FEMA – Foreign remittances of Jaipur IPL franchisee in 2008 – Violation – Burden to prove and quantum of Penalty – Specific finding on the specific role of individual is essential for imposing penalty
One Emerging Media IPL Ltd, UK, gave bid of Rs.268 crores for Rajasthan Royals IPL team of Jaipur, payable in ten equal instalments over a period of ten years. The agreement was executed by the then CEO of Jaipur IPL Cricket Pvt Ltd and Vice-President of BCCI & Chairman of IPL.
The performance deposit was transferred by one Manoj Badale from UK to the HDFC Bank account of BCCI-IPL. Franchise agreement was signed on 14.4.2008 and balance amount was paid by EM Sporting Holdings Ltd Mauritius (EMSH).
The documents show that JIPL (incorporated on 8.3.2008) was wholly owned subsidiary of EMSH incorporated on 5.5.2008.
ED alleged that JIPL and its promoters contravened the provisions of FEM and show cause notices dated 13.4.2011 were issued.
The Special Director of ED imposed total penalty of Rs.98.35 crores on the respondents by the order dated 30.1.2013.
By the Order dated 11.7.2019 of the Appellate Tribunal for SAFEMA, FEMA, NDPS, PMLA & PBPT Act, the penalty was reduced to Rs.15 crores. Appeals under Section 35 of the Foreign Exchange Management Act, 1999
HELD that the Tribunal recorded a clear finding that an exorbitant penalty was imposed on individuals without recorded findings on specific roles of said individuals. Imposition of maximum penalty is justified if a person was in charge and responsible for the functioning of the company having some motive to benefit from the transaction in question. Overall, the Tribunal found that there was no loss to the exchequer, remittances had come in and remained in India, the foreign exchange did not go out of India, the remittances were utilised for the same purposes, the entities have not gained any benefit and JIPL had participated in IPL since 2008. The appeals were dismissed.
Judgment dated 13.12.2023 in FEMA APPEAL NO.1 OF 2020 of the Special Director, Directorate of Enforcement Vs. Jaipur IPL Cricket Pvt td with connected matters.
