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 the appellants failed to pay the ordered amount within the six week period, did not seek an extension, and produced no higher forum stay. The statutory pre deposit obligation, subject only to the tribunal's discretion to relax it on undue hardship, is a mandatory condition precedent to maintain the appeal; as a result, the appeals were dismissed for non compliance with the deposit direction.

---

---

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.

---