Realty developer BPTP Limited and its directors, including chairman Kabul Chawla, have settled a ₹537.50-crore foreign exchange violation case by paying ₹4.84 crore — less than one per cent of the amount involved.
The order comes as a relief for the company, which is yet to file its (DRHP) draft red herring prospectus with the market regulator SEBI
The Reserve Bank of India passed the compounding orders on September 17, the Enforcement Directorate said in a press release on Wednesday. Compounding allows a company to settle a violation by paying a one-time amount instead of facing prolonged proceedings.
BPTP paid ₹4,03,62,500. Directors Kabul Chawla and Sudhanshu Tripathi paid ₹40,36,250 each.
What the case was about
The ED found that BPTP, earlier known as Business Park Town Planners Private Limited, had issued shares to foreign investors with a clause promising them an assured return or a fixed exit price. Indian foreign investment rules do not permit this. Shares sold to overseas investors must carry genuine risk; a guaranteed exit turns the investment into disguised borrowing, which is governed by separate and stricter limits.
The agency said it took up the probe on credible information and filed a complaint before the Adjudicating Authority. The company and its directors then approached the RBI, which is the authority empowered to compound such cases. The ED issued a no-objection certificate, and the central bank passed the order on that basis.
“This facilitates voluntary compliance, reduces avoidable litigation and promotes ease of doing business,” the ED said of its policy on granting such clearances.
Why it matters
A DRHP is the first formal document a company files with SEBI before a public issue (IPO), and it must disclose every pending case against the company and its promoters. A live foreign exchange investigation would have had to go into that section and would have drawn questions from the regulator. Settling it now means BPTP files with one less disclosure to defend.
The fine print
The ED release is specific that proceedings stand terminated only in respect of the contravention that was compounded. It does not state that the agency has closed every line of inquiry involving the company or its promoters.
