2025 (9) TMI 759 - AT - FEMA

Pre-deposit under FEMA second proviso: failure to pay ordered 10% deposit led to dismissal of appeal.

A tribunal had directed a reduced pre-deposit of 10% of the penalty under the second proviso to Section 19(1) of the Foreign Exchange Management Act, but ... Non-compliance with pre-deposit directions - failure to compliance with the second proviso to Section 19(1) of FEMA, 1999 - HELD THAT:- The Appellants have failed to make the pre-deposit of penalty amounts and have not sought any extension of time to make the pre-deposit of penalty amounts. The Appellants have also failed to produce any Order of stay or otherwise of higher judicial forum. Moreover, the Appellants are no longer in communication with their Advocate. Thus, the Appellants have failed to comply with the provisions of the second proviso to Section 19(1) of FEMA, 1999. Therefore, the two Appeals are dismissed. Issues: Whether the appeals should be dismissed for failure to comply with the pre-deposit direction (10% of penalty) under the second proviso to Section 19(1) of the Foreign Exchange Management Act, 1999.Analysis: The Tribunal had earlier exercised its discretion under the second proviso to Section 19(1) of the Foreign Exchange Management Act, 1999 and directed a reduced pre-deposit of 10% of the penalty within six weeks. The appellants failed to make the ordered pre-deposit within the stipulated time, did not seek an extension, produced no stay/order from a higher forum, and ceased communication with their counsel. The statutory provision requires deposit of the penalty while filing an appeal subject only to the Tribunal's discretion to dispense with or condition the deposit where undue hardship is shown; compliance with the Tribunal's deposit direction is a mandatory precondition for continuance of the appeal.Conclusion: The appeals are dismissed for non-compliance with the pre-deposit direction under the second proviso to Section 19(1) of the Foreign Exchange Management Act, 1999.