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of <h1>Waiver of pre-deposit under Section 19(1) must yield to fairness; tribunals may grant interim relief balancing hardship, public interest.</h1> SC held that principles permitting waiver of pre-deposit under Section 19(1) must yield to fairness, legality and public interest; interim relief is ... Challenge the order u/s 35 - FERA - waiver of pre-deposit - imposition of a penalty - foreign exchange contravening the provisions of Section 8(1) of the Foreign Exchange Regulation Act, 1973 - appeal filed u/s 35, which came to be dismissed by the High Court holding that no case for hardship was made out either before the Tribunal or before it - HELD THAT:- Merely because this Court has indicated the principles that does not give a license to the forum/authority to pass an order which cannot be sustained on the touchstone of fairness, legality and public interest. Where denial of interim relief may lead to public mischief, grave irreparable private injury or shake citizens' faith in the impartiality of public administration, interim relief can be given. Two significant expressions in Section 19(1) used in the provisions are 'undue hardship to such person' and 'safeguard the realization of penalty'. Therefore, while dealing with the application twin requirements of considerations i.e. consideration of undue hardship aspect and imposition of conditions to safeguard the realization of penalty have to be kept in view. For a hardship to be 'undue' it must be shown that the particular burden to have to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant would derive from compliance with it. The imposition of condition to safeguard the realization of penalty. This is an aspect which the Tribunal has to bring into focus. It is for the Tribunal to impose such conditions as are deemed proper to safeguard the realization of penalty. Therefore, the Tribunal while dealing with the application has to consider materials to be placed by the assessee relating to undue hardship and also to stipulate condition as required to safeguard the realization of penalty. In the instant case Tribunal has rightly observed that the rival stands have to be examined in detail with reference to material on record Undisputedly the appellant had deposited the amount which was directed to be deposited. However, for the balance amount demanded with a view to safeguard the realization of penalty the appellant shall furnish such security as may be stipulated by the Tribunal. Issues involved:Challenge to order under Section 35 of Foreign Exchange Management Act, 1999.Analysis:The appellant challenged the order passed by the Division Bench of the Calcutta High Court under Section 35 of the Foreign Exchange Management Act, 1999. The Enforcement Directorate issued a memorandum indicating that the appellant had acquired foreign exchange contravening the provisions of the Foreign Exchange Regulation Act, 1973. The Special Director imposed a penalty of Rs.25 lakhs on the appellant, who then appealed to the Tribunal. The Tribunal directed the deposit of 60% of the penalty amount for the appeal to be entertained. The High Court dismissed the appeal, stating no case for hardship was made out. The appellant argued for dispensing with pre-deposit, citing compliance with the interim order by depositing Rs.10,00,000. The respondents contended that no case for dispensing with pre-deposit was made out.The principles regarding grant of stay pending disposal of matters before forums were discussed, emphasizing the need for judicial exercise of discretion. The Supreme Court referred to various cases to highlight the importance of analyzing the factual scenario in each case. Section 19 of the Act was examined, focusing on the twin requirements of considering undue hardship and imposing conditions to safeguard penalty realization. The Court emphasized that undue hardship must be established by the applicant and is related to economic hardship disproportionate to the circumstances. The Tribunal was tasked with considering undue hardship and imposing suitable conditions to safeguard penalty realization.The Court highlighted the need for a detailed examination of rival stands and material on record. The appellant had deposited the directed amount but was required to furnish security for the balance amount demanded to safeguard penalty realization. Once this was done, the appeal would be heard without further deposit if defect-free. The appeal was disposed of accordingly, with the judgment delivered by Dr. Arijit Pasayat and Dr. Mukundakam Sharma.
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