Case Note & Summary
The Appellant, Rajkumar Shivhare, was proceeded against for violation of Section 3(c) of the Foreign Exchange Management Act, 1999 (FEMA) for allegedly receiving unauthorized payments of Rs. 5 Crores from persons resident outside India in connection with illegal betting on cricket matches during the ICC World Cup 2003. The Special Director of Enforcement Directorate imposed a penalty of Rs. 2 Crores on the Appellant. The Appellant appealed to the Appellate Tribunal and sought waiver of the requirement of predeposit under Section 19(1) FEMA. The Tribunal directed the Appellant to deposit the entire penalty amount. The Appellant initially challenged this order before the Delhi High Court under Article 226, which was dismissed, and the Supreme Court dismissed the appeal but granted liberty to file an appeal under Section 35 FEMA before the appropriate High Court. The Bombay High Court admitted the appeal on the question of whether the Tribunal was right in dismissing the stay petition without properly appreciating the strong prima facie case, violation of natural justice, and undue hardship. The Court held that the Tribunal had considered the material on record and found that the Appellant had not made out a case of undue hardship or a strong prima facie case. The Court noted that the Appellant had not placed any material to demonstrate financial hardship or that the order was perverse. The appeal was dismissed, and the Tribunal's order was upheld.
Headnote
A) Foreign Exchange Management Act - Waiver of Predeposit - Section 19(1) FEMA, 1999 - The Tribunal's order directing full predeposit of penalty was upheld as the Appellant failed to establish undue hardship or a strong prima facie case; the Tribunal's discretion was not shown to be perverse or unreasonable (Paras 1-9).
Issue of Consideration
Whether the Appellate Tribunal was right in dismissing the application for waiver of predeposit of penalty without properly appreciating the strong prima facie case, violation of principles of natural justice, and undue hardship.
Final Decision
The appeal is dismissed. The order of the Appellate Tribunal directing the Appellant to deposit the entire penalty amount of Rs. 2 Crores is upheld.
Law Points
- Waiver of predeposit under Section 19(1) FEMA requires demonstration of undue hardship and strong prima facie case
- Tribunal's discretion not to be interfered with lightly
- Section 35 FEMA appeal on question of law only
Case Details
2012 LawText (BOM) (04) 61
F.E.R.A. Appeal No.18 of 2012 in Appeal No.172 of 2008
Dr. D.Y. Chandrachud, Mrs. Mridula Bhatkar
Mr. Subhash Jha i/b Law Global for the Appellant, Mr. R.V. Desai, Senior Advocate with Mr. M.S. Bhardwaj for the Respondent
Union of India, Through Special Director, Enforcement Directorate, Mumbai
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Nature of Litigation
Appeal under Section 35 of FEMA against order of Appellate Tribunal directing full predeposit of penalty.
Remedy Sought
Appellant sought waiver of predeposit of penalty of Rs. 2 Crores before the Appellate Tribunal, and subsequently challenged the Tribunal's order before the High Court.
Filing Reason
Appellant was penalized for violation of Section 3(c) FEMA for unauthorized receipt of payments from persons resident outside India.
Previous Decisions
Special Director imposed penalty of Rs. 2 Crores on 29 February 2008; Appellate Tribunal directed full predeposit; Delhi High Court dismissed writ petition on 24 September 2008; Supreme Court dismissed appeal on 12 April 2010 but granted liberty to file appeal under Section 35.
Issues
Whether the Appellate Tribunal was right in dismissing the application for waiver of predeposit of penalty without properly appreciating the strong prima facie case, violation of principles of natural justice, and undue hardship.
Submissions/Arguments
Appellant argued that the Tribunal failed to consider the strong prima facie case, violation of natural justice, and undue hardship.
Respondent supported the Tribunal's order, contending that the Appellant had not made out a case for waiver.
Ratio Decidendi
The Tribunal's discretion under Section 19(1) FEMA to waive predeposit is not to be interfered with unless it is shown to be perverse or based on no material. The Appellant failed to demonstrate undue hardship or a strong prima facie case, and the Tribunal's order was not unreasonable.
Judgment Excerpts
The Tribunal has considered the material on the record and has come to the conclusion that the Appellant has not made out a case of undue hardship or a strong prima facie case.
The Appellant has not placed any material on the record to demonstrate that the order of the Tribunal suffers from any perversity or that the discretion has been exercised in an unreasonable manner.
Procedural History
Special Director passed adjudication order on 29 February 2008 imposing penalty. Appellant appealed to Appellate Tribunal and sought waiver of predeposit. Tribunal directed full predeposit on application. Appellant filed writ petition before Delhi High Court which was dismissed on 24 September 2008. Appeal to Supreme Court was dismissed on 12 April 2010 with liberty to file appeal under Section 35. Appellant filed FERA Appeal No.18 of 2012 before Bombay High Court.
Acts & Sections
- Foreign Exchange Management Act, 1999 (FEMA): Section 3(c), Section 19(1), Section 35
