER A STATUTE
Code of Procedure
)T HAS TO FOLLOW THE CODE OF .O SUCH CODE OF PROCEDURE PROCEDURE STRICTLY
Deals with
6ARIETY OF #ASES
Headed by
*UDGE PANEL OF JUDGES AND #HAIRPERSON AND OTHER JUDICIAL -AGISTRATE MEMBERS
Party
#OURT JUDGES ARE IMPARTIAL 4RIBUNAL MAY BE PARTY TO DISARBITRATOR AND NOT THE PARTY TO PUTE DISPUTE
Example
0UNE $ISTRICT #OURT
3PECIFIC #ASES
.ATIONAL #OMPANY ,AW 4RIBUNAL .#,4
Q5. Write a short note on: Person and authorized person. [Dec. 2013 (5 Marks)] Ans.: Person [Section 2(u)]: 0ERSON INCLUDES
)NDIVIDUAL
(INDU UNDIVIDED FAMILY
#OMPANY
&IRM
!/0 OR "/) WHETHER INCORPORATED OR NOT
%VERY ARTIFICIAL JURIDICAL PERSON AND
!NY AGENCY OFFICE OR BRANCH OWNED OR CONTROLLED BY ANY PERSON
TAXMANN®
Court
2.4
0!24 ! &/2%)'. %8#(!.'% -!.!'%-%.4 ."&#S
Authorized Person [Section 2(c)]: !UTHORIZED PERSON MEANS AN
!UTHORIZED DEALER
-ONEY CHANGER
/FF SHORE BANKING UNIT OR
!NY OTHER PERSON FOR THE TIME BEING AUTHORIZED U S
TO DEAL IN FOREIGN EXCHANGE OR FOREIGN SECURITIES Generally, all nationalized banks, leading non-nationalized banks and foreign banks are appointed as authorized dealers to deal in foreign exchange. Eg: ($&# BANK DEALS WITH FOREIGN CURRENCY
POSSESSION & RETENTION OF FOREIGN EXCHANGE
TAXMANN®
Q6. Dr. Sukant, who is permanently resident in India, retains foreign currency notes of US$ 5,000 which he had acquired during his visit to USA by way of expert medical advice rendered to patients there. Advice with reference to FEMA. [June 2014 (1 Mark)] Ans.: (a) Facts of Case:- $R 3UKANT WHO IS PERMANENTLY RESIDENT IN )NDIA RETAINS FOREIGN CURRENCY NOTES OF 53 WHICH HE HAD ACQUIRED DURING HIS VISIT TO 53! BY WAY OF EXPERT MEDICAL ADVICE RENDERED TO PATIENTS THERE (b) Provision:- !S PER Regulation 3 OF THE Foreign Exchange Management (Possession & Retention of Foreign Currency) Regulations, 2015 A PERSON RESIDENT IN )NDIA MAY POSSESS FOREIGN CURRENCY NOTES BANK NOTES AND FOREIGN CURRENCY TRAVELLERS CHEQUE NOT EXCEEDING 53 PROVIDED THAT SUCH FOREIGN EXCHANGE WAS ACQUIRED BY HIM WHILE ON A VISIT TO ANY PLACE OUTSIDE )NDIA BY WAY OF PAYMENT FOR SERVICES (c) Conclusion:- 4HUS $R 3UKANT CAN HOLD FOREIGN CURRENCY OF 53 AND WILL HAVE TO SURRENDER TO 53 TO AN AUTHORIZED PERSON Q7. Foreign Exchange Management (Possession & Retention of Foreign Currency) Regulations, 2015 deals with limits on possession and retention of foreign currency or foreign coins. What is the limit of possession or retention of foreign currency or foreign coins under Regulation 3? [Dec. 2018 (4 Marks)] Ans.: (a) Meaning of possession and retention @4O POSSESS OR @TO RETAIN MEANS TO POSSESS OR TO RETAIN IN PHYSICAL FORM AND THE WORDS @POSSESSION OR @RETENTION SHALL BE CONSTRUED ACCORDINGLY
