2018 (4) TMI 232 - AT - FEMA

Stay petition - Held that - This is is an arguable case on merits and hence cannot also be stated to be prima facie in their favour. They are accordingly required to pre-deposit the penalty of ₹ 10 lakhs within a period of four weeks from today failing which the appeal shall be disposed off as per the provisions of FEMA.

Summary

Issues:
1. Identity dispute regarding Mr. Ram Nath/Mr. M.S. Cheera
2. Pre-deposit waiver request for penalty under FEMA
3. Alleged contravention of FEMA provisions by Mr. Ram Nath

Identity Dispute (Mr. Ram Nath/Mr. M.S. Cheera):
The case involves a controversy over the identity of Mr. Ram Nath, who acquired foreign exchange without prior RBI permission. The appellant claimed that Mr. Mohinder Singh Chera impersonated as Mr. Ram Nath, but the respondent argued that Mr. Ram Nath is the actual appellant. Despite an application for amendment to change the appellant's name, it was withdrawn. The Special Judge's judgment on a fake passport issued to M.S. Cheera as Mr. Ram Nath did not clarify Mr. Ram Nath's existence in this case. The impugned order extensively discussed Mr. Ram Nath's involvement, leading to a crucial identity dispute.

Pre-Deposit Waiver Request:
The appellant sought a waiver of the &8377; 10 lakhs penalty pre-deposit imposed by the adjudicating authority under FEMA. The appellant's counsel contended that the case should proceed without the pre-deposit, citing judgments supporting this argument. However, the respondent asserted that the appellant failed to demonstrate undue hardship for the pre-deposit and emphasized the necessity of complying with Section 19 of FEMA. The appellate tribunal found the case arguable on merits but not prima facie in favor of the appellant, mandating the pre-deposit within four weeks to avoid appeal dismissal.

Alleged Contravention of FEMA Provisions:
The core issue revolved around Mr. Ram Nath's acquisition of foreign exchange without RBI permission, violating Sections 8(1) and 14 of FEMA. The appellant did not contest the non-compliance with the pre-deposit requirement but argued against its enforcement due to alleged undue hardship. Despite the appellant receiving the money back, the tribunal deemed the case meritorious but necessitated the penalty pre-deposit to proceed further under FEMA provisions. The judgment highlighted the importance of compliance with FEMA regulations and the requirement for the appellant to fulfill the pre-deposit obligation promptly.