2011 (11) TMI 62 - SC - FEMA

Condonation of delay - the benefit of Section 14 of the Limitation Act cannot be extended to the appellants.- After having made a prayer that the writ petitions filed by them be treated as appeals under Section 35, two of the appellants filed applications for recall of that order. No doubt, the learned Single Judge accepted their prayer and the Division Bench confirmed the order of the learned Single Judge but the manner in which the appellants prosecuted the writ petitions before the Delhi High Court leaves no room for doubt that they had done so with the sole object of delaying compliance of the direction given by the Appellate Tribunal and, by no stretch of imagination, it can be said that they were bona fide prosecuting remedy before a wrong forum. Rather, there was total absence of good faith, which is sine qua non for invoking Section 14 of the Limitation Act. Regarding undue hardship - instead of coming clean, they tried to paint a gloomy picture about their financial position, which the Appellate Tribunal rightly refused to accept. If what was stated in the applications filed by the appellants and affidavit dated 10.10.2008 is correct, then the appellants must be in a state of begging which not even a man of ordinary prudence will be prepared to accept. To us, it is clear that the appellants deliberately concealed the facts relating to their financial condition. Therefore, the Appellate Tribunal did not commit any error by refusing to entertain their prayer for total exemption.

Summary

Issues Involved:
1. Condonation of delay in filing appeals under Section 35 of the Foreign Exchange Management Act, 1999.
2. Applicability of Section 14 of the Limitation Act, 1963.
3. Financial hardship and requirement of pre-deposit of penalty.

Detailed Analysis:

1. Condonation of Delay in Filing Appeals:
The appellants sought to set aside the order of the Division Bench of the Bombay High Court, which dismissed their applications for condonation of delay in filing appeals under Section 35 of the Foreign Exchange Management Act, 1999. The High Court held that it lacked the power to entertain appeals filed beyond 120 days. The appellants argued that the period during which their writ petitions were pending before the Delhi High Court should be excluded under Section 14 of the Limitation Act, 1963. However, the Supreme Court noted that the applications filed by the appellants sought condonation of delay under Section 5 of the Limitation Act, which is not applicable due to the specific time limits prescribed under Section 35 of the Act. The Court emphasized that the appellants did not demonstrate due diligence or good faith in prosecuting their remedy before a wrong forum, thus failing to meet the requirements of Section 14 of the Limitation Act.

2. Applicability of Section 14 of the Limitation Act:
The appellants contended that the time spent in prosecuting writ petitions before the Delhi High Court should be excluded under Section 14 of the Limitation Act. The Supreme Court examined whether Section 14 could be invoked for excluding the time spent in prosecuting a remedy before a wrong forum. The Court referred to precedents, including State of Goa v. Western Builders and Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department, which support the applicability of Section 14 in appropriate cases. However, the Court found that the appellants did not act in good faith and were aware of the appropriate forum. Their actions were seen as an attempt to delay compliance with the Appellate Tribunal's order. Consequently, the Court held that Section 14 could not be invoked in this case.

3. Financial Hardship and Requirement of Pre-Deposit:
The appellants argued that their financial condition was precarious and that the Appellate Tribunal erred in directing them to deposit 50% of the penalty. The Supreme Court noted that the appellants failed to candidly disclose their financial status and instead presented a misleading picture. The Court emphasized that the appellants had the burden to establish undue hardship, which they failed to do. The Court referred to Benara Values Ltd. v. Commissioner of Central Excise, which highlighted the need for the applicant to demonstrate undue hardship and the Tribunal's duty to safeguard the interests of the Revenue. The Court concluded that the Appellate Tribunal did not err in refusing to grant total exemption from the pre-deposit requirement.

Conclusion:
The Supreme Court dismissed the appeals, upholding the Bombay High Court's decision to reject the applications for condonation of delay. The Court found that the appellants did not act in good faith and failed to establish undue hardship. The appellants were given four weeks to comply with the Appellate Tribunal's direction, failing which their appeals would stand dismissed.