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Issues: Whether the petitioner was entitled to waiver or reduction of the statutory pre-deposit under the proviso to Section 19 of the Foreign Exchange Management Act, 1999 on the ground of undue hardship, including where financial hardship was not shown but a strong prima facie case was asserted.
Analysis: The expression "undue hardship" was construed broadly to mean a burden out of proportion to the requirement imposed, and not merely financial difficulty. The pre-deposit proviso was held to require consideration of the existence of a prima facie case, the strength of the challenge, the balance of convenience, the risk of irreparable prejudice, and other relevant circumstances. The Court also noted that where the impugned order disclosed serious errors or the appellant had a strong prima facie case, insisting on full pre-deposit could itself amount to undue hardship. Applying that approach, the Court found that the bank had a reasonably good prima facie case, while also noticing the allegations of lack of diligence and the need for those issues to be examined in the appeal.
Conclusion: The petitioner was not granted full waiver, but only a partial dispensation. It was directed to deposit 50% of the penalty amount, and the appeal was to proceed on compliance.
Final Conclusion: The writ petition succeeded to the limited extent of obtaining partial relief against the pre-deposit condition, with the appeal left to be heard after compliance with the reduced deposit requirement.
Ratio Decidendi: Undue hardship under a pre-deposit proviso is not confined to financial incapacity and may be established where, on a strong prima facie case and the overall circumstances, insisting on full deposit would be disproportionate to the object of the requirement.
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