NEW DELHI: Promoters of Jaipur IPL Cricket Pvt Ltd (JIPL), which owns the Indian Premier League franchise Rajasthan Royals (RR), have won major relief from the Prevention of Money Laundering Appellate (PMLA) tribunal.
The tribunal has termed the Rs 983.5 million fine slapped on RR’s promoters by the Enforcement Directorate (ED) in May 2013 as ‘untenable’ and ‘unsustainable’, and reduced it to Rs 150 million, while in the case of individual appellants, it has been struck down to nil.
While delivering its order, the tribunal termed ED’s case of FEMA (Foreign Exchange Management Act) violations brought against RR’s promoters as ‘technical’ and ‘venial’ at best, Hindu Businessline reports.
It bears noting that this cutback is itself a massively scaled down figure from the 30% reduction that the Appellate Tribunal for Foreign Exchange (ATFE) had granted in May 2017 on the appeal mounted by RR’s promoters against the Rs 983.5 million fine imposed by the ED.
For the record, Rs 332.2 million was the total payment made to BCCI by various individuals/entities connected to Rajasthan Royals while bidding for the IPL franchise in 2008, around which ED’s case was built.
The tribunal, while upholding the FEMA violation of Rs 332.2 million, struck down the penalty imposed on several individual directors of the concerned entities and substantially reduced the penalties on others, invoking doctrine of proportionality, the business daily has reported.
“…punishment of a certain crime should be in proportion to the severity of the crime itself. The doctrine, the conduct of good faith, honesty and mens rea cannot be excluded from consideration while deciding the quantum of imposing penalties,” the tribunal concluded, while ruling on the matter.
Hindu Businessline further reports:
The ED’s case was that in each of the 3 tranches of payments made to BCCI, the remitter of funds was different from the investor, a Mauritius based entity, to whom shares were sought to be issued.
Arrangement had been made to route the investment through Mauritius but the funds are flowing into India from United Kingdom which is not permissible. The Reserve Bank of India and Foreign Investment Promotion Board twice rejected the application of appellants for issuance of shares and especially there was FIPB’s categorical finding that the company could not provide satisfactory proof of receipt of foreign exchange.
But the tribunal observed that “there has been no loss to the exchequer, funds remained in India, remittances were utilised for the purpose for which they were intended and above all, Rajasthan Royals franchise has participated in IPL since 2008.”
Further the tribunal, without any further allegations of FEMA contraventions invoked the settled principle of ‘proportionality’, which according to it, must guide imposition of penalties in quasi-criminal proceedings. “Exercise of discretion while determining the quantum of penalty must be fair, objective and based on relevant considerations. Such exercise of discretion cannot be based on arbitrary, vague or fanciful considerations,” the tribunal ruled.