#( &/2%)'. %8#(!.'% -!.!'%-%.4 !#4
2.5
(b) Provision in the Act: Section 4 of Foreign Exchange Management Act,1999 0ERSON RESIDENT IN )NDIA CAN ACQUIRE HOLD OWN POSSESS OR TRANSFER ANY FOREIGN EXCHANGE ONLY AFTER COMPLIANCE WITH THE PROVISIONS OF THE !CT 2ULES AND 2EGULATIONS (c) Regulation framed 2") HAS FRAMED FEM (Possession & Retention of Foreign Currency) Regulations, 2015 (d) Limits for possession and retention of foreign currency or foreign coins [Regulation 3]: 4HE 2") SPECIFIES THE FOLLOWING LIMITS FOR POSSESSION OR RETENTION OF FOREIGN CURRENCY OR FOREIGN COINS i !N AUTHORIZED PERSON ACTING WITHIN THE SCOPE OF HIS AUTHORITY MAY POSSESS FOREIGN CURRENCY AND COINS WITHOUT ANY LIMIT ii !NY PERSON MAY POSSESS FOREIGN COINS WITHOUT ANY LIMIT
WAS ACQUIRED BY HIM WHILE ON A VISIT TO ANY PLACE OUTSIDE )NDIA BY WAY OF PAYMENT FOR SERVICES NOT ARISING FROM ANY BUSINESS IN OR ANYTHING DONE IN )NDIA
WAS ACQUIRED BY HIM FROM ANY PERSON NOT RESIDENT IN )NDIA AND WHO IS ON A VISIT TO )NDIA AS HONORARIUM OR GIFT OR FOR SERVICES RENDERED OR IN SETTLEMENT OF ANY LAWFUL OBLIGATION
WAS ACQUIRED BY HIM BY WAY OF HONORARIUM OR GIFT WHILE ON A VISIT TO ANY PLACE OUTSIDE )NDIA
REPRESENTS UNSPENT AMOUNT OF FOREIGN EXCHANGE ACQUIRED BY HIM FROM AN AUTHORIZED PERSON FOR TRAVEL ABROAD
REALIZATION, REPATRIATION & SURRENDER OF FOREIGN EXCHANGE Q8. Discuss the exemptions from the provisions relating to holding, realization and repatriation of foreign currency under the Foreign Exchange Management Act, 1999. [June 2006 (4 Marks)] Ans.: (a) Definition of Repatriate to India: Section 2(y): 2EPATRIATE TO )NDIA MEANS BRINGING INTO )NDIA THE REALIZED FOREIGN EXCHANGE AND
TAXMANN®
iii ! PERSON RESIDENT IN )NDIA MAY POSSESS FOREIGN CURRENCY NOTES BANK NOTES AND FOREIGN CURRENCY TRAVELLERS CHEQUE NOT EXCEEDING US$ 2,000 PROVIDED THAT SUCH FOREIGN EXCHANGE
2.6
0!24 ! &/2%)'. %8#(!.'% -!.!'%-%.4 ."&#S
