Pending appeal and deposit waiver, recovery may proceed absent stay, though limited interim protection can still be granted.

Pending an appeal under the Foreign Exchange Regulation Act, 1973, the appellate authority may dispense with deposit of the penalty amount where insisting on deposit would cause undue hardship, but that discretion must first be exercised on the application before it. In the absence of any stay from the appellate authority, the recovery authority may require deposit and its direction is not unlawful. At the same time, where the appeal and dispensation request remain pending, limited protective relief may be granted to preserve the appellant's position until the appeal is decided, with a direction for expeditious disposal.

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Issues: Whether recovery proceedings for the penalty amount could be taken pending the appeal and the application for dispensation of deposit under section 52(2) of the Foreign Exchange Regulation Act, 1973, and whether any relief could nevertheless be granted to the petitioner.

Analysis: The appellate authority is vested with discretion under the second proviso to section 52(2) to dispense with deposit where insistence on deposit would cause undue hardship. Since the petitioner's application for dispensation remained pending, the appellate authority had not exercised the statutory power one way or the other. In the absence of any stay order from the appellate authority, the recovery authority was within jurisdiction in calling upon the petitioner to deposit the penalty amount, and the impugned direction was not illegal. At the same time, the pendency of the appeal and the inaction of the appellate authority justified limited protective relief.

Conclusion: The challenge to the recovery direction was not accepted, but the petitioner obtained interim protection against recovery until disposal of the appeal and a direction to the appellate authority to decide the appeal within a fixed time.

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