1995 (7) TMI 182 - HC - FEMA

Court affirms power to waive penalty deposits in hardship cases, emphasizing procedural nature. Respondents' circumstances considered.

The Court upheld the Foreign Exchange Regulation Appellate Board's power to waive penalty deposits in cases of hardship, emphasizing that such orders are ... Stay/Dispensation of pre-deposit Issues:Challenge to orders of Foreign Exchange Regulation Appellate Board dated December 6, 1993 and March 28, 1994 under Article 227 of the Constitution of India.Analysis:The case involved a petition challenging the orders of the Foreign Exchange Regulation Appellate Board. The respondents, exporters of agricultural equipment, failed to realize export proceeds, leading to penalties imposed under the Foreign Exchange Regulation Act. The Board directed the respondents to deposit penalty amounts for hearing the appeal. The petitioner contended that subsequent orders reducing the penalty amounts were illegal. However, the respondents argued that the pre-deposit order was interim and did not affect the case's merits. The Court examined the provisions of Section 52 of FERA, which empower the Board to dispense with penalty deposits in cases of hardship. The Court clarified that such orders are procedural and not final decisions on the case's merits.The Court emphasized that the Board's discretion to waive penalty deposits must be exercised judiciously and in the interest of justice. It noted that such orders are meant to prevent undue hardship and ensure the appellant's right to appeal is not lost due to circumstances beyond their control. The Court clarified that the Board can modify interlocutory orders regarding penalty deposits based on valid reasons or supervening events affecting the appellant's ability to pay. The Court held that the Board's order to waive a portion of the penalty amount was justified in this case to prevent undue hardship to the respondents.The petitioner argued that there were no supervening events justifying the Board's order to waive a portion of the penalty amount. However, the Court found that the respondents' initial request was only for an extension of time, and the request for waiving the amount came later due to their inability to raise a loan. The Court upheld the Board's decision to waive a portion of the penalty amount, considering the respondents' financial situation. Ultimately, the Court dismissed the petition, finding no merit in the challenge to the Board's orders.In conclusion, the Court upheld the Foreign Exchange Regulation Appellate Board's power to waive penalty deposits in cases of hardship and clarified that such orders are procedural and not final decisions on the case's merits. The Court found the Board's decision to waive a portion of the penalty amount justified based on the respondents' circumstances, ultimately dismissing the petition challenging the Board's orders.