2010 (11) TMI 737 - HC - FEMA

Writ petition - Search and seizure - petitioner did not deposit a sum of Rs. 10,00,000/- imposed against him as penalty. Along with the appeal, he filed an application under Section 52(2) of the Act seeking to dispense with such deposit on the ground that he does not have wherewithal to deposit the same and insisting for such deposit would cause undue hardship to him - amount seized by the department from the petitioner has been subjected to confiscation, no materials available on record to disbelieve the statement of the petitioner that he does not have wherewithal and there appears to be some truth in the claim of the petitioner and finally having regard to the fact that the petitioner is a chartered accountant by profession, and so, he must have some reasonable income, conditional order in favour of the petitioner to direct him to deposit a sum of Rs. 2,00,000/- (Rupees two lakhs only) within a period of 45 days from the date of receipt of a copy of this order for entertaining the appeal as provided in Section 52(2) of the Act. To that extent the impugned order needs interference.

Summary

Issues:
Challenge to appellate tribunal's order for foreign exchange violation penalty deposit under FERA Act, maintainability of writ petition, discretion to dispense with deposit, independence of confiscation proceedings from criminal prosecution, adequacy of petitioner's financial situation for deposit, interference with tribunal's order.

Analysis:
The petitioner challenged an order by the appellate tribunal for foreign exchange violation penalty deposit under the Foreign Exchange Regulation Act, 1973. The appeal was timely filed, but the petitioner did not deposit the penalty amount of Rs. 10,00,000 and sought dispensation citing financial hardship and lack of prima facie case. The tribunal refused to waive the deposit, leading to the writ petition. The petitioner argued innocence due to previous acquittal in a related criminal case and lack of financial means. The respondent opposed, asserting independence of proceedings, petitioner's financial capability, and the availability of alternative appeal remedies. The court examined the maintainability of the writ petition under Section 54 of the Act and cited relevant judgments to establish its jurisdiction.

Regarding the petitioner's contentions, the court clarified the independence of confiscation and penalty proceedings from criminal cases. It analyzed Section 52(2) of the Act, emphasizing the tribunal's discretion to waive deposit in cases of undue hardship, which cannot be exercised arbitrarily. Noting the lack of evidence supporting the respondent's claim of the petitioner's financial capacity, the court acknowledged the petitioner's profession and financial circumstances, leading to a modified order for a reduced deposit of Rs. 2,00,000 within 45 days for appeal consideration, citing the interest of justice.

In conclusion, the court partially allowed the writ petition, modifying the tribunal's order for a reduced deposit and outlining the adjustment or return of the deposited amount based on penalty imposition. The judgment highlighted the need for evidence-based decisions in financial matters and balanced the petitioner's circumstances with legal requirements, ensuring fairness and adherence to the Act.