Waiver of pre-deposit considered on arguable prima facie case and hardship; conditional partial deposit plus bank guarantee required.

Application for waiver of pre-deposit under the Foreign Exchange Management Act was considered on whether an arguable prima facie case and undue hardship exist; the analysis balanced admissibility and weight of evidence against the need to safeguard penalty recovery and applied principles permitting conditional waiver with adequate security. Outcome provided a partial conditional waiver: a percentage of the penalty must be deposited and an equivalent portion secured by a bank guarantee, with the remainder waived until final disposal of the appeal.

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Issues: Whether the appellant's application for waiver of pre-deposit of the penalty of Rs. 78,00,000/- imposed under the Foreign Exchange Management Act, 1999 should be allowed and, if so, to what extent.

Analysis: The Tribunal considered whether an arguable prima facie case exists and whether the appellant has shown undue hardship warranting waiver of the pre-deposit requirement under the statutory and judicial precedents cited. The appellant relied on alleged lack of corroborative evidence, challenged admissibility of diary entries, and produced income-tax return acknowledgements claiming no income and financial distress. The respondent relied on admissions recorded before investigating authorities, documentary seizures, statements of intermediaries, the magnitude of the alleged contraventions under the Foreign Exchange Management Act, 1999 and associated regulations, and authorities holding that the applicant must prove financial hardship. The Tribunal refrained from finally adjudicating the merits so as not to pre-judge the appeal, balanced the existence of an arguable prima facie case against the need to safeguard recovery of penalty, and applied established principles permitting conditional waiver subject to adequate security to protect realization.

Conclusion: The application for waiver of pre-deposit is partly allowed in favour of the appellant. The appellant is directed to deposit 25% of the penalty (Rs. 19,50,000/-) and furnish a bank guarantee from a scheduled bank for an additional 25% of the penalty within eight weeks, whereupon 50% of the penalty shall remain waived until final disposal of the appeal.

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