M/S.Thomas Cook India Limited vs The Additional Director

C.M.A.Nos.2802, 2815, 2812 and 2806 of 2024

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED: 17-04-2025

CORAM

THE HONOURABLE MR JUSTICE R. SURESH KUMAR AND THE HONOURABLE DR.JUSTICE A.D.MARIA CLETE

CMA Nos. 2802, 2815, 2806, 2812 and 2806 of 2024 AND CMP Nos. 22794,22852, 22755, 22748, 22795 and 22856 OF 2024

C.M.A.No.2802 of 2024

M/s.Thomas Cook India Limited Rep. by its Authorised Signatory Mr.Amit Bhatia No.43/19, 1st Floor, Sivaji Ganesan Road, T.Nagar, Chennai-600017 ... Appellant

Vs

1. The Additional Director Adjudicating Authority Directorate of Enforcement Chennai Zone-1, 3rd Floor, Murugesa Naicker Officer Complex, 84, Greams Road, Chennai-600006

2.Shri R.Kumar The Assistant Director, Directorate of Enforcement, Directorate of Enforcement Chennai Zone-1, 3rd Floor, Murugesa Naicker Officer Complex, 84, Greams Road, Chennai-600006 ... Respondents

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CMA No. 2815 of 2024

Amit Bhatia General Manager and Regional Head, M/s. Thomas Cook India Ltd., No.43/19, 1st Floor, Sivaji Ganesan Road, T.Nagar, Chennai - 17. ... Appellant

Vs 1. The Joint Director Adjudicating Authority Directorate of Enforcement Chennai Zone-1, 3rd Floor, Murugesa Naicker Officer Complex, 84, Greams Road, Chennai- 600006

2.Shri R.Kumar The Assistant Director, Directorate of Enforcement, Directorate of Enforcement Chennai Zone-1, 3rd Floor, Murugesa Naicker Officer Complex, 84, Greams Road, Chennai- 600006

.. Respondents CMA No. 2812 of 2024

Ashwin Savoor Head-Sales and Operations, M/s Tata Capital Forex Limited, (Now Thomas Cook (India) Limited), 11th Floor, Marathon futres, A Wing NM, Joshi Marg, Lower Parel, Mumbai-400 013 .. Appellant

Vs 1. The Joint Director Adjudicating Authority Directorate of Enforcement Chennai Zone-1, 3rd Floor,

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Murugesa Naicker Officer Complex, 84, Greams Road, Chennai-600006

2.Shri R.Kumar The Assistant Director, Directorate of Enforecement, Directorate of Enforcement Chennai Zone-1, 3rd Floor, Murugesa Naicker Officer Complex, 84, Greams Road, Chennai-600006

... Respondents

CMA No. 2806 of 2024

Tata Capital Forex Limited (erstwhile known as Mis T.C. Forex Services Ltd.,) (now Thomas Cook (India) Ltd., Rep by its Authorized Signatory, Mr. Ashwin Savoor, G-1, Apex Plaza, 3, Nungambakkam High Road, Chennai 6.

... Appellant

Vs 1. The Joint Director Adjudicating Authority Directorate of Enforcement Chennai Zone-1, 3rd Floor, Murugesa Naicker Officer Complex, 84, Greams Road, Chennai-600006

2.Shri R.Kumar The Assistant Director, Directorate of Enforecement, Directorate of Enforcement Chennai Zone-1, 3rd Floor, Murugesa Naicker Officer Complex, 84, Greams Road, Chennai- 600006

... Respondent(s)

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PRAYER in CMA No. 2802 of 2024

Civil Miscellaneous Appeal under Section 35 of the Foreign Exchange Management Act, 1999 to call for the records of the Honble Appellate Tribunal under SAFEMA, at New Delhi in relation to its Order dt. 01.05.2024, in MP-FE-775/CHN/2020 in FPA-FE-77/CHN/2020, set aside the same and consequently waive the requirement of pre-deposit under section 19(1) of the Foreign Exchange Management Act, 1999.

PRAYER in CMA No. 2815 of 2024

Civil Miscellaneous Appeal under Section 35 of the Foreign Exchange Management Act, 1999 to call for the records of the Honble Appellate Tribunal under SAFEMA, at New Delhi in relation to its Order dt. 01.05.2024, in MP-FE-776/CHN/2020 in FPA-FE-78/CHN/2020, set aside the same and consequently waive the requirement of pre-deposit under section 19(1) of the Foreign Exchange Management Act, 1999.