i 4HE SELLING OF FOREIGN EXCHANGE TO AN AUTHORIZED PERSON IN )NDIA IN EXCHANGE FOR RUPEES OR ii 4HE HOLDING OF REALIZED AMOUNT IN AN ACCOUNT WITH AN AUTHORIZED PERSON TO THE EXTENT NOTIFIED BY THE 2") AND iii 5SE OF THE REALIZED AMOUNT FOR DISCHARGE OF A DEBT OR LIABILITY DENOMINATED IN FOREIGN EXCHANGE (b) Provision relating to realization & repatriation of foreign exchange [Section 8]: 7HERE ANY AMOUNT OF FOREIGN EXCHANGE IS DUE OR HAS ACCRUED TO ANY PERSON RESIDENT IN )NDIA SUCH PERSON SHALL TAKE ALL REASONABLE STEPS TO REALIZE AND REPATRIATE TO )NDIA SUCH FOREIGN EXCHANGE WITHIN SPECIFIED PERIOD AND IN SPECIFIED MANNER BY THE 2") (c) Exemption from realization and repatriation in certain cases [Section 9]:
TAXMANN®
)N FOLLOWING CASES FOREIGN EXCHANGE NEED NOT BE REPATRIATED TO )NDIA
0OSSESSION OF FOREIGN CURRENCY OR COINS BY ANY PERSON UP TO SPECIFIED LIMIT
&OREIGN CURRENCY ACCOUNT HELD OR OPERATED AS SPECIFIED BY 2")
&OREIGN EXCHANGE ACQUIRED OR RECEIVED BEFORE THE OR ANY INCOME ARISING OR ACCRUING WHICH IS HELD OUTSIDE )NDIA BY ANY PERSON IN PURSUANCE OF A GENERAL OR SPECIAL PERMISSION GRANTED BY THE 2")
&OREIGN EXCHANGE ACQUIRED AND HELD BY WAY OF GIFT OR INHERITANCE BY A PERSON RESIDENT IN )NDIA UP TO LIMIT AS SPECIFIED BY 2")
&OREIGN EXCHANGE ACQUIRED FROM EMPLOYMENT BUSINESS TRADE VOCATION SERVICES HONORARIUM GIFTS INHERITANCE OR ANY OTHER LEGITIMATE MEANS UP TO LIMIT SPECIFIED BY THE 2")
3UCH OTHER RECEIPTS IN FOREIGN EXCHANGE AS MAY BE SPECIFIED BY THE 2")
AUTHORIZED PERSON Q9. Define the term ‘authorized person’ under the Foreign Exchange Management Act, 1999 and state the powers of the RBI to issue direction to an authorized person. [Dec. 2015 (5 Marks)] Ans.: (a) Authorized Person [Section 2(c)]: !UTHORIZED PERSON MEANS AN AUTHORIZED DEALER MONEY CHANGER OFF SHORE BANKING UNIT OR ANY OTHER
#( &/2%)'. %8#(!.'% -!.!'%-%.4 !#4
2.7
PERSON FOR THE TIME BEING AUTHORIZED U S TO DEAL IN FOREIGN EXCHANGE OR FOREIGN SECURITIES Generally, all nationalized banks, leading non-nationalized banks and foreign banks are appointed as authorized dealers to deal in foreign exchange. Eg: ($&# BANK BUY OR SELL FOREIGN CURRENCY (b) RBI’s powers to issue directions to authorized person [Section 11]: (i) Issue Direction:- 4HE 2") MAY GIVE TO THE AUTHORIZED PERSONS ANY DIRECTION IN REGARD TO MAKING OF PAYMENT OR THE DOING OR DESIST FROM DOING ANY ACT RELATING TO FOREIGN EXCHANGE OR FOREIGN SECURITY FOR THE PURPOSE OF SECURING COMPLIANCE WITH THE PROVISIONS OF &%-! (ii) Furnish Information:- 4HE 2") MAY ALSO DIRECT ANY AUTHORIZED PERSON TO FURNISH NECESSARY INFORMATION IN PRESCRIBED MANNER FOR THE PURPOSE OF ENSURING THE COMPLIANCE WITH &%-!
