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TMI Blog2011 (11) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... osition, 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. - CIVIL APPEAL NO. 10301 OF 2011, 10302 OF 2011, 10303 OF 2011 - - - Dated:- 29-11-2011 - Shri G.S. Singhvi and Sudhansu Jyoti Mukhopadhaya JJ. JUDGMENT G. S. Singhvi, J. 1. Leave granted. 2. In these appeals prayer has been made for setting aside the order of the Division Bench of the Bombay High Court whereby the applications filed by the appellants for condonation of delay in filing appeals under Section 35 of the Foreign Exchange Management Act, 1999 (for short, `the Act ) were dismissed along with the appeals filed against order dated 2.8.2007 passed by the Appellate Tribunal for Foreign Exchange (for short, `the Appellate Tribunal ). Background f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a foreign currency/foreign security. The appellants case does not attract the provision of Section 3 (d) of the Act. 5. That impugned order passed by Special Director is liable to be set aside in view of the grounds of appeal and the applicant has every hope of succeeding in the matter. As such the applicant has a very good prima facie case on merits and is likely to succeed in the appeal. 6. That the applicant is suffering from a grave financial hardship since all his assets including, properties, movable and immovable have been attached by an order of Ld. Debt Recovery Tribunal on 11th April, 2001 (a copy of the order dated 11th April, 2001 is annexed herewith and marked as Annexure B-1). Moreover the applicant/appellant is a notified person and all his assets including, properties, movable and immovable have been attached by the Government of India pursuant to the Notification dated 6th October, 2001. A copy of the Notification dated 6th October, 2001 is attached herewith and marked as Annexure B-2. 7. That the appellant is further suffering due to another order of attachment passed by the Dy. CIT, Central Cir 40 under Section 281B of the Income Tax Act dated 7th April, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ble Debt Recovery Tribunal, Mumbai dated 11th April, 2001 confirmed on 25th September, 2001 ( a copy of the order dated 11th April, 2001 confirmed on 25th September, 2001 is annexed herewith and marked as Annexure B-1). 9. That by order dated 12th December, 2003 passed by SEBI, the appellant has been prohibited from carrying out its business activity of buying, selling or dealing in securities in any manner directly or indirectly and have also been debarred from associating with the Securities market for the period of fourteen years. (A copy of the SEBI order dated 12 th December, 2003 is annexed herewith and marked as Annexure- B4. 10. In view of the submissions made above it is respectfully submitted that the applicant/appellant is not in a position to deposit the penalty amount of Rs.12,00,00,000 (Rupees Twelve Crores) imposed in the impugned order. The appellant/applicant has absolutely no means to pay the penalty amount as pre-deposit and such pre-deposit would cause undue hardship to the applicant/appellant. In the application filed on behalf of M/s. Panther Fincap and Management Services Limited, the following averments were made: 4. The applicant submits that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed DSQ shares has not been discharged but is required to be paid by the appellants which normally can be at the place where creditor, i.e. GIL, resides or is engaged in business, i.e. Mauritius. Therefore, allegations of contravention of Section 3(d) cannot be termed as ex facie bad, hence the appellants have no prima facie case. They have many questions to answer. After deciding one factor included in undue hardship , we proceed to look to the financial position of the appellants. It is the burden on the appellants to disclose correct financial position which in these appeals the appellants have totally failed to disclose. The appellants are not candid enough to bring out their correct financial status. Merely because Directorate of Enforcement has not come out forcefully against the ground of financial disability, this Tribunal cannot believe that appellants, who were roaring in crores at one time, are not in a position to make pre-deposit of the penalty, especially when this Tribunal is simultaneously duty-bound to, as provided in Second Proviso of Section 19 (1) FEM Act, 1999, to ensure recovery of penalty. However, we are conscious that this Tribunal may not unwittingly pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section, entire period during which the writ petitions filed by the appellants remained pending before the Delhi High Court is liable to be excluded while computing the period of limitation and if that is done, the appeals filed under Section 35 cannot be treated as barred by time. Learned senior counsel referred to Section 29(2) of the Limitation Act and the judgments of this Court in State of Goa v. Western Builders (2006) 6 SCC 239, Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department and others (2008) 7 SCC 169, Coal India Limited and another v. Ujjal Transport Agency and others (2011) 1 SCC 117 and argued that even though the period of limitation prescribed under Section 35 of the Act is different from the period specified in Article 137 of the Schedule appended to the Limitation Act, in the absence of express exclusion of Section 14 of the Limitation Act, the appellants are entitled to seek exclusion of the time spent by them in bona fide prosecution of remedy before a wrong forum. Shri Ranjit Kumar submitted that at the time of filing writ petitions before the Delhi High Court, all the High Courts were entertaining such petitions and granting r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot invoke Section 14 of the Limitation Act because their action of filing the writ petitions before the Delhi High Court was not bona fide. He pointed out that vide order dated 7.11.2007, the learned Single Judge of the Delhi High Court had accepted the request made by counsel appearing for the appellants and treated the writ petition filed by Kartik K. Parekh as an appeal and similar order appears to have been passed in the case of M/s. Panther Fincap and Management Services Limited but those orders were subsequently recalled at the instance of the two appellants. Shri Panda submitted that the Appellate Tribunal did not commit any error by directing the appellants to deposit 50% of the penalty imposed by the Special Director because they had been found guilty of clandestine monetary transactions and did not disclose their true financial position. . The relevant provisions : 10. Section 35 of the Act as also Sections 5, 14 and 29(1) and (2) of the Limitation Act, which have bearing on the decision of the issue raised in the appeals, read as under 35. Appeal to High Court - Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... good faith in a court of first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it. (3) Notwithstanding anything contained in rule 2 of Order XXIII of the Code of Civil Procedure, 1908 (5 of 1908), the provisions of sub-section (1) shall apply in relation to a fresh suit instituted on permission granted by the court under rule 1 of that Order, where such permission is granted on the ground that the first suit must fail by reason of a defect in the jurisdiction of the court of other cause of a like nature. Explanation - For the purpose of this section, - (a) In excluding the time during which a former civil proceeding was pending, the day on which that proceeding was instituted and the day on which it ended shall both be counted; (b) a plaintiff or an applicant resisting an appeal shall be deemed to be prosecuting a proceeding; (c) Misjoinder of parties or of causes of action shall be deemed to be a cause of a like nature with defect of jurisdiction. 29. Savings - (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. In our view, even in a case where the special law does not exclude the provisions of Sections 4 to 24 of the Limitation Act by an express reference, it would nonetheless be open to the court to examine whether and to what extent the nature of those 16 provisions or the nature of the subject-matter and scheme of the special law exclude their operation. (emphasis supplied) 13. In Union of India v. Popular Construction Company (supra), this Court considered the question whether Section 5 of the Limitation Act can be invoked for condonation of delay in filing an application under Section 34 of the Arbitration and Conciliation Act, 1996. The two-Judge Bench referred to earlier decisions in Vidyacharan Shukla v. Khubchand Baghel AIR 1964 SC 1099, Hukumdev Narain Yadav v. Lalit Narain Mishra (1974) 2 SCC 133, Mangu Ram v. MCD (1976) 1 SCC 392, Patel Naranbhai Marghabhai v. Dhulabhai Galbabhai (1992) 4 SCC 264 and held: As far as the language of Section 34 of the 1996 Act is concerned, the crucial words are but not thereafter used in the proviso to sub-section (3). In our opinion, this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he permissible period provided under the statute. The period up to which the prayer for condonation can be accepted is statutorily provided. It was submitted that the logic of Section 5 of the Limitation Act, 1963 (in short the Limitation Act ) can be availed for condonation of delay. The first proviso to Section 35 makes the position clear that the appeal has to be preferred within three months from the date of communication to him of the decision or order. However, if the Commissioner is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of 60 days, he can allow it to be presented within a further period of 30 days. In other words, this clearly shows that the appeal has to be filed within 60 days but in terms of the proviso further 30 days' time can be granted by the appellate authority to entertain the appeal. The proviso to sub-section (1) of Section 35 makes the position crystal clear that the