Module: General Practice
Q32: Scenario: Mr. X has been issued a Show Cause Notice by the Directorate of Enforcement (ED) for a contravention involving ₹3 Crores. The adjudication proceedings are currently in progress. Mr. X now wants to apply for Compounding of this contravention to the RBI to settle the matter. Is he eligible?
✅ Correct Answer: A
Compounding During Adjudication: The Rule: A person can apply for compounding either before or after the institution of adjudication proceedings (Section 15). Effect: If the compounding authority (RBI) accepts the application and passes a Compounding Order, the adjudication proceedings pending before the ED must be dropped/abated regarding that specific contravention.
Constraint: He generally cannot apply if an appeal has already been filed against an adjudication order.
But during the pendency of adjudication (investigation/show cause stage), compounding is a valid exit route to "buy peace."
Constraint: He generally cannot apply if an appeal has already been filed against an adjudication order.
But during the pendency of adjudication (investigation/show cause stage), compounding is a valid exit route to "buy peace."