AGK AGK AGK IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.2890 OF 2008 Shantilal J. Sheth ..Petitioner V/s. The Appellate Tribunal for Foreign Exchange & Others ..Respondents Mr.V. Sridharan i/by PDS Legal for the petitioner. Mr.A.S. Rao with Mr.Y.R. Mishra for the respondents. CORAM : D.K. DESHMUKH & J.P. DEVADHAR, JJ. DATED : 22ND OCTOBER, 2008. P.C. : 1. The petitioner, by this petition, challenges the order passed by the Appellate Tribunal for Foreign Exchange, dismissing his Appeal No.578 of 2000. By that order, the tribunal has rejected the application filed by the petitioner for rectification of order dated 22-3-2007, as also the appeal filed by the petitioner. 2. The petitioner had filed an appeal before the tribunal challenging the adjudication order dated 26-7-2000 passed by the Special Director, Enforcement Directorate imposing a penalty of Rs.75,00,000/- for contravention of Section 9(1)(d) and 9(1)(f)(i) of Foreign Exchange Regulation Act, 1972. Along with the appeal, the petitioner had filed an application for dispensing with the condition of predeposit of the amount of penalty. That application was decided by the tribunal by order dated 22-3-2007. The tribunal rejected that application. As a consequence of rejection of that application, by order dated 22-3-2007 the petitioner should have deposited the amount of penalty, in order that his appeal can be heard on merits by the tribunal within the time allowed by order dated 22-3-2007. The petitioner did not deposit the amount and instead on 16-5-2007, he filed an application for rectification of the order dated 22-3-2007. That application came up before the tribunal for hearing on 22-9-2007. When the application was called for hearing before the tribunal, advocate who had filed appearance on behalf of the petitioner before the tribunal appeared before the tribunal and stated that she has no instructions from the petitioner. The tribunal, therefore, in the absence of petitioner and his advocate considered the application for rectification and rejected the same and after rejecting the application for rectification, as order of predeposit was not complied with, the tribunal was left with no option but to dismiss the appeal. 3. The learned counsel appearing for the petitioner submits that by order dated 22-3-2007 the tribunal, while rejecting the application dispensing with the condition of predeposit, found that the condition of predeposit could not have been dispensed with. For the same reason, his application for rectification has been dismissed. According to the learned counsel considering the financial position of the petitioner, specially the averments made by him in his application for dispensing with the condition of predeposit, the tribunal should have dispensed with the requirement of predeposit. 4. So far as the law relevant on the subject is concerned, it is contained in first and second proviso to sub-rule (1) of Rule 10 of the Foreign Exchange Management (Adjudication) Proceedings and Appeal Rules, 2000. Sub-rule (1) of Rule 10 reads as under : "10. Form of appeal. Form of appeal. Form of appeal. - (1) Every appeal presented to the Appellate Tribunal under section 19 of the Act shall be in the Form II signed by the applicant. The appeal shall be sent in triplicate and accompanied by three copies of the order appealed against. Every appeal shall be accompanied by a fee of Rupees ten thousand in the form of cash or demand draft payable in favour of the Registrar, Appellate Tribunal for Foreign Exchange, New Delhi. Provided that the applicant shall deposit the amount of penalty imposed by the Adjudicating Authority or the Special Director (Appeals) as the case may be, to such authorities may be notified under the first proviso to section 19 of the Act: Provided further that where in a 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 may deem fit to impose so as to safeguard the realisation of penalty". 5. Perusal of the abovequoted provision shows that there is an obligation cast on the appellant, who files an appeal against penalty imposed under the Act, to deposit the amount of penalty before the appellate authority. Second proviso to sub-rule (1) of Rule 10 confers power on the tribunal to dispense with the condition of predeposit of the amount of penalty. If the tribunal find that asking the appellant to deposit the amount would cause undue hardship to the appellant, subject to such conditions as the tribunal may impose so as to safeguard the interest of revenue, therefore, it follows that while making an order for dispensing with the condition of predeposit or not dispensing with the condition of predeposit, the tribunal has to see that in case the appeal ultimately fails, the amount of penalty can be recovered. In the present case, the amount of penalty imposed on the petitioner admittedly is Rs.75,00,000/-. In the writ petition, for dispensing with the condition of predeposit, the petitioner about his financial position has stated thus : "[c] The Petitioner who is aged 61 years of age is acute heart patient and does not have any source of income and liquidity of funds to pay the amount of Rs.75,00,000/-. Moreover, the amount of Rs.2,95,000/- which has been ordered to be confiscated is accounted for and the same is in the custody of the department. Copies of the medical reports are enclosed as Annexure B. The Petitioner does not have any business or service. The Petitioner is maintaining SB account with Indian Overseas Bank, Borivali Br, Mumbai and as on 6-8-2000 the credit balance in the account is Rs.5647/81. A statement of the account is enclosed as annexure C. The Petitioner does not pay Income Tax AND was looked after by his daughter who is the only earning member in the family, consisting of five members. The Petitioner does not have any property in his name. He is residing in small flat admeasuring about 200 sq. ft. with his wife and three children, on the monthly rent of Rs.88." 6. Perusal of the abovequoted portion of the petition shows that the petitioner has clearly stated that he is not in a financial position to pay the amount of penalty and, therefore, it is obvious that the petitioner was in no position to ensure payment of amount of penalty in case his appeal fails. Really speaking in view of the provisions of second proviso to sub-rule (1) of Rule 10 quoted above, as one of the aspects to be looked into by the tribunal before making an order, is to safeguard the realisation of amount of penalty, an application made for dispensing with the condition for predeposit must have averments to show as to how the petitioner proposes to safeguard realisation of the amount of penalty in case his appeal fails. . In the application filed by the petitioner, there are no averments made as to how the petitioner would be able to safeguard realisation of the penalty in case the appeal fails. On the contrary, the averments made in the application, specially the averments quoted above, shows that the petitioner is in no position to pay the amount of penalty. He also does not have any property, by selling which the amount of penalty could be recovered. In such a situation, therefore, in our opinion, no fault can be found with the tribunal, declining to dispense with the condition of predeposit. . We asked the learned counsel appearing for the petitioner as to why he did not give any instructions to his advocate who was appearing before the tribunal. He stated that the petitioner could not give instructions, because he was not in a position to pay the fees of the advocate appearing for him before the tribunal, whereas the petitioner was represented in this petition by a very senior and busy Advocate. . In order to test the bona fides of the petitioner, we put it to the learned counsel appearing for the petitioner that in case the petitioner is willing to deposit the amount of penalty in the tribunal, we will consider granting him time to deposit the amount of penalty and we may also direct the tribunal to hear his appeal on merits. The learned counsel fairly stated before us that he has taken instructions and his client is not willing to deposit the amount, because according to him he is in no position to deposit the amount. 7. Taking overall view of the matter, therefore, it is clear to us that if the averments made in the application by the petitioner quoted above are to be believed, while dispensing with the condition of predeposit, the tribunal or this Court will not be able to make any order so far as safeguarding the realisation of penalty in the event of failure of appeal is concerned and, therefore, the application for dispensing with the condition of predeposit cannot be granted and if the averments are not believed, then it is obvious that the petitioner has money but he is not willing to deposit it and not instructing his advocate before the tribunal shows that the strategy adopted by the petitioner is to prolong the proceedings and avoid depositing the amount of penalty. 8. Looking at the matter from any point of view, we do not find any fault with the orders passed by the tribunal. There is no scope to interfere. The writ petition is rejected. D.K. DESHMUKH, J. J.P. DEVADHAR, J.