PRAYER in CMA No. 2812 of 2024

Civil Miscellaneous Appeal under Section 35 of the Foreign Exchange Management Act, 1999 to call for the records of the Honble Appellate Tribunal under SAFEMA, at New Delhi in relation to its Order dt. 01.05.2024, in MP-FE-779/CHN/2020 in FPA-FE-80/CHN/2020, set aside the same and consequently waive the requirement of pre-deposit under section 19(1) of the Foreign Exchange Management Act, 1999.

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PRAYER in CMA No. 2806 of 2024

Civil Miscellaneous Appeal under Section 35 of the Foreign Exchange Management Act, 1999 to call for the records of the Honble Appellate Tribunal under SAFEMA, at New Delhi in relation to its Order dt. 01.05.2024, in MP-FE-777/CHN/2020 in FPA-FE-79/CHN/2020, set aside the same and consequently waive the requirement of pre-deposit under section 19(1) of the Foreign Exchange Management Act, 1999.

In all C.M.As

For Appellants : Dr.M.R.Venkatesh for Mr.Tarun Rao Kallakuru

For Respondents : Mr.N.Ramesh Special Public Prosecutor - for Enforcement Directorate

COMMON JUDGMENT

( Judgment of the Court was delivered by R.Suresh Kumar J.)

Since the issue involved in all the four appeals is inextricably

connected with each other, all these appeals were heard together and are

disposed of by this common judgment.

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2. As against the order of the adjudicating authority under the Foreign

Exchange Management Act, 1999 (In short 'FEMA'), appeals had been filed

before the appellate Tribunal under the Smugglers and Foreign Exchange

Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA) at New Delhi,

where, the appellants had sought for waiver of pre-deposit of penalty.

3. For better understanding of the case, the facts in C.M.A.No.2802 of

2024 is traversed herein. The adjudicating authority imposed a sum of Rs.3

Crores penalty on M/s.Thomas Cook India Limited / the appellant in

C.M.A.No.2802 of 2024 and imposed a penalty of Rs.1.50 Crores on one

Mr.Amit Bhatia, who claimed to be the authorised signatory of M/s.Thomas

Cook India Limited. Therefore, two separate appeals have been filed, where,

such a waiver had been sought for under the second proviso to Section

19(1) of the FEMA.

4. Similar plea is raised in other appeals also. The appellate Tribunal

under SAFEMA, having heard both sides, has passed an order stating that,

on the facts and circumstances of the case and without going into the merits

of the case, the appellants were directed to deposit 20% of the penalty

amount as per the order impugned before it in the form of FDR in the name

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of the respondent Enforcement Directorate for a period of two years and the

said FDR to be renewed after every two years. Similar orders have been

passed by the appellate Tribunal in all these cases. Aggrieved over the

same, these Civil Miscellaneous Appeals have been directed.

5. Heard Dr.M.R.Venkatesh, learned counsel appearing for the

appellants in all these appeals and Mr.N.Ramesh, learned Special Public

Prosecutor appearing for the respondent Enforcement Directorate.

6. Learned counsel for the appellants pointed out that, insofar as the

merits of the case is concerned, a notice in fact had been issued by the

adjudicating authority during March 2020, wich was the peak period of

COVID-19 situation. Thereafter, further opportunity was mentioned to be

given, however such an opportunity had not been given and without giving

any such opportunity, final orders were passed by the adjudicating authority.

Therefore he would contend that, had there been a full opportunity given to

the appellants, the case would have been projected in proper perspective

and there could not have been any room for losing the case before the

adjudicating authority. Hence, it is the ultimate contention of the learned

counsel for the appellants that if those cases are heard on merits by the

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appellate Tribunal, certainly the cases would go in favour of the appellants

alone. Therefore, the discretion as has been provided under the second

proviso to Section 19(1) could have been fully utilized and exercised by the

appellate Tribunal and by thus, they could have waived the entire pre-

deposit of the penalty. However, this plea has not been considered in proper

perspective by the Tribunal and hence they have approached this Court.

7. That apart, the learned counsel for the appellant has relied upon a

decision of the Delhi High Court in the case of “Nimesh Suchde Prop.

M/s.Siddharth Polymers -vs- Union of India and Others” dated

22.07.2009 made in L.P.A.No.203 of 2009 and C.M.No.6626 of 2009, where

he relies upon the following paragraph.