Q10. Who is an authorized person under Foreign Exchange Management Act, 1999 and what are his obligations? [Dec. 2018 (5 Marks)] Ans.: (a) Authorized Person [Section 2(c)]: !UTHORIZED PERSON MEANS AN AUTHORIZED DEALER MONEY CHANGER OFF SHORE BANKING UNIT OR ANY OTHER PERSON FOR THE TIME BEING AUTHORIZED U S TO DEAL IN FOREIGN EXCHANGE OR FOREIGN SECURITIES Generally, all nationalized banks, leading non-nationalized banks and foreign banks are appointed as authorized dealers to deal in foreign exchange. Eg: ($&# BANK BUY AND SELL FOREIGN CURRENCY (b) Authorization to act as Authorized Person [Section 10(1) & (2)]: 4HE 2") MAY ON AN APPLICATION MADE TO IT AUTHORIZE ANY PERSON TO BE KNOWN AS AUTHORIZED PERSON TO DEAL IN FOREIGN EXCHANGE OR SECURITIES !N AUTHORIZATION SHALL BE IN WRITING AND SHALL BE SUBJECT TO THE PRESCRIBED CONDITIONS
TAXMANN®
(iii) Penalty:- 7HERE ANY AUTHORIZED PERSON CONTRAVENES ANY DIRECTION OR FAILS TO FILE ANY RETURN THE 2") MAY AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD IMPOSE ON THE AUTHORIZED PERSON A PENALTY WHICH MAY EXTEND TO ` 10,000 )N THE CASE OF CONTINUING CONTRAVENTION AN ADDITIONAL PENALTY UP TO ` 2,000 per day CAN BE IMPOSED
2.8
0!24 ! &/2%)'. %8#(!.'% -!.!'%-%.4 ."&#S
(c) Obligation of Authorized Person (i) General and Special Directions:- !N AUTHORIZED PERSON SHALL COMPLY WITH GENERAL OR SPECIAL DIRECTIONS OR ORDERS GIVEN BY THE 2") !N AUTHORIZED PERSON SHALL NOT ENGAGE IN ANY TRANSACTION WHICH IS NOT IN CONFORMITY WITH THE TERMS OF HIS AUTHORIZATION WITHOUT THE PREVIOUS PERMISSION OF THE 2") (ii) Obtaining Declaration and information & refusal to deal:- !N AUTHORIZED PERSON SHALL BEFORE UNDERTAKING TRANSACTION IN FOREIGN EXCHANGE REQUIRE THE PERSON TO GIVE DECLARATION FROM A PERSON TO SATISFY HIMSELF THAT THE TRANSACTION IN IS NOT VIOLATION OF &%-! (iii) Doubtful transaction should be refused )F AUTHORIZED PERSON HAS ANY DOUBT HE SHOULD REFUSE THE TRANSACTION IN WRITING
TAXMANN®
(iv) Contemplated Transaction:- )F THE AUTHORIZED PERSON HAS REASON TO BELIEVE THAT TRANSACTION IS CONTEMPLATED HE SHOULD THE MATTER TO THE 2") (d) Effect of misuse: ! PERSON WHO HAS FOREIGN EXCHANGE SHALL BE DEEMED TO HAVE COMMITTED CONTRAVENTION OF THE PROVISIONS OF THE &%-! IF SUCH PERSON
$OES NOT USE FOREIGN EXCHANGE FOR PURPOSE FOR WHICH IT WAS ACQUIRED OR
$OES NOT SURRENDER IT TO AUTHORIZED PERSON WITHIN THE SPECIFIED PERIOD OR
5SES THE FOREIGN EXCHANGE FOR ANY OTHER PURPOSE OTHER THAN FOR WHICH IT WAS ACQUIRED
Q11. Explain the powers of the Reserve Bank of India to issue directions to an authorised person under the Foreign Exchange Management Act, 1999. [Dec. 2019 (5 Marks each)] Ans.: 0LEASE REFER FOR !NSWER IN 1
CONTRAVENTION & PENALTIES Q12. What are the penalties provided for contravention of any provisions under the Foreign Exchange Management Act, 1999? Ans.: (a) Penalties [Section 13]: )F ANY PERSON CONTRAVENES ANY PROVISION OF &%-! HE SHALL BE LIABLE TO A PENALTY AS STATED BELOW
