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Karnataka High Court

Mr T Gopi vs Joint Director Of on 14 September, 2017

                           -1-
                                         MFA No.1168/2017

  IN THE HIGH COURT OF KARNATAKA AT BENGALURU

    DATED THIS THE 14TH DAY OF SEPTEMBER 2017

                        PRESENT

         THE HON'BLE MR. JUSTICE H.G.RAMESH

                          AND

        THE HON'BLE MRS. JUSTICE K.S.MUDAGAL

MISCELLANEOUS FIRST APPEAL NO.1168/2017 (FEMA)

BETWEEN :

MR. T.GOPI
S/O TEETHAGIRI
AGED ABOUT 43 YEARS
MANAGING DIRECTOR OF
M/S WOOD TECH
CONSULTANTS PVT. LTD.
NO.31/2, NADAKERAPPA
INDUSTRIAL ESTATE
ANDRAHALLI MAIN ROAD
NEAR PEENYA II STAGE
VISHWANEEDAM POST
BANGALORE - 560 091                         ...APPELLANT

(BY SRI CHIDANANDA URS B.G., ADVOCATE)

AND :

JOINT DIRECTOR OF ENFORCEMENT
OFFICE OF THE JOINT DIRECTOR OF
ENFORCEMENT, GOVERNMENT OF INDIA
3RD FLOOR, 'B' BLOCK, BMTC
SHANTHINAGAR, TTMC, KH ROAD
BANGALORE - 560 027                        ...RESPONDENT

(BY SRI MADHUKAR DESHPANDE, ADVOCATE)

     THIS MFA IS FILED UNDER SECTION 35 OF FOREIGN
EXCHANGE MANAGEMENT ACT, 1999, PRAYING TO FORMULATE THE
                                       -2-
                                                       MFA No.1168/2017

SUBSTANTIAL QUESTIONS OF LAW AND TO SET ASIDE THE
IMPUGNED STAY ORDER DATED 23.08.2016 PASSED IN APPEAL
NUMBER 28/2013 ON THE FILE OF THE APPELLATE TRIBUNAL FOR
FOREIGN EXCHANGE, 15TH FLOOR, HINDUSTAN TIMES HOUSE,
K.G.MARG, NEW DELHI-110 001.

     THIS MFA COMING ON FOR ADMISSION,                        THIS   DAY,
H.G.RAMESH J., DELIVERED THE FOLLOWING:

                                JUDGMENT

H.G.RAMESH, J. (Oral):

1. Heard. This appeal is directed against the order dated 23.08.2016 passed by the Appellate Tribunal for Foreign Exchange, New Delhi in appeal No.28/2013 partially dispensing with deposit of the penalty amount. The order was passed exercising the power under second proviso to Section 19(1) of the Foreign Exchange Management Act, 1999 ('the Act' for short); operative portion of the order reads as follows:

"11. The applications for stay and waiver from pre deposit of penalty amount are disposed of with the directions that the recovery of the amount of penalty imposed through the Impugned Order shall remain stayed till the disposal of the appeals provided the applicants/appellants deposit 10% of the total amount of penalty imposed against them individually through the Impugned Order within 30 days from the date of communication of this order and further furnish reliable security otherwise than bank guarantee of 40% of the amount of total penalty imposed against each of them within the same period. List the instant appeals on 30.11.2016 for reporting compliance. Both the parties be informed accordingly. No order as to costs. Registrar is directed to send the copy of order to both the parties."

2. It is relevant to refer to Section 19(1) of the Act:

"19. Appeal to Appellate Tribunal.--(1) Save as provided in sub-section (2), the Central Government or any person aggrieved by an order made by an Adjudicating Authority, other than those referred to in sub-section (1) of section 17, or the Special Director (Appeals), may prefer an appeal to the Appellate Tribunal:

Provided that any person appealing against the order of the Adjudicating Authority or the Special Director (Appeals) levying any penalty, shall while filing the appeal, deposit the amount of such penalty with such authority as may be notified by the Central Government:

Provided further that where in any particular case, the Appellate Tribunal is of the opinion that the deposit of such penalty would cause undue hardship to such person, the Appellate Tribunal may dispense with such deposit subject to such conditions as it may deem fit to impose so as to safeguard the realisation of penalty.

............................................................................................................."

3. The reasoning of the Tribunal in passing the order is as follows:

"8. In view of the above, discussions and without expressing any opinion on the merits of the case at this stage, we are convinced that the applicants/appellants have an arguable case. In view of the case laws, Banara Walls Ltd. Vs. Commissioner, Central Excise and Anrs. (2006) 13 SCC 347, Monotosh Shah Vs. Special Director, Enforcement Directorate (2008) 12 SCC 359, Nimesh Suchde Prop. Siddharth Polimers Vs. Union of India (2011) 107 SCL 183 (Delhi), We are of the view that it will be fair, just and proper that the applicants/appellants be allowed partial waiver as case for complete waiver is not made out in the back drop of circumstances placed before us.

9. Consequently in our view, the ends of justice will be met and the interest of revenue will be secured if the applicants/appellants are directed to deposit 10% of the total amount of penalty imposed against them individually through the Impugned Order within 30 days from the date of communication of this order and further furnish reliable security otherwise than bank guarantee of 40% of the amount of total penalty imposed against each of them within the same period.

10. It is also relevant to mention that this Tribunal earliar used to demand bank guarantee, however when it was brought to the notice of the Tribunal that banks now a days, provide bank guarantee only when the entire deposit is made to it, the Tribunal stopped demanding bank guarantee from the parties at the time of disposal of the applications for stay & waiver from pre-deposit. Demanding a bank guarantee in view of the financial condition of the appellants in our view may tantamount to deprivation of the statutory right to appeal and for all practical purposes, it will amount to demanding the deposit of entire amount of penalty imposed through the Adjudication Order. Therefore, the Tribunal is now not insisting on bank guarantee in the cases before it, at the time of disposal of the applications for stay & waiver from pre-deposit."

4. Learned counsel for the appellant, in support of the appeal, placed reliance on the following decisions:

1. Vaseem Iqbal Kapadia v. Union of India [2015 (323) E.L.T. 353 (Bom.)]

2. ND Investments v. Union of India [2015 (319) E.L.T. 53 (Bom.)]

3. Pennar Industries Ltd. vs. State of A.P. [2015 (322) E.L.T. 25 (S.C.)]

4. Benara Valves Ltd. v. Commissioner of Central Excise [2006 (204) E.L.T. 513 (S.C.)]

5. Monotosh Saha v. Special Director, Enforcement Directorate [2008 (229) E.L.T. 492 (S.C.)]

6. Nimesh Suchde Prop. Siddharth Polymers vs. Union of India [(2011) 107 SCL 183 Delhi]

5. We have examined the matter in the light of the above decisions. It is relevant to state that an appeal would lie to the High Court under Section 35 of the Act on any question of -5- MFA No.1168/2017 law arising out of the order passed by the Appellate Tribunal. On the facts of the case, it can't be said that the discretion exercised by the Appellate Tribunal in directing to deposit only 10% of the penalty and furnishing security (otherwise than bank guarantee) for 40% of the penalty is unreasonable or arbitrary to warrant interference. In our opinion, no question of law arises for consideration in this appeal. The appeal is devoid of merit and it is accordingly dismissed. In view of dismissal of the appeal, IA No.3/2017 filed for interim stay also stands dismissed.

Appeal dismissed.

Sd/-

JUDGE Sd/-

JUDGE LB