M/S Hussnain International vs Union Of India & Ors

M/s Hussnain International ...... Appellant

Versus

Union of India & Ors. ...... Respondents

O R D E R

A. K. PATNAIK, J.

Leave granted.

2. These are appeals against the order dated 24.09.2007

of the Division Bench of the High Court of Delhi in L.P.A.

No.1098 of 2006 and against the order dated 02.11.2007 of

the Division Bench of the High Court of Delhi in Review

Application No.396 of 2007.

3. The facts giving rise to these appeals briefly are that

the appellant carries on the business of export of brass art-

wares and other Indian handicrafts. On 09.10.1991, two

Advance Licences were issued to the appellant for import of

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240 MT's of brass dross/ash against each of the licences for

the C.I.F. value of Rs.24,64,800/- and Rs.24,64,000/-

respectively with the condition to export of 80 MT's of brass

art-ware against each of the licences for FOB value of US

dollars 2,37,082.95 and US dollars 2,38,545 within a period

of 12 months. As the appellant failed to discharge its export

obligation under the licences, two show-cause notices dated

26.09.1996 were issued to the appellant and its partners to

show cause why penalty under Section 11(2) of the Foreign

Trade (Development and Regulation) Act, 1992 (for short

`the Act') will not be imposed on it. Thereafter, two orders

dated 24.05.2002 and 27.06.2002 were passed by the

Adjudicating Authority imposing a penalty of

Rs.1,30,00,000/- in respect of each of the two licences on

the appellant and its partners under Section 11(2) of the

Act. Aggrieved, the appellant filed two appeals before the

Appellate Authority against the two orders of penalty.

Alongwith the appeals, the appellant also filed applications

for stay of recovery of the penalty amounts but the appellant

was intimated to make pre-deposit of Rs.5,00,000/- towards

the penalties after which the appeals will be decided by the

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Appellate Authority on merits. The appellant failed to make

the pre-deposit of Rs.5,00,000/- and consequently the

appeals were dismissed.

4. The appellant then filed Writ Petition (C) No.8058 of

2006 in the High Court of Delhi praying for setting aside the

orders of the Appellate Authority and the orders of the

Adjudicating Authority and for directing extension of time

for making the pre-deposit of Rs.5,00,000/- and for granting

extension to the appellant to meet its export obligations. By

order dated 18.05.2006, the learned Single Judge dismissed

the writ petition. The appellant challenged the order of the

learned Single Judge before the Division Bench of the High

Court in L.P.A. No.1098 of 2006. The Division Bench of the

High Court passed the impugned order dated 24.09.2007

allowing the appellant to deposit a sum of Rs.20,00,000/- in

each of the two appeals within 8 weeks and further directing

that on such deposits being made the Appellate Authority

may dispose of the appeals on merits. Thereafter, the

appellant filed Review Application No.396 of 2007 which

was also dismissed by the impugned order dated

02.11.2007 of the Division Bench of the High Court.

4 5. We have heard learned counsel for the parties and we

are of the considered opinion that the Division Bench of the

High Court should not have passed the impugned order for

deposit of Rs.20,00,000/- for each of the appeals when the

Appellate Authority had directed the appellant to make pre-

deposit for Rs.5,00,000/- for both the appeals. The second

proviso to sub-section (1) of Section 15 of the Act states that

in the case of an appeal against a decision or order

imposing a penalty or redemption charges, no such appeal

shall be entertained unless the amount of the penalty or

redemption charges has been deposited by the appellant.

The third proviso to sub-section (1) of Section 15 of the Act,

however, states "where the Appellate Authority is of opinion

that the deposit to be made will cause undue hardship to the

appellant, it may, at its discretion, dispense with such

deposit either unconditionally or subject to such conditions as

it may impose." Hence, under the Act discretion is vested in

the Appellate Authority to dispense with a pre-deposit of

penalty either unconditionally or subject to such condition

as the Appellate Authority may impose. If in exercise of

such discretion, the Appellate Authority in the present case

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dispensed with the pre-deposit penalty of Rs.1,30,00,000/-

in each of the two appeals subject to the appellant

depositing a sum of Rs.5,00,000/-, the Division Bench of

the Delhi High Court ought not to have enhanced the

amount of pre-deposit to Rs.20,00,000/- for each of the two

appeals.

6. As the two appeals of the appellant have not been

heard on merits, we set aside the impugned order of the

Division Bench of the High Court of Delhi and the order of

the learned Single Judge and direct that in case the

appellant deposits the sum of Rs.5,00,000/- as directed by

the Appellate Authority within two months from today, the

two appellate orders of the Appellate Authority will stand

quashed and the appeal will be heard on merits afresh by

the Appellate Authority.

7. With the aforesaid directions, the appeals are allowed.

No costs.

.............................J.

(R. V. Raveendran)

.............................J.

(A. K. Patnaik)

New Delhi,

February 21, 2011.