If amount is quantifiable: 0ENALTY UP TO thrice the sum INVOLVED IN SUCH CONTRAVENTION
#( &/2%)'. %8#(!.'% -!.!'%-%.4 !#4
2.9
If amount is not quantifiable: 0ENALTY UP TO ` 2 lakhs
Continuing Contravention:- )N CASE OF CONTINUING CONTRAVENTION ADDITIONAL PENALTY UP TO ` 5,000 per day CAN BE IMPOSED
(b) Confiscation:- !DJUDICATING !UTHORITY CAN ALSO ORDER CONFISCATION OF ANY CURRENCY SECURITY OR ANY OTHER MONEY OR PROPERTY IN RESPECT OF WHICH THE CONTRAVENTION HAS TAKEN PLACE (c) Direction:- !DJUDICATING !UTHORITY CAN ALSO DIRECT THAT FOREIGN EXCHANGE HOLDINGS OF ANY PERSON COMMITTING THE CONTRAVENTIONS SHALL BE BROUGHT BACK INTO )NDIA OR SHALL BE RETAINED OUTSIDE )NDIA AS PER DIRECTIONS
COMPOUNDING OF OFFENCES Q13. Discuss the provisions and procedure relating to compounding of various offences under the Foreign Exchange (Compounding Proceedings) Rules, 2000. Ans.:
(b) Power of Reserve Bank to compound contravention [Rule 4(1)]: i )F ANY 0ERSON CONTRAVENES ANY PROVISIONS OF &OREIGN %XCHANGE -ANAGEMENT !CT except Section 3(a) OF THE !CT THEN APPLICATION FOR COMPOUNDING CAN BE MADE AS SPECIFIED BELOW Sum involved in contravention is
Officer of RBI that can compound the offence
` LAKH OR BELOW
!SSISTANT 'ENERAL -ANAGER
-ORE THAN ` LAKH BUT LESS THAN ` LAKH
$EPUTY 'ENERAL -ANAGER
-ORE THAN ` LAKH BUT LESS THAN ` LAKH
'ENERAL -ANAGER
-ORE THAN ` LAKH
#HIEF 'ENERAL -ANAGER
Section 3(a): .O PERSON SHALL DEAL IN OR TRANSFER ANY FOREIGN EXCHANGE OR FOREIGN SECURITY TO ANY PERSON NOT BEING AN AUTHORIZED PERSON ii No compounding if similar offence is committed within a period of 3 years [Rule 4(2)]: .O CONTRAVENTION SHALL BE COMPOUNDED UNLESS THE AMOUNT INVOLVED IN SUCH CONTRAVENTION IS quantifiable iii /NCE AN OFFENCE IS COMPOUNDED SIMILAR OFFENCE COMMITTED WITHIN PERIOD OF YEARS CANNOT BE COMPOUNDED 4HUS SIMILAR OFFENCE CAN BE COMPOUNDED ONLY ONCE IN YEARS
TAXMANN®
(a) Compounding Meaning:- #OMPOUNDING REFERS TO THE PROCESS OF VOLUNTARILY ADMITTING THE CONTRAVENTION PLEADING GUILTY AND SEEKING REDRESSAL.
2.10
0!24 ! &/2%)'. %8#(!.'% -!.!'%-%.4 ."&#S
iv %VERY OFFICER SHALL EXERCISE THE POWERS TO COMPOUND ANY CONTRAVENTION SUBJECT TO THE DIRECTION CONTROL AND SUPERVISION OF THE 'OVERNOR OF THE 2") [Rule 4(3)] v Fee for compounding [Rule 4(4)]: %VERY APPLICATION FOR COMPOUNDING ANY CONTRAVENTION SHALL BE MADE IN PRESCRIBED &ORM TO THE 2ESERVE "ANK OF )NDIA %XCHANGE #ONTROL $EPARTMENT #ENTRAL /FFICE Mumbai ALONG WITH A FEE OF ` BY WAY OF $$ IN FAVOUR OF COMPOUNDING AUTHORITY (c) The Power of Enforcement Directorate to compound contraventions [Rule 5(1)]: i !PPLICATIONS SEEKING COMPOUNDING OF CONTRAVENTIONS u/s 3(a) SHALL BE SUBMITTED TO %NFORCEMENT $IRECTORATE AS SPECIFIED BELOW
TAXMANN®
Sum involved in contravention is ` LAKH OR BELOW -ORE THAN ` LAKH BUT LESS THAN ` LAKH -ORE THAN ` LAKH BUT LESS THAN ` LAKH -ORE THAN ` LAKH BUT LESS THAN ` LAKH -ORE THAN ` LAKH
