Undue hardship for FEMA pre-deposit waiver requires more than financial difficulty; revenue protection remains central.

Dispensation of pre-deposit of FEMA penalties is available only on a showing of undue hardship, and the Tribunal must still protect revenue by imposing suitable conditions. Mere financial difficulty is insufficient; the applicant must demonstrate hardship beyond ordinary inconvenience. In considering waiver requests, the Tribunal must act judicially with regard to the prima facie case and the interest of revenue. On the facts noted, the penalties were lower than the amounts involved in the alleged contravention, and the Tribunal's refusal to waive deposit was upheld.

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Issues: Whether the Appellate Tribunal was justified in refusing dispensation of pre-deposit of penalty under the Foreign Exchange Management Act, 1999 on the ground that the appellants had not shown undue hardship.

Analysis: The proviso to section 19 of the Foreign Exchange Management Act, 1999 permits dispensation of pre-deposit only where deposit of the penalty would cause undue hardship, and even then the Tribunal must impose conditions to safeguard revenue. The expression "undue hardship" requires something more than ordinary financial difficulty and must be shown by the applicant. While considering waiver applications, the Tribunal must exercise discretion judicially, keeping in view the prima facie case and the interest of the revenue. On the facts, the penalties imposed were lower than the amounts involved in the alleged contravention, and the Tribunal's refusal to dispense with deposit was based on the material before it.

Conclusion: The refusal to dispense with pre-deposit was upheld, and the challenge to the Tribunal's order failed.

Final Conclusion: The appeals were dismissed, and the appellants were required to comply with the Tribunal's direction to deposit the penalty amount within the time granted.

Ratio Decidendi: Mere financial difficulty does not constitute undue hardship for waiver of statutory pre-deposit, and interference is unwarranted where the Tribunal has exercised its discretion judicially while protecting the interest of revenue.

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