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TMI Blog2012 (11) TMI 879X X X X Extracts X X X X X X X X Extracts X X X X ..... hardship and also to stipulate conditions as required to safeguard the realisation of penalty. Undue hardship As per Section 50 of FERA, the penalty shall be upto five times of the alleged violation. Even though the alleged contravention by the appellant is to the extent of more than Rs.5 Crores, the adjudicating authority/Additional Commissioner imposed only a penalty of Rs.1.25 Crores. The Appellate Tribunal has directed the appellant to deposit 5% of the penalty amount - there is no improper exercise of discretion to entertain this appeal. It cannot be said that the impugned order has caused undue hardship to the appellant warranting interference with the order - CMA No.3900 of 2011 and M.P.No.1 of 2011 - - - Dated:- 22-2-2012 - MRS. R.BANUMATHI AND MRS S.VIMALA JJ. For Appellant: Mr. M. Abdul Nazeer For Respondent No.1: Mr.M. Dhandapani Spl.Counsel for Enforcement J U D G M E N T R.BANUMATHI,J. The appeal is preferred against the order of the Appellate Tribunal for Foreign Exchange, New Delhi in Appeal No.246 of 2008 (dated 04.01.2010) dismissing the appeal for non-compliance of judicial order under which the appellant was directed to make a pre-d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compliance with the order dated 18.09.2009. For non-compliance of the order under Section 52(2) of FERA, by the impugned order, the Appellate Tribunal dismissed the appeal on 4.1.2010. 4. Challenging the order dismissing the appeal, the appellant has preferred this appeal by raising the following questions of law: 1. Whether the confirmation of the impugned order of the original Adjudicating Authority passed Ex-parte by the Appellate Tribunal is valid and sustainable? 2. Whether the Appellate Tribunal acted legally and properly in upholding the order passed by the original Adjudicating Authority in violation of and in contravention of Rule 3 of Adjudication proceedings and appeal Rules, 1974? 3. Whether the respondent has made out a prima facie case for issuing the show cause notice under Sections 9(1)(b) and 9(1)(d), 9(1)(3) and 8(2) of the Foreign Exchange Regulation Act? 4. Whether the Appellate Tribunal is justified in passing a conditional order to deposit 5% of the penalty amount for entertaining the Appeal, which was filed against the impugned order passed Ex-parte by the Original Adjudicating Authority? 5. Even at the admission stage we have ordered notice to Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 52; but the appeal shall lie only on questions of law. 9. By a combined reading of Sections 52 and 54, it is seen that under the provisions of Foreign Exchange Regulation Act, the appeal lies to the High Court only as against any decision or order of the appellate Board passed under sub-section (3) or sub-section (4) of Section 52. Any direction to deposit the penalty amount or the order of dispensation passed by the Appellate Board is an order passed under Section 52(2) and the proviso thereon. As per Section 54 of FERA, as against the order passed under Section 52(2) or the proviso thereon, no appeal shall lie to the High Court. 10. Contending that a question of law is involved in the order passed under Section 52(2), learned counsel for appellant placed reliance upon a decision of Karnataka High Court in the case of MRS.SUDERSHAN BOURY VS. THE DIRECTOR OF ENFORCEMENT, NEW DELHI, (AIR 1982 KARNATAKA 135). In the said case, the Karnataka High Court was considering the question of imposing penalty under Section 50 of the Foreign Exchange Regulation Act, which involves a complex process and intricate questions of fact and law. In such facts and circumstances, the Karnatak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o such conditions as it may deem fit to impose so as to safeguard the realisation of penalty. 13. Section 35 of FEMA deals with Appeal to High Court. As per Section 35, which reads as under:- 35 - Appeal to High Court. Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any quest on of law arising out of such order: Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days. quot; Thus under Section 35 of FEMA, as against any decision or order of the Appellate Tribunal, appeal lies to the High Court on any question of law arising out of such order. 14. As per Section 52(2) of the FERA or Section 19(1) FEMA and the second proviso thereon, the Order directing the deposit of penalty and the order dispensing with the condition of pre-deposit is a discretion of the Appellate Authority. By the impugned order, the Appellate Authority has exercised its disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... caused when the hardship is not warranted by the circumstances. 13. 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. 14. The word undue adds something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant. 15. The other aspect relates to imposition of conditions to safeguard the realisation of penalty. 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 realisation of penalty. 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 realisation of penalty. 17. Contention of Appellant is that Appellant is not in a financial position even to pay 5% of the pre-deposit and direction to pre-deposit 5% would cause undue hardship to the appellant and the appellant prays for dispensation of entir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant are not applicable to the case on hand. 20. Re-Contention - Violation of Principles of Natural Justice:- Section 51 of FERA calls upon the adjudicating officer to hold an enquiry in the prescribed manner. Rule 3 of the Adjudication Proceedings and Appeal Rules, 1974 prescribes the manner. Section 51 read with Rule 3 contemplates two stages: (i) issuance of show cause notice; (ii) where the adjudicating authority does not accept the cause shown by the person, the adjudicating officer has to hold enquiry in the prescribed manner after giving that person a reasonable opportunity for making a representation in the manner; and (iii) on such enquiry, if the adjudicating officer is satisfied that the person has committed the contravention, the adjudicating authority to impose such penalty. 21. In this case, the show cause notice was issued on 1.3.1999 for which the appellant has sent the reply through his lawyer K.A.Jabbar on 3.5.1999 denying the allegations made in the show cause notice. In the show cause notice, the appellant has requested for cross examination of the other accused and the third parties, who have given statement implicating them in the case. Thereafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en satisfied, there was contravention of Rules 3 and 10 and violation of principles of natural justice and in view of the prejudice caused to the appellant, the Appellate Tribunal must have dispensed with the pre-deposit. 24. In support of his contention that when the appellant was not found on the given address, the fresh notice ought to have been sent, the learned counsel for appellant placed reliance upon a decision of the Supreme Court in the case of PAYAL ASHOK KUMAR JINDAL VS. CAPTAIN ASHOK KUMAR JINDAL, (1992 (60) ELT 19 (SC)). In the said case, the Court sent two registered notices to the appellant at her Noida address and also at the address given by her in the proceedings before the Court and both the notices came back with the endorsement that the appellant could not be found on the given addresses. There was no material on the record to reach a conclusion that the appellant refused to receive the notices. Further, in the said case, there was also nothing on the record to show as to whether the postal authorities made any efforts to deliver the registered letters to any of the appellant's relations at the given addresses. In such facts and circumstances of the case, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered only by the appellate authority. 27. The alleged violation of principles of natural justice cannot be put in a straight jacket formula. It depends upon the facts and circumstances of the case. There is a clear distinction between cases, where there was no hearing at all and the cases, where there were mere technical infringement of natural justice. In the light of facts and circumstances of the case, it is for the Appellate Authority to consider whether there was violation of principles of natural justice and whether any prejudice was caused to the appellant. We are of the view that only considering the facts and circumstances of the case, the Appellate Tribunal exercised its discretion waiving 95% of the penalty and directing the appellant to pre-deposit only 5% of the penalty. 28. The only question falling for our consideration is, whether the direction of the Appellate Authority to pre-deposit 5% of the penalty has caused undue hardship to the appellant. Considering the scope of expressions undue hardship occurring in proviso to Section 19(1) and observing that while dealing with application for dispensation of pre-deposit, the interest of the revenue has to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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