appellate authority has no power to allow the appeal to be presented beyond the period of 30 days. The language used makes the position clear that the legislature intended the appellate authority to entertain the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60 days which is the preliminary limitation period for preferring an appeal. In the absence of any clause condoning the delay by showing sufficient cause after the prescribed period, there is complete exclusion of Section 5 of the Limitation Act. The High Court was, therefore, justified in holding that there was no power to condone the delay after expiry of the prescribed period of 180 days. 17. In Chhattisgarh State Electricity Board v. Central Electricity Regulatory Commission (supra), a two-Judge Bench interpreted Section 125 of the Electricity Act, 2003, which is substantially similar to Section 35 of the Act and observed: Section 125 lays down that any person aggrieved by any decision or order of the Tribunal can file an appeal to this Court within 60 days from the date of communication of the decision or order of the Tribunal. Proviso to Section 125 empowers this Court to entertain an appeal filed within a further period of 60 days if it is satisfied that there was sufficient cause for not filing appeal within the initial period of 60 days. This shows that the period of limitation prescribed for filing appeals under Sections 111(2) and 125 is substantially different fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l limitation for filing an appeal against the decision or order of the Tribunal and proviso to Section 125 will become nugatory. 18. The question whether Section 14 of the Limitation Act can be relied upon for excluding the time spent in prosecuting remedy before a wrong forum was considered by a two Judge Bench in State of Goa v. Western Builders (supra) in the context of the provisions contained in Arbitration and Conciliation Act, 1996. The Bench referred to the provisions of the two Acts and observed: There is no provision in the whole of the Act which prohibits discretion of the court. Under Section 14 of the Limitation Act if the party has been bona fidely prosecuting his remedy before the court which has no jurisdiction whether the period spent in that proceedings shall be excluded or not. Learned counsel for the respondent has taken us to the provisions of the Act of 1996: like Section 5, Section 8(1), Section 9, Section 11, subsections (4), (6), (9) and sub-section (3) of Section 14, Section 27, Sections 34, 36, 37, 39(2) and (4), Section 41, sub-section (2), Sections 42 and 43 and tried to emphasise with reference to the aforesaid sections that wherever the legislat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 14 of the Limitation Act, proper approach will have to be adopted and the provisions will have to be interpreted so as to advance the cause of justice rather than abort the proceedings. It will be well to bear in mind that an element of mistake is inherent in the invocation of Section 14. In fact, the section is intended to provide relief against the bar of limitation in cases of mistaken remedy or selection of a wrong forum. On reading Section 14 of the Act it becomes clear that the legislature has enacted the said section to exempt a certain period covered by a bona fide litigious activity. Upon the words used in the section, it is not possible to sustain the interpretation that the principle underlying the said section, namely, that the bar of limitation should not affect a person honestly doing his best to get his case tried on merits but failing because the court is unable to give him such a trial, would not be applicable to an application filed under Section 34 of the Act of 1996. The principle is clearly applicable not only to a case in which a litigant brings his application in the court, that is, a court having no jurisdiction to entertain it but also where he br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aggrieved party makes an application. The jurisdiction under Section 34 of the Act, cannot be exercised suo motu. The total period of four months within which an application, for setting aside an arbitral award, has to be made is not unusually long. Section 34 of the Act of 1996 would be unduly oppressive, if it is held that the provisions of Section 14 of the Limitation Act are not applicable to it, because cases are no doubt conceivable where an aggrieved party, despite exercise of due diligence and good faith, is unable to make an application within a period of four months. From the scheme and language of Section 34 of the Act of 1996, the intention of the legislature to exclude the applicability of Section 14 of the Limitation Act is not manifest. It is well to remember that Section 14 of the Limitation Act does not provide for a fresh period of limitation but only provides for the exclusion of a certain period. Having regard to the legislative intent, it will have to be held that the provisions of Section 14 of the Limitation Act, 