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CS Executive · Economic, Commercial and Intellectual Property Laws · Overseas Direct Investment

Meridian Components Pvt Ltd, a Pune company, made an overseas investment that was later found to violate a FEMA rule. The contravention is quantifiable at Rs 40 lakh. Under Section 13(1) of FEMA, 1999, what is the maximum penalty the Adjudicating Authority can impose for the contravention itself, excluding any daily penalty?

The maximum penalty is Rs 1.2 crore. Section 13(1) permits a penalty up to thrice the sum involved when the amount is quantifiable, and thrice Rs 40 lakh equals Rs 1.2 crore. The Rs 2 lakh limit applies only to non-quantifiable contraventions.

  1. ARs 2 lakh
  2. BUp to Rs 40 lakh, being the sum involved
  3. CUp to Rs 1.2 crore, being thrice the sum involvedCorrect
  4. DUp to Rs 80 lakh, being twice the sum involved

Explanation

Section 13(1) provides a penalty up to thrice the sum involved where the amount is quantifiable. Thrice Rs 40 lakh is Rs 1.2 crore. The Rs 2 lakh cap applies only where the amount is not quantifiable, so option A is wrong. Options B and D use the wrong multiple.

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