2026 (1) TMI 861

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....ds Polymer (I) Private Limited (hereinafter 'the Appellant Company') and Mr. Amit Saha (the director) under Section 35 of the Foreign Exchange Management Act, 1999 (hereinafter 'FEMA'), compels us to revisit the fundamental equilibrium between the State's prerogative to secure revenue and the citizen's right to an effective appellate remedy. The lis before us is not merely a dispute over a numerical figure; it is a challenge to an exercise of discretion that, while adhering to the letter of the law, arguably violates its spirit by demanding the "impossible." 2. The central grievance articulated by the appellants is directed against the interlocutory order dated 23.04.2025 passed by the Learned Appellate Tribunal (SAFEMA/FEMA). The pivot ....

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....or financial condition,' committed a jurisdictional error by treating the 10% limit in the Third Proviso to Section 19(1) of FEMA as a mandatory minimum deposit, thereby rendering the statutory right of appeal illusory and the order perverse?" SUBMISSIONS OF THE PARTIES 6. Mr. Nilotpal Chowdhury, Learned Counsel for the appellants, mounted a two-pronged attack on the impugned order. He contended that the decision is hit by a "vice of internal contradiction"-once the Tribunal accepted the "poor financial condition" as a fact, the demand for Rs.2.20 Crore became a demand for an impossibility. He invoked the maxim Impossibilium Nulla Obligatio Est (the law compels no one to do that which is impossible), arguing that demanding such a ....

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.... contingent upon the Tribunal's satisfaction regarding the appellant's hardship. It provides as follows- "Provided further that where in any particular case, the Appellate Tribunal is of the opinion that the deposit of the penalty amount shall cause undue hardship to the person aggrieved, it may dispense with such deposit subject to such conditions as it may deem fit to impose so as to safeguard the realisation of penalty." 11. The expression "undue hardship" is not merely "hardship," but a burden "out of proportion to the nature of the requirement itself" (Bank of Baroda vs. Appellate Tribunal [121 (2005) DLT 424). For an NPA declared entity with no liquid assets, a multi-million-rupee deposit is, prima facie, an undue hard....