ED Slapped 8600 Crore Rupees Show-Cause Notice on Emaar MGF Land for Violating FEMA
The ED slapped 8600 crore Rupees show-cause notice on Emaar MGF Land for violating the Foreign Exchange Management Act (FEMA).
The Enforcement Directorate (ED) slapped 8600 crore Rupees show-cause notice on Emaar MGF Land on the grounds that the joint venture between Dubai's Emaar Properties and India's MGF Development violated Foreign Exchange Management Act (FEMA).
The investigation conducted under FEMA, it was found that the Emaar MGF Land as well as its four subsidiaries received the funds from Mauritius, Cyprus, Dubai and other countries since April 2005 under foreign direct investment scheme of the Reserve Bank of India.
The foreign direct investment scheme of the Reserve Bank of India gives an advantage to the Indian companies under automatic route to receive funds from overseas for various business activities such as construction development projects. Under the facility, Emaar MGF Land Ltd as well as its subsidiaries needed to disclose the purpose of receiving this FDI. While disclosing the use of this FDI, Emaar MGF Land Ltd revealed that the funds were used for construction development projects, while in reality these funds were used for the purchase of agricultural land in India.
The directorate of enforcement explained that the company has violated the FEMA because it used the overseas funds for the purpose which was neither disclosed to the Reserve Bank of India, nor permitted in FDI scheme of RBI. The company, therefore violated the contravention of section 6(3) (b) of FEMA 99 for an overall amount of 8600 crore Rupees, due to which it was issued the show-cause notice.