9911796707
TMI Blog2012 (5) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... ) : 1. This Appeal arises from an order of the Appellate Tribunal for Foreign Exchange on an application for waiver of predeposit made to the Tribunal under the provisions of Section 19(1) of the Foreign Exchange Management Act 1999. The Appeal before this Court arises under Section 35 on a question of law. Though several questions have been framed in the Memo of Appeal, counsel appearing on behalf of the Appellant states that question (e) as raised would be comprehensive enough to govern the submissions which are urged in the Appeal. That question reads as follows : Whether in the facts and circumstances of the case, the Tribunal is right in dismissing the stay Petition for waiver of predeposit of penalty in FEMA appeal without properly appreciating the strong prima facie case, violation of principle of natural justice and undue hardship despite bringing out the same on the basis of documents filed along with stay petition in Appeal. 2. The Appeal is admitted on the aforesaid question and with the consent of learned counsel appearing on behalf of the Appellant and the Respondent is taken up for hearing and final disposal. 3. The Appellant was proceeded against for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court which was allowed by a Division Bench of this Court by a judgment dated 6 July 2011. This Court was of the view that the Appellant would be entitled to the benefit of the provisions of Section 14 of the Limitation Act 1963 and since he was bonafide pursuing his case under Article 226 first before the Delhi High Court and thereupon in appeal before the Supreme Court, that period would have to be excluded. Excluding that period, the Court held that there were sufficient grounds for condoning the delay which was within the statutory period, to the extent of which delay can be condoned under the proviso to Section 35. The Appeal has now been listed and the issue before the Court is whether, within the parameters that are set out in Section 35 of the FEMA, a case has been made out by the Appellant. 4. The order of adjudication that has been passed by the Special Director adverts to the following circumstances : i) Eight statements of the Appellant were recorded by the Enforcement Directorate. In those statements, the Appellant gave a detailed account of the fact that between 1992 to 2002 he was in Dubai and engaged in the betting business and since February 2003 he was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the accounts were taken from the computer hard disk of the Appellant under a Panchanama which was recorded in his presence. The entries in the accounts indicated in detail accounts pertaining to bets placed in respect of cricket matches between various cricket playing nations. On this basis the Special Director held that the statement of the Appellant that he had received an amount of Rs.5 Crores by way of hawala from Dubai and Jakarta was liable to be accepted. The Special Director rejected the plea that the Appellant should be allowed to cross examine a woman client of the Appellant based in Dubai who was alleged to have placed certain bets and whose account was alleged to have been settled by the purchase of goods in Dubai for presentation to the wife of the Appellant. On this ground the penalty has been affirmed. The Appellate Tribunal while disposing of the application for predeposit placed reliance on the admissional statement of the Appellant. The Tribunal after considering the submissions was of the view that the impugned order could not be regarded as exfacie illegal. No specific material was produced before the Tribunal in support of the plea of financial hardship. On t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omprehend both the element of a prima facie case and of financial hardship. Both those elements have a material bearing on the decision of the Appellate Tribunal on whether a waiver of predeposit should be granted. As held by the Supreme Court in its decision in Union of India v. Jesus Sales Corporation (1996) 4 SCC 69. while construing the provisions of Section 4M of the Imports and Exports (Control) Act 1947 the normal rule is that before filing an appeal or before the appeal is heard, the appellant must deposit the amount which he has been directed to deposit towards penalty. An order of dispensation is an exception to the requirement of deposit. At the same time, when a discretion is conferred by the statute upon the Tribunal to dispense with the requirement of deposit, the exercise of the discretion is not unfettered but has to be along judicially recognized principles. That is why when the statute uses the expression undue hardship , that must comprehend both the question as to whether the Appellant has made out a prima facie case and whether the requirement of predeposit would cause undue financial hardship. The Tribunal at the stage of evaluating a prima facie case is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Appellant quantifying the amount received as Rs.5 Crores, the department would have to corelate the amount reflected in the accounts and in the computerized statement to evaluate the exact amount that may be involved in the betting transactions. In this respect the Court must also be mindful of the fact that such transactions which are mostly clandestine in nature take place under the cloak of secrecy and it is the person involved in the transaction who has knowledge of the detailed facts pertaining to them. Looked at from the entirety of the material available on the record, we are of the view that no case was made out by the Appellant for a complete waiver of the requirement of predeposit under the second proviso to sub section (1) of Section 19. Since the Appellant is entitled to file an appeal, on facts and law before the Tribunal, and considering the nature of the defence which is sought to be raised, we are of the view that some modification of the order passed by the Appellate Tribunal would be warranted. 10 We are of the view, having heard counsel appearing on behalf of the Appellant and the learned senior counsel appearing on behalf of the Respondent on the quant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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