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TMI Blog2012 (5) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 violation of the provisions of Section 3(c) of the FEMA. The allegation in the notice to show was that the Appellant together with another person, Sunil Rai, unauthorizedly received payments amounting to Rs.5 Crores on the instructions of persons resident outside India. The residential premises of the Appellant and the conoticee were searched on 19 and 20 February 2003 on information received to the effect that they were involved in illegal betting on cricket matches during the ICC World Cup Tournament of 2003. The search of the business premises resulted in the seizure of documents, audio cassettes, telephones, recording equipment and a computer hard disk amongst other incriminating material. Eight statements of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meters 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 carrying on his own cricket betting business from the premises that were searched. From 9 February 2003, according to the Appellant, he was receiving bets for the ICC World Cup Tournament. The Appellant admitted that he had 70 to 80 regular clients, some of whom were residing in Dubai and Jakarta. The amounts of the bets were received through hawala channels and the profits which were earned by the persons residing outside India were also remitted through hawala channels. The Dubai business of the Appellant was being looked after by his relative Jitendra Shivhare who was receiving and making payments to the clients of the Appellant. The '+' sign in the accounts meant that the Appellant had to receive money, whereas t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 this ground, the application was dismissed. 6. Counsel appearing on behalf of the Appellant submitted that - (i) The direction to deposit the full amount of the penalty of Rs.2 Crores is disproportionate and arbitrary and virtually deprives the Appellant of the right of appeal before the Tribunal; (ii) As and by way of a prima facie case the Appellant would submit that - (a) The provisions of the FEMA would not be attracted since there is no basis to provide a link between the telephone numbers retrieved from the records of the Appellant with the alleged receipt of monies from abroad; (b) The Appellant was denied the right of cross examination of one of the witnesses whose statement was recorded by the Enforcement D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 required to go into a consideration in detail of the evidence which can only be at the hearing of the appellate proceedings. Similarly, on the issue of financial hardship the onus lies on the Appellant to produce documentary material before the Tribunal to establish its case. 9. In the present case, the statements of the Appellant were recorded on eight different occasions. Prima facie, the statements contained a detailed account of the nature of the betting business which was carried out by the Appellant and contained a quantification of the amount of Rs.5 Crores received by him through hawala channels. The statements, as the adjudicating officer recorded, were sought to be challenged in terms of their authenticity for the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (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 quantum of deposit that a direction to the Appellant to deposit 60% of the penalty as quantified would meet the ends of justice. The Tribunal by its decision which was rendered on 17 July 2008 had directed the Appellant to deposit the penalty within thirty days failing which it was stated that the Appeal would stand dismissed. Thereafter as we have noted earlier, the Appellant had filed writ proceedings before the Delhi High Court and in an appeal therefrom to the Supreme Court where the Supreme Court held that ordinarily a writ petition against the order of the Tribunal on an application for waiver of predeposit would not be maintainable. In terms of the liberty granted by the Supreme Court the present appeal was filed. The appeal was fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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