Pukraj Ganeshmal Jain vs Enforcement Directorate And Anr.
2007 Latest Caselaw 2247 Del

JUDGMENT

Mukundakam Sharma, C.J.

CM No. 16054/2007 (exemption)

Allowed, subject to just exceptions.

LPA No. 1337/2007 (Stay) and CM No. 16053/07 and 16055/07 (delay)

1. This appeal is directed against the order dated 28th September, 2007 whereby the learned Single Judge has partly allowed the writ petition filed by the appellant to the extent of modifying the order passed by the Appellate Tribunal with a direction that instead of depositing 25% of the penalty amount in terms of the order of the Tribunal, the appellant shall make a pre-deposit of an amount of Rs. 50 lacs within two months from that date. Subject to the aforesaid condition, it was directed that the appeal filed by the appellant shall be heard by the Tribunal.

2. The appellant had filed the aforesaid writ petition before this Court being aggrieved by the order passed by the Appellate Tribunal under the provisions of Section 52 of the Foreign Exchange Regulation Act, 1973 (in short "FERA"). The said order of the Tribunal, which was under challenge, was passed in the appeal filed by the appellant as against the order dated 4th October, 2000 passed by the Special Director under the provisions of FERA imposing penalty of Rs. 3,55,00,000/-. The said order was passed by the Special Director regarding the conclusion that the appellant had received compensatory payment to the tune of Rs. 1,66,40,180/- from different persons in India on instructions from Mr. Mohammad of Dubai and made compensatory payment totalling Rs. 5,02,54,335/- to different persons in India on instructions from Mr. Mohammad of Dubai. It was held by him that the charges in the notice issued against him stand proved and after recording the findings a direction was issued that the seized Indian currency of Rs. 5,75,000/- and 21 gold bars of ten tolas each being amount / property involved in the aforesaid contraventions, be confiscated and the proceeds thereof be credited to the Central Government account.

3. The aforesaid findings, according to the appellant, are unjustified and illegal and consequently a statutory appeal has been filed by the appellant before the Appellate Authority, namely, the Tribunal in terms of the provisions of Section 52. Section 52(2) of the said Act requires pre-deposit of the penalty amount as a condition precedent for deciding the appeal. However, the second proviso empowers the Appellate Authority to pass an order to dispense with such deposit either unconditionally or subject to such conditions as it may deem fit. An application was filed by the appellant along with the aforesaid appeal under Section 52(2) read with second proviso seeking for dispensation of the requirement to pre-deposit unconditionally. The Appellate Tribunal on consideration of the records passed an order on 23rd February, 2006 directing that the appellant should deposit 25% of the penalty amount within 45 days from that day failing which the appeal would be dismissed on the ground of non-deposit of the pre-deposit amount of 25% of the penalty amount. The said order passed by the Appellate Tribunal for Foreign Exchange was challenged by the appellant by filing a writ petition, which was disposed of under the impugned order. Consequently, this appeal is filed on which we have heard learned Counsel for the parties.

4. Mr. K.N. Bhat, Senior Advocate appearing for the appellant has submitted before us that the findings recorded by the learned Single Judge that the prima facie nature of merits of the case or otherwise could not be a dominant factor is wrong and is not tenable in view of the settled position of law. Mr. K.N. Bhat, Sr. Advocate in support of the aforesaid statement, has relied upon the decision of the Supreme Court in Mehsana Dist. Co-op Milk P.U. Ltd. v. Union of India reported as and also the decision of the Supreme Court in Polar Industries Ltd. v. Commissioner of Central Excise, Meerut and others reported as . These cases, which are relied upon, also deal with the issue with regard to dispensation of the requirement of pre-deposit being made at the time of filing of appeal under the relevant enactments. In the light of his submissions, we have also heard learned Counsel appearing for the respondents, who has drawn our attention to the order passed by the Primary Authority as also to the conduct of the appellant herein. He has pointed out that not only the appellant was found to be involved in hawala transaction but his conduct was also not above board as he after obtaining permission did not turn up and join the investigation and avoided the investigation for nearly about six months when he was apprehended and examined under Section 40 of FERA.

5. Be that as it may, we are not deciding the merit of the order passed by the learned Special Director in this appeal, for the said order is subject matter to be decided in the appeal, which is pending for consideration before the Appellate Authority. What is to be decided at this stage is as to whether or not there is a prima facie case and other factors justifying the pre-deposit condition imposed by the Appellate Authority as modified by the learned Single Judge or the pre-deposit condition should be dispensed with completely or reduced. This aspect has to be examined keeping in mind the limited power of judicial review.

6. Contention raised by the counsel for the appellant was that neither the Tribunal nor the learned Single Judge examined the issue with regard to prima facie case which was required to be considered as laid down in the aforesaid decision of the Supreme Court.

7. We have examined the said issue and on consideration of the records, we find that the Appellate Tribunal, while directing for deposit of 25% of the penalty amount as a pre-condition of entertaining the appeal, has referred to the pleadings of the parties and thereafter has recorded that wrong evaluation of evidence of admissional statement though retracted would not make the impugned order ex facie bad and that rather the appellant has a case to answer.

8. The Tribunal held that considering the totality of the circumstances of the case, the appellant has not been able to make out a good prima facie case. Thereafter, the Tribunal proceeded to consider as to whether or not there is a financial hardship. On that count it was held that the appellant should deposit 25% of the penalty amount and 75% of the penalty amount could be dispensed with. The said order though not elaborate, does spell out reasons and grounds why complete exemption was not granted. The said order was challenged before the learned Single Judge, who, in our considered opinion, has also examined the issue with regard to prima facie case in respect of which it was held that the same may not be dominant factor, but at the same time held that it is one of the factors which is required to be considered. Thereafter he proceeded to examine the case of undue hardship and considering the facts and circumstances of the case held that the direction to pay 25% of the penalty amount amounting to Rs. 83.75 lacs in the facts of the case would cause undue hardship to the appellant. Having held thus, he modified the order of the Tribunal by directing deposit of Rs. 50 lacs as a pre-condition for hearing of the appeal.

9. In our considered opinion, both the Tribunal and the learned Single Judge have considered not only the case as to whether or not a prima facie case is made out, but have also considered the financial hardship aspect. In our considered opinion, all the relevant factors have been taken notice of by the learned Tribunal as also by the learned Single Judge. The learned Single Judge considered it a case of undue hardship if a direction is issued for payment of 25% of the penalty amount and, therefore, he modified the order and directed for payment of only Rs. 50 lacs in the facts and circumstances of the case.

10. We have referred to the facts found in the penalty order. Having considered the findings recorded and found, we do not think it is an appropriate case, where the appellant is entitled to any further reduction. The appeal has no merit and is dismissed.