Delhi High Court
K. Mohammed Imran vs Uoi & Ors. on 18 May, 2009
Author: Ajit Prakash Shah
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ LPA 222/2009 & CM Nos. 7228-30/2009
K. MOHAMMED IMRAN ..... Appellant
Through: Mr. Saurabh Prakash,
Mr. Mahendra Singh,
Mr. Nagesh and Mr. Vikash
Bhatnagar, Advocates.
versus
UOI & ORS. ..... Respondents
Through: None.
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE NEERAJ KISHAN KAUL
ORDER
% 18.05.2009
1. The present appeal arises out of the order of the learned single
Judge dated 17th April, 2009. The Appellate Tribunal for Foreign
Exchange (in short „Tribunal‟) had disposed of the application of the
appellant (original petitioner in the writ petition) for waiver of pre-
deposit by partly allowing the same and directing the appellant to
pre-deposit 70% of the penalty amount within thirty days. The
Assessing Officer had imposed a penalty of Rs.50,00,000/-. The
Tribunal had asked the appellant to make a pre-deposit of
Rs.35,00,000/- as a pre-condition for hearing of his appeal before it.
2. The allegations against the appellant are that he had indulged
in hawala transactions along with his brother-in-law of more than
Rs.2 crores. The learned single Judge, after noticing income-tax
returns of the appellant as also immovable property owned by the
appellant‟s wife, has further reduced the pre-deposit amount to Rs.
10,00,000/- to be paid in two installments as a pre-condition for
hearing of the appeal. We see no infirmity in this finding.
3. As held by this Court in the case of Rakesh Kumar Aggarwal
vs. CEGAT, New Delhi, 2002(143) ELT 497, that while exercising
the writ jurisdiction in a matter concerning the waiver of pre-deposit,
the scope for interference is very limited. Unless the order is perverse,
unreasonable and/or based on no material, there would be hardly
any scope for interference.
4. It is further pertinent to refer to the decision of the Supreme
Court in Benara Valves Ltd. vs. CCE, (2006) 13 SCC 347. The
Supreme Court in the said matter, while considering the issue of
stay/dispensation of pre-deposit for hearing of an appeal, under
Section 35 F of the Central Excise Act, 1944, observed that in such
matters, though discretion is available, the same has to exercised
judicially. Two significant expressions used in Section 35 F of the
Central Excise Act, 1944, are "undue hardship to such person" and
"safeguard the interests of revenue". The aspect of "undue hardship"
is a matter within the special knowledge of the applicant for waiver
and has to be established by him. A mere assertion about undue
hardship would not be sufficient. In Indian conditions, expression
"undue hardship" is normally related to economic hardship. "Undue"
means something which is not merited by the conduct of the
claimant, or is very much disproportionate to it. Undue hardship is
caused 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
interest of revenue‟. It is for the Tribunal to impose such conditions
as are deemed proper to safeguard the interest of revenue.
5. Under Section 19 sub-clause (1) of Foreign Exchange
Management Act, 1999, the expressions used are "undue hardship"
and "safeguard the realization of penalty". The appellant has been
unable to show as to how undue hardship would be caused to him.
No case has been made out to warrant any interference by us on the
touch stone of fairness, legality and public interest. The learned
single Judge has very fairly directed the appellant to make a deposit
of Rs. 10,00,000/- in two installments as a pre-condition for hearing
the appeal. Neither before the Tribunal nor before the learned Single
Judge or in the pleadings before us has the appellant succeeded in
making out a case of financial and undue hardship to warrant
complete waiver of the requirement of the pre-deposit.
6. As held by the Delhi High Court in Monotash Saha vs.
Special Director, Enforcement Directorate, 2008 (229) ELT 493,
while dealing with Section 19 of the Foreign Exchange Management
Act, 1999, that "undue hardship" is a matter within the special
knowledge of the applicant for waiver and has to be established by
him. A mere assertion about undue hardship would not be
sufficient. "Undue hardship" which means something which is not
merited by the conduct of the claimant, or is very much
disproportionate to it. "Undue hardship" is caused when the hardship
is not warranted by the circumstances. It was also held in the said
judgment that as far as the condition to safeguard the realization of
penalty is concerned it is for the Tribunal to impose such conditions
as are deemed proper to safeguard the realization of penalty. The
Tribunal noticed that confessional statements were made which were
subsequently retracted. The Tribunal rightly held that evidentiary
value of retracted confessions has to be adjudged after hearing
arguments at the time of disposal on merits. The Tribunal also
noticed that the appellant had not brought forth clearly its financial
position before it.
7. In the present case, clearly the appellant has been unable to
make out a case for complete waiver of the pre-deposit. The twin
requirements of proviso to Section 19(1) of the Foreign Exchange
Management Act, 1999, have not been satisfied to entitle him to
complete waiver. The interest of justice would be served by appellant
depositing the amount, as directed the learned single Judge.
8. In view of what is stated hereinabove, the appeal is dismissed.
All pending applications stand disposed of as well.
CHIEF JUSTICE
NEERAJ KISHAN KAUL, J.
MAY 18, 2009
sb