1963 would be applicable to an application submitted under Section 34 of the Act of 1996 for setting aside an arbitral award. In his concurri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er receiving copy of the order passed by the Appellate Tribunal, they had filed writ petitions before the Delhi High Court, which were disposed of on 26.7.2010 and, thereafter, they filed appeals before the Bombay High Court under Section 35 of the Act. Paragraphs 1, 2 and 3 of the applications for condonation of delay which are identical in all the cases were as under: 1. The Appellant above named has preferred an Appeal against the order dated 2nd August 2007 (hereinafter referred to as the impugned order ) passed by the Respondent No.1 against the Appellant above named. The Appellant states that the impugned order was received by the Appellant on 5 th October 2007. The Appellant states that there is a delay of 1056 days in filing the above appeal, the reasons for which are being stated in detail hereunder and, therefore, the Appellant above named prays that the delay in filing the present appeal may please be condoned. 2. RELIEFS SOUGHT : (a) That this Hon ble Court be pleased to condoned the delay of 1056 days in filing the said Appeal; (b) That such further and other reliefs as the facts and circumstances may require. 3. REASONS FOR THE DELAY : 3.1 The Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuting the writ petitions before the Delhi High Court. This shows that the appellants were seeking to invoke Section 5 of the Limitation Act, which, as mentioned above, cannot be pressed into service in view of the language of Section 35 of the Act and interpretation of similar provisions by this Court. 23. There is another reason why the benefit of Section 14 of the Limitation Act cannot be extended to the appellants. All of them are well conversant with various statutory provisions including FEMA. One of them was declared a notified person under Section 3(2) of the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992 and several civil and criminal cases are pending against him. The very fact that they had engaged a group of eminent Advocates to present their cause before the Delhi and the Bombay High Courts shows that they have the assistance of legal experts and this seems to the reason why they invoked the jurisdiction of the Delhi High Court and not of the Bombay High Court despite the fact that they are residents of Bombay and have been contesting other matters including the proceedings pending before the Special Court at Bombay. It also appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... graph 45 of the judgment of this Court in Raj Kumar Shivhare v. Assistant Director, Directorate of Enforcement (supra). Indeed, it is not even the case of the appellants that they had filed appeals under Section 35 of the Act within 30 days computed from 26.7.2010. Therefore, the Division Bench of the Bombay High Court rightly observed that even though the issue relating to jurisdiction of the Delhi High Court to grant time to the appellants to file appeals is highly debatable, the time specified in the order passed by the Delhi High Court cannot be extended. 25. In view of the above discussion, we hold that the impugned order does not suffer from any legal infirmity. 26. Notwithstanding the above conclusion, we have considered the submission of Shri Ranjit Kumar that the appellants are facing huge financial crises and the Appellate Tribunal committed serious error by not entertaining their prayer to dispense with the requirement of deposit of the amount of penalty in its entirety, but have not felt convinced. In our considered view, the appellants miserably failed to make out a case, which could justify an order by the Appellate Tribunal to relieve them of the statutory obliga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d when the hardship is not warranted by the circumstances. For a hardship to be undue it must be shown that the particular burden to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant would derive from compliance with it. The word undue adds something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant. The other aspect relates to imposition of condition to safeguard the interests of the Revenue. This is an aspect which the Tribunal has to bring into focus. It is for the Tribunal to impose such conditions as are deemed proper to safeguard the interests of the Revenue. Therefore, the Tribunal while dealing with the application has to consider materials to be placed by the assessee relating to undue hardship and also to stipulate conditions as required to safeguard the interests of the Revenue. 28. The same view was reiterated in Indu Nissan Oxo Chemicals Industries Ltd. v. Union of India (2007) 13 SCC 487 by considering proviso to Section 129-E of the Customs Act, 1962, which is almost identical to Section 19 of the Act. 29. In the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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