The Bombay High Court in the writ petition filed in the case of New Delhi Television Ltd. v. RBI and Ors has directed the RBI to render the necessary guidance to the petitioner in the matter of compounding of the contraventions under the FEMA.
The petitioner carries on business of operating news channels. He submits that the year 2000 notified Foreign Exchange (Compounding Proceedings) Rules, 2000 which embodies a comprehensive regime contemplating the “Compounding Authority” to be either an officer of the RBI (R1) or R2 with certain monetary thresholds imposed in relation to powers for compounding, depending on the nature of the violation and prescribes procedures to be followed in relation to compounding generally. Under Rule 8, specifically, it is the statutory duty of the Compounding Authority to call for any information, record or any other documents relevant to the compounding application and to pass an order of compounding after affording an opportunity of being heard to all concerned.
The petitioner filed the application with the RBI (R1) since the jurisdiction for compounding lay with R1. R1 returned the compounding applications on the ground that certain administrative actions were required to be completed by the petitioner advising the petitioner that he should approach its OID and Foreign Investment Division (FID) for further guidance, in the matter of compounding.
The issue in the present matter was that whether the amendment affecting the parties by pushing them into Courts brought to the Compounding Rules by insertion of the proviso has come into force or not.
The petitioner argued that the amendment has not come into force because of non-compliance with Section 48 of the FEMA. Further, the petitioner by the present writ desires that the present Court should issue a writ of mandamus or any other writ, order or direction analogous to that writ, directing RBI (R1) to this writ petition to guide the petitioner in making of an application styled as an application for compounding within the time frame prescribed by the Foreign Exchange (Compounding Proceedings) Rules, 2000.
The respondent on the other hand relying upon a judgment urged that the provisions of Section 48 are directory.
The division bench comprising of Justice S.C Dharmadhikari and Justice Bharati H. Dhangre directed the RBI to render the necessary guidance to the petitioner in the matter of compounding of the contraventions under the FEMA.
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