2018 (11) TMI 188 - HC - FEMA

Contravention of Section 8 of the Foreign Exchange Management Act, 1999 read with Section 42(1) thereof along with Regulation 9 and 13 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 - Appeal to Appellate Tribunal - Held that - The Tribunal prescribed a condition of deposit of 20% of the penalty amount as a precondition for hearing the Appeals on merits. Such a pre-condition is imminently fair, just and reasonable. It does not deny the appellant a right of appeal as is now projected before us. It ensures that justice would be done as well. Thus, the right of appeal has not been defeated and frustrated and as is now complained. In fact from 14th July, 2009, we have travelled upto 31st October, 2018. Despite this enormous passage of time, the appellants have not complied with this order and the conditions imposed therein. We were prepared to give further time to the appellant to comply with this order, but their counsel argued that they do not have any money. Given their precarious financial position and undue hardship, we must set aside this condition altogether or reduce the amount to a paltry sum of approximately two lakhs. Tribunal was ready and willing to hear the restoration application provided a fair stand was taken by the appellants. On such occasions, when the restoration applications of the appellants were placed before the Tribunal, they chose to remain absent. They did not cooperate with the Tribunal. The Tribunal was not obliged to wait for them. Its the appellants who desire another opportunity to have an adjudication on merits. However, their conduct is not consistent and justice cannot be rendered to those who have failed to show their bona fides in the instant case. We find that the bona fides are totally lacking. The Tribunal has indulged the appellants enough and we do not see the discretion exercised by the Tribunal to be arbitrary or capacious enabling us to entertain these Appeals.

Summary

Issues:
Challenge to orders passed on 30th March, 2009 and 31st January, 2018 regarding contravention of FEMA provisions, imposition of penalties, non-compliance with tribunal orders, and interpretation of Section 19 of FEMA for appeal process.

Analysis:
1. The original order dated 30th March, 2009, dealt with a notice issued for contravention of FEMA provisions by failing to repatriate funds to India. Penalties were imposed on the company and its directors. The appellate remedy was sought before the Appellate Tribunal, which granted dispensation of pre-deposit of penalty to the appellants, subject to conditions. Failure to comply led to dismissal of the appeals on 14th July, 2009.

2. Attempts were made to revive the appeals by filing applications for restoration. The Tribunal granted opportunities for compliance but eventually dismissed the appeals on 31st January, 2018, due to non-compliance with the order of 14th July, 2009. The appellants failed to respond positively to the conditions set by the Tribunal, leading to the dismissal of the appeals.

3. The appellants challenged the Tribunal's orders, contending that the conditions imposed for appeal were onerous and excessive. The interpretation of Section 19 of FEMA was crucial, as it provides for an appeal to the Appellate Tribunal against orders of the Adjudicating Authority. The appellants argued that justice should not be denied based on hyper-technical grounds and that the proviso should be interpreted in line with the purpose of providing an appeal.

4. The Tribunal's discretion to impose conditions for depositing penalties before hearing appeals was considered fair and reasonable. Despite ample time given to comply, the appellants failed to adhere to the conditions. The Tribunal was willing to hear restoration applications but the appellants' lack of cooperation and absence led to the dismissal of the appeals. The Tribunal's actions were deemed not arbitrary, and the appellants' conduct lacked bona fides.

5. Consequently, the High Court upheld the Tribunal's orders, dismissing all appeals and companion applications. No costs were awarded. The judgment emphasized the importance of compliance with tribunal orders and the fair exercise of discretion in appeal processes under FEMA.

This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive understanding of the case and the court's decision.