Directorate that can compound the offence $EPUTY $IRECTOR OF THE $IRECTORATE OF %NFORCEMENT !DDITIONAL $IRECTOR OF THE $IRECTORATE OF %NFORCEMENT 3PECIAL $IRECTOR OF THE $IRECTORATE OF %NFORCEMENT 3PECIAL $IRECTOR WITH ,EGAL !DVISOR OF THE $IRECTORATE OF %NFORCEMENT $IRECTOR OF %NFORCEMENT WITH 3PECIAL $IRECTOR OF THE $IRECTORATE OF %NFORCEMENT
ii No compounding if similar offence is committed within a period of 3 years [Rule 5(2)]: .O CONTRAVENTION SHALL BE COMPOUNDED UNLESS THE AMOUNT INVOLVED IN SUCH CONTRAVENTION IS quantifiable iii /NCE AN OFFENCE IS COMPOUNDED SIMILAR OFFENCE COMMITTED WITHIN PERIOD OF YEARS CANNOT BE COMPOUNDED 4HUS SIMILAR OFFENCE CAN BE COMPOUNDED ONLY ONCE IN YEARS iv %VERY OFFICER OF THE $IRECTORATE OF %NFORCEMENT SHALL EXERCISE THE POWERS TO COMPOUND ANY CONTRAVENTION SUBJECT TO THE DIRECTION CONTROL AND SUPERVISION OF THE 'OVERNOR OF THE 2") [Rule 5(3)] v Fee for compounding [Rule 5(4)]: %VERY APPLICATION FOR COMPOUNDING ANY CONTRAVENTION RULE SHALL BE MADE IN PRESCRIBED &ORM TO THE $IRECTOR $IRECTORATE OF %NFORCEMENT New Delhi ALONG WITH A FEE OF ` BY WAY OF $$ IN FAVOUR OF COMPOUNDING AUTHORITY
#( &/2%)'. %8#(!.'% -!.!'%-%.4 !#4
2.11
Q14. Joseph, a resident in India has failed to realize and repatriate the foreign exchange into country and in this regard a complaint has been made to the Government authorities by somebody inimical to Joseph. Explain briefly the powers of the Adjudicating Authorities to enquire and deal with the complaint of violation of the provisions of the Foreign Exchange Management Act, 1999. [Dec. 2000 (8 Marks)] Ans.: (a) Facts of Case:*OSEPH A RESIDENT IN )NDIA HAS FAILED TO REALIZE AND REPATRIATE THE FOREIGN EXCHANGE INTO COUNTRY AND IN THIS REGARD A COMPLAINT HAS BEEN MADE TO THE 'OVERNMENT AUTHORITIES BY SOMEBODY INIMICAL TO *OSEPH (b) Provision (i) Section 8 of the Foreign Exchange Management Act, 1999 : ! PERSON RESIDENT IN )NDIA SHALL TAKE ALL REASONABLE STEPS TO REALIZE AND REPATRIATE THE FOREIGN EXCHANGE DUE TO HIM
(c) Conclusion:- )N PRESENT CASE THE COMPLAINT AGAINST *OSEPH HAS BEEN MADE BY A PERSON WHO IS INIMICAL TO *OSEPH AND NOT BY AN OFFICER AUTHORIZED BY A GENERAL OR SPECIAL ORDER OF THE #ENTRAL 'OVERNMENT 4HEREFORE THE !DJUDICATING !UTHORITY CANNOT HOLD THE INQUIRY Q15. What is meant by contravention and compounding of contravention? [June 2018 (5 Marks)] Ans.: (a) Contravention: #ONTRAVENTION IS A BREACH OF THE PROVISIONS OF THE &OREIGN %XCHANGE -ANAGEMENT !CT &%-! AND RULES REGULATIONS NOTIFICATIONS ORDERS DIRECTIONS CIRCULARS ISSUED THEREUNDER (b) Compounding:- #OMPOUNDING REFERS TO THE PROCESS OF VOLUNTARILY ADMITTING THE CONTRAVENTION PLEADING GUILTY AND SEEKING REDRESSAL 4HE 2") IS EMPOWERED TO COMPOUND CONTRAVENTIONS OF THE PROVISIONS OF THE &%-! )T IS A VOLUNTARY PROCESS IN WHICH AN INDIVIDUAL OR A CORPORATE SEEKS COMPOUNDING OF AN ADMITTED CONTRAVENTION )T PROVIDES COMFORT TO ANY PERSON WHO CONTRAVENES ANY PROVISIONS OF &%-! BY MINIMIZING TRANSACTION COSTS 7ILFUL MALA FIDE and fraudulent transactions are, however, viewed seriously, which will not be compounded by the RBI.
