N.P. Haroun Rasheed vs The Special Director, Enforcement Directorate and Foreign Exchange Regulation, Appellate Tribunal

S. Nagamuthu, J.—Challenge in this writ petition is to the order of the second Respondent, dated 01.05.2008, made in Appeal No. 397 of 2003. The said appeal was filed by the Petitioner before the appellate tribunal for foreign exchange u/s 52 of the Foreign Exchange Regulation Act, 1973 (hereinafter referred as the Act) against the order passed by the first Respondent, the Special Director, Enforcement Directorate, New Delhi, in Order No. SDE (SSB)IV/19 & 20/2003, dated 29.08.2003.

Admittedly, the appeal was filed in time. However, the Petitioner did not deposit a sum of Rs. 10,00,000/- imposed against him as penalty. Along with the appeal, he filed an application u/s 52(2) of the Act seeking to dispense with such deposit on the ground that he does not have wherewithal to deposit the same and insisting for such deposit would cause undue hardship to him. It was also contended that there was no prima facie case against him.

Having considered all the above, the appellate tribunal passed the impugned order declining to dispense with the pre deposit and directed the Petitioner to deposit the penalty within a period of 45 days. Challenging the same, the Petitioner is now before this Court with this writ petition.

I have heard the learned Counsel appearing for the Petitioner and the learned Counsel appearing for the first Respondent and also perused the materials available on record.

The learned Counsel for the Petitioner would submit that in respect of the same occurrence, a prosecution was launched against the Petitioner, which ultimately ended in acquittal by the trial Court. An appeal preferred by the department to the High Court was also dismissed. Thus, he has been proved to be an innocent person. It is further submitted that the original order of the Director was passed expert without affording sufficient opportunity to the Petitioner. The learned Counsel for the Petitioner further submitted that there are no materials to show that the Petitioner has any wherewithal to deposit the penalty amount. The contrary findings, according to the learned Counsel, as made in the impugned order are not correct. He would submit that if the Petitioner is insisted to deposit the entire amount of Rs. 10,00,000/-, it would surely cause undue hardship to him. The learned Counsel for the Petitioner would further submit that the Petitioner is a chartered accountant by profession. Having regard to all the above, the learned Counsel for the Petitioner would submit that the impugned order may be interfered with.

The learned Counsel for the Respondent would stoutly oppose this writ petition. According to him, though the Petitioner was acquitted by the criminal court, it has got nothing to do with the proceedings under this Act for imposing penalty and confiscation. He would further submit that this proceeding is independent of the criminal prosecution. He would further submit that the Petitioner has got wherewithal to deposit the amount imposed as penalty. Therefore, the impugned order, according to the learned Counsel, does not require any interference at the hands of this Court.

The learned Counsel for the Respondent would submit that the writ petition itself is not maintainable, in view of the fact that there is an alternative remedy of appeal available to the Petitioner u/s 54 of the Act. To substantiate this contention, the learned Counsel for the Respondent has relied on a judgment of the Honorable Supreme Court in Raj Kumar Shivhare Vs. Assistant Director, Directorate of Enforcement and Another, . That is a case under the Foreign Exchange Management Act, 1999. In that case u/s 35 of the Act, any person aggrieved by any decision or order of the appellate tribunal may file an appeal to the High Court. Relying on that, the learned Counsel for the Respondent would submit that even in respect of any order declining to dispense with the pre deposit, an appeal lies to the High Court and therefore, the writ petition is not maintainable.

I have considered the above submission. Let me, at first, take up the question of maintainability of this petition. In sofar as the FERA Act is concerned u/s 54 of the Act, an appeal shall lie to the High Court only on question of law from any decision or order by the appellate board under Sub-Sections 3 or 4 of Section 52. But, the order under challenge in this writ petition is the one passed under Sub-Section 2 of Section 52 of the Act. Thus, it is very clear as against such an order, appeal does not lie u/s 54 of the Act. Therefore, the above said judgment in Raj Kumar Shivhare case, has no application to the facts of the present case.

The learned Counsel for the Respondent would rely on yet another judgment reported in (2007) 13 SCC 487 ( Indu Nissan Oxo Chemicals Industries Ltd. v. Union Of India) to contend that in exercise of writ jurisdiction under Article 226 of the Constitution of India, this Court should not interfere with any order regarding pre deposit.

A close reading of the above said judgment of the Honorable Supreme Court would go to show that it has no application to FERA. That was a case where the Honorable Supreme Court expressed the view that the Court cannot order for dispensation of pre deposit for preferring appeal under the Customs Act. Indisputably, under the Customs Act there is no power vested with the appellate authority to dispense with pre deposit for entertaining an appeal, whereas under the FERA Act there is such power given u/s 52(2) of the Act. Here in this case, the challenge is regarding the disinclination on the part of the appellate authority in exercising such power, which according to the Petitioner, is arbitrary. Surely, in my considered opinion, whether the order has been passed in accordance with law or the same has been passed in an arbitrary manner, can be gone into by this Court. Thus, I hold that the writ petition is maintainable.

Turning to the next contention of the Petitioner, the proceeding for confiscation and for imposition of penalty initiated under the Act is independent of the criminal prosecution. Acquittal of the Petitioner by the criminal Court may be a circumstance while considering the question of confiscation and such acquittal will not be a bar to proceed further with the confiscation proceedings.

Nextly, a perusal of Section 52(2) of the Act would go to show that it gives discretion to the tribunal to dispense with such deposit, in the event if the Petitioner is able to show undue hardship. But such discretion cannot be exercised arbitrarily. Though it is stated that the Petitioner has got wherewithal to deposit the said amount, to substantiate the same, absolutely no materials have been placed by the Respondent and even the order does not refer to any such material to indicate at least that the Petitioner has got wherewithal to deposit the entire amount. Therefore, the undue hardship pleaded by the Petitioner cannot be slightly brushed aside.

Having regard to the fact that the original impugned order of the Director is an exparte order, having regard to the fact that a sum of Rs. 9,00,000/- which has been seized by the department from the Petitioner has been subjected to confiscation, having regard to the fact that there are no materials available on record to totally disbelieve the statement of the Petitioner that he does not have wherewithal and there appears to be some truth in the claim of the Petitioner and finally having regard to the fact that the Petitioner is a chartered accountant by profession, and so, he must have some reasonable income, I hold that it would be in the interest of justice to pass a conditional order in favor of the Petitioner to direct him to deposit a sum of Rs. 2,00,000/- (Rupees two lakhs only) within a period of 45 days from the date of receipt of a copy of this order for entertaining the appeal as provided in Section 52(2) of the Act. To that extent the impugned order needs interference.

In the result, the writ petition is partly allowed in the following terms;

a) The order of tribunal is modified to the effect that instead of depositing Rs. 10,00,000/- as directed by the tribunal, it would be suffice for the Petitioner to deposit a sum of Rs. 2,00,000/-, within a period of 45 days from the date of receipt of a copy of this order. On such deposit, the tribunal shall entertain the appeal and dispose of the same in accordance with law.

b) In the event any penalty is imposed ultimately, the above said deposited amount shall be adjusted accordingly towards the penalty, otherwise the same shall be returned to the Petitioner.

Consequently, connected miscellaneous petition is closed. No costs.