New Delhi, Jan 12 (IANS) The Reserve Bank of India (RBI) has issued a compounding order under Section 15 of the Foreign Exchange Management Act (FEMA), in the case of Elsteel Modular India Private Limited, which has resulted in termination of proceedings against the company for alleged contraventions of the law, according to a statement issued by the Enforcement Directorate (ED) on Monday.
The order was passed by the RBI on December 12, 2025 after the Directorate of Enforcement (ED) issued a “No Objection” in the matter, the statement said.
The ED had taken up the case for investigation, based on credible information received against Elsteel Modular India Private Limited.
After completing the investigation, ED filed a complaint under Section 16 of FEMA before the Adjudicating Authority.
The contraventions under FEMA, for which compounding has been done, include late reporting of foreign inward payments, covering a sum of over Rs. 1.21 crore.
As per the provisions of FEMA, the adjudication proceedings were initiated by the Adjudicating Authority by issuance of Show Cause Notice dated September 7, 2023 under Section 6 of FEMA to the company and its directors/officers who were incharge and responsible for the conduct of the business of the company during the relevant period of contravention.
The company, later on, filed an application before the RBI for compounding contravention under FEMA as per the provisions of Section 15 of the Act.
After the reference from RBI, the ED issued its “no objection” for the compounding in line with the true spirit of the Act, the statement said.
Accordingly, the RBI, on the basis of no objection issued by ED, has compounded the contravention vide compounding order dated December 12, 2025 with a one-time payment of Rs.14,200.
This has resulted in the termination of adjudication proceedings for the contravention under the provisions of FEMA that were filed against the company. The statement also added that no further litigation will be carried out against the company.
Compounding of offences is a legal mechanism allowing an accused person or entity to settle a violation by paying a monetary penalty or fulfilling other conditions, thereby avoiding a full prosecution, lengthy litigation, and a potential criminal record, typically for less serious offenses like minor tax non-compliance or certain civil wrongs.
It involves the offender voluntarily admitting guilt and applying to a competent authority, for the offense to be condoned, resulting in the discharge of the accused.
–IANS
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