TAXMANN®
(ii) Section 16 .O !DJUDICATING !UTHORITY SHALL HOLD AN ENQUIRY EXCEPT UPON A COMPLAINT IN WRITING MADE BY ANY OFFICER AUTHORIZED BY A GENERAL OR SPECIAL ORDER BY THE #ENTRAL 'OVERNMENT
2.12
0!24 ! &/2%)'. %8#(!.'% -!.!'%-%.4 ."&#S
(c) Power to compound contravention [Section 15(1)]: !NY CONTRAVENTION U S MAY ON AN APPLICATION MADE BY THE PERSON COMMITTING SUCH CONTRAVENTION BE COMPOUNDED WITHIN DAYS FROM THE DATE OF RECEIPT OF APPLICATION BY THE $IRECTOR OF %NFORCEMENT OR SUCH OTHER OFFICERS OF THE $IRECTORATE OF %NFORCEMENT AND /FFICERS OF THE 2") AS MAY BE AUTHORIZED IN THIS BEHALF BY THE #ENTRAL 'OVERNMENT IN PRESCRIBED MANNER (d) No further proceedings after compounding [Section 15(2)]: 7HERE A CONTRAVENTION HAS BEEN COMPOUNDED NO PROCEEDING OR FURTHER PROCEEDING AS THE CASE MAY BE SHALL BE INITIATED OR CONTINUED AGAINST THE PERSON COMMITTING SUCH CONTRAVENTION IN RESPECT OF THE CONTRAVENTION SO COMPOUNDED
TAXMANN®
Q16. Mr. Ronu an Indian national, failed to realize and repatriate foreign exchange amounting to ` 1 Crore. Subsequently he realized that he has committed a convention of the Foreign Exchange Management Act, 1999. He desires to compound the said offence. State, whether Mr. Ronu can do so? [Dec. 2017 (5 Marks)] Ans.: (a) Facts of Case:- -R 2ONU AN )NDIAN NATIONAL FAILED TO REALIZE AND REPATRIATE FOREIGN EXCHANGE AMOUNTING TO ` #RORE 3UBSEQUENTLY HE REALIZED THAT HE HAS COMMITTED A CONVENTION OF THE &OREIGN %XCHANGE -ANAGEMENT !CT (E DESIRES TO COMPOUND THE SAID OFFENCE (b) Provision:(i) Meaning: - #OMPOUNDING REFERS TO THE PROCESS OF VOLUNTARILY ADMITTING THE CONTRAVENTION PLEADING GUILTY AND SEEKING REDRESSAL. (ii) Section 8 Realisation and Repatriation: 4HE PERSON SHOULD TAKE ALL REASONABLE STEPS TO REALISE AND REPATRIATE WITHIN SUCH PERIOD AS MAY BE SPECIFIED BY 2") -R 2ONU HAS FAILED TO REALISE AND REPATRIATE FOREIGN EXCHANGE AND CONTRAVENED THE PROVISIONS OF SECTION (iii) Section 13 Penalty: (E IS LIABLE TO THE PENALTIES LEVIABLE U S OF &%-! (iv) Section 15 Compounding of offence 3ECTION PERMITS THE OFFENDING PARTY TO COMPOUND THE CONTRAVENTION WITHIN DAYS FROM THE DATE OF RECEIPT OF APPLICATION BY THE $IRECTORATE OF %NFORCEMENT OR SUCH OTHER OFFICES OF THE $IRECTORATE OF %NFORCEMENT AND OFFICERS OF 2") AS MAY BE AUTHORISED BY #ENTRAL 'OVERNMENT IS SUCH MANNER AS MAY BE PRESCRIBED
#( &/2%)'. %8#(!.'% -!.!'%-%.4 !#4
2.13
(c) Conclusion:- -R 2ONU SHOULD SUBMIT HIS APPLICATION OF COMPOUNDING TO THE $IRECTOR $IRECTORATE OF %NFORCEMENT .EW $ELHI ALONG WITH A FEE OF ` BY WAY OF $EMAND $RAFT
ADJUDICATION & APPEAL Q17. Explain the procedure relating to establishment of Appellate Tribunal under Foreign Exchange Management Act, 1999. [June 2017 (5 Marks)] Ans.: Establishment of Appellate Tribunal [Section 18]: 4HE !PPELLATE 4RIBUNAL CONSTITUTED U S OF THE Smugglers & Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 SHALL BE THE !PPELLATE 4RIBUNAL FOR THE &%-! !CT AND THE SAID !PPELLATE 4RIBUNAL SHALL EXERCISE THE JURISDICTION POWERS AND AUTHORITY CONFERRED ON IT UNDER THE &%-! !CT Appeal to Appellate Tribunal [Section 19(1)]: !N APPEAL CAN BE FILED WITH !PPELLATE 4RIBUNAL AGAINST THE ORDER MADE BY 3PECIAL $IRECTOR !PPEALS
!N !DJUDICATING !UTHORITY [other than Assistant Director of the Enforcement or Deputy Director of Enforcement]
Q18. Explain the composition relating to establishment of Appellate Tribunal under the Foreign Exchange Management Act, 1999. [June 2017 (5 Marks)] Ans.: Composition of Appellate Tribunal [Section 20]: Due to amendment in Section 18 of the FEMA Act, the Appellate Tribunal constituted u/s 12(1) of the Smugglers & Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 shall be the Appellate Tribunal for the FEMA Act, 1999 and thus question is not relevant for Dec. 2018 and onward examinations. Q19. Discuss the establishment and jurisdiction of Appellate Tribunal constituted under the Foreign Exchange Management Act, 1999. [Dec. 2019 (4 Marks each)] Ans.: 0LEASE REFER FOR !NSWER IN 1UESTION .O
TAXMANN®
CRACKER | Economic Business & Commercial Laws AUTHOR PUBLISHER DATE OF PUBLICATION EDITION ISBN NO NO. OF PAGES BINDING TYPE
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N.S. ZAD, MAYUR AGARWAL TAXMANN FEBRUARY 2022 6TH EDITION 9789393880048 430 PAPERBACK
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Description This book is prepared exclusively for the Executive Level of Company Secretary Examination requirement. It covers the entire revised, new syllabus as per ICSI. The Present Publication is the 6 th Edition for CS-Executive | New Syllabus | June/Dec. 2022 Exams, authored by CS N.S. Zad & CA Mayur Agarwal. The noteworthy features of this book are as follows: u Strictly as per the New Syllabus of ICSI u [Arrangement of Questions] Topic-wise arrangement of past exam questions & answers u Coverage of this book includes n
Fully-Solved Questions of Past Exams (including Dec. 2021 Exam) l
Solved Paper: December 2020 | New Syllabus
l
Solved Paper: June 2021 | New Syllabus
l
Solved Paper: December 2021 | New Syllabus
u [Most Amended & Updated] Covers the latest applicable provisions and amendments under the respective laws u [Marks Distribution] Chapter-wise marks distribution for past exams u [ICSI Study Material] Chapter-wise comparison for past exams Also Available: u [2019 Edition] of Taxmann’s Economic Business & Commercial Laws u
[1 st Edition] of Taxmann’s Quick Revision Charts on Economic Business & Commercial Laws
u Taxmann’s Combo for CRACKER & Quick Revision Charts
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