“ 7. While dealing with cases of waiver of pre-deposit under Section 19 of FEMA, the Supreme Court in the case of Monotosh Saha vs. Special Director, Enforcement Directorate and Anr., reported in 2008(11) SCALE 603 has observed as under:

11. Two significant expressions used in the provisions are "undue hardship to such person" and "safeguard the realization of penalty". Therefore, while dealing with the application twin requirements of considerations i.e. consideration of undue

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hardship aspect and imposition of conditions to safeguard the realization of penalty have to be kept in view.

12. As noted above there are two important expressions in Section 19(1). One is undue hardship. This is a matter within the special knowledge of the applicant for waiver and has to be established by him. A mere assertion about undue hardship would not be sufficient. It was noted by this Court in S. Vasudeva v. State of Karnataka and Ors. that under Indian conditions expression "Undue hardship" is normally related to economic hardship.

"Undue" which means something which is not merited by the conduct of the claimant, or is very much disproportionate to it. Undue hardship is caused when the hardship is not warranted by the circumstances.

13. For a hardship to be 'undue' it must be shown that the particular burden to have to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant would derive from compliance with it.

14. The word "undue adds something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant.”

8. Relying upon the said paragraph of the Delhi High Court decision,

the learned counsel appearing for the appellants would canvass the point

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that, there are two important expressions in Section 19(1). The first one is

'undue hardship'. Insofar as 'undue hardship' is concerned, it is normally

related to economic hardship and therefore if such an economic hardship is

pleaded, for which if substantial materials were placed before the Court, it

must consider that the litigant was in really undue hardship. Therefore, such

a discretion of waiving the pre-deposit of the penalty could be exercised.

However, on those guidelines as has been mentioned in the said judgment

since the Tribunal has not exercised its discretion under the second proviso

to Section 19, the order impugned is liable to be interfered with. Therefore,

the learned counsel for the appellants seeks the indulgence of this Court.

9. On the other hand, Mr.N.Ramesh learned Special Public Prosecutor

for Enforcement Directorate would contend that, the first proviso to Section

19(1) makes it mandatory that there shall be a pre-deposit and only on that

condition, the appeal would be entertained. Under the second proviso, it is

only the discretion of the Tribunal to waive such pre-deposit.

10. Therefore, while exercising the discretion under the second proviso

to Section 19(1), depending upon the circumstances of the case, such a

discretion would be exercised by the Tribunal and here in the case in hand,

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taking into consideration the facts and circumstances of the case, by using

the discretion the Tribunal had already exercised its power by reducing the

penalty amount only to 20% instead of 100%. Therefore, such a discretion

since has already been exercised by the Tribunal to the maximum extent, it

cannot be found fault with and absolutely there is no scope for interference

in the order impugned, he contended.

11. We have heard the submissions made by the learned counsel for

both sides and have perused the materials placed on record.

12. The only question to be considered here is that, whether the

Tribunal has exercised its discretion in the context of second proviso to

Section 19(1) of the Act. The language used in the first proviso to Section

19(1) reads as follows:

"Provided that any person appealing against the order of the

Adjudicating Authority or the Special Director (Appeals) levying any

penalty, shall while filing the appeal, deposit the amount of such

penalty with such authority as may be notified by the Central

Government."

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13. Here, the word "shall" has been used by the legislature. Thereby,

it has become mandatory that, whenever such appeals are filed against the

levying of penalty, the penalty amount shall be deposited as directed by the

authority.

14. However, the language used by the legislature in the second

proviso states that,

" Provided further that where in any particular case, the Appellate

Tribunal is of the opinion that the deposit of such penalty would cause

undue hardship to such person, the Appellate Tribunal may dispense

with such deposit subject to such conditions as it may deem fit to impose

so as to safeguard the realisation of penalty. "

15. Only in that context, the Delhi High Court judgment also has to be

looked into. If we look at the judgment of the Delhi High Court cited supra,

it in fact promotes the case of the respondent Enforcement Directorate and

not the case of the appellants. The two ingredients, which have been

mentioned in the second proviso as stated in the said judgment is (i) undue

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hardship and (ii) so as to safeguard the realization of penalty. Here, in order

to safeguard the realization of penalty, the discretion to be used has to be

restricted to that extent that too only on the basis of undue hardship, which

must be in the opinion of the Tribunal. In the order impugned here, it has

been clearly stated that, considering the facts and circumstances of the case

the Tribunal, by exercising its discretion has reduced the pre-deposit of

penalty to only 20% ie., 1/5th of the penalty amount. That itself is a great

relief that has been given by way of exercise of discretion under the second

proviso to Section 19(1) of the Act.

16. It is further to be noted that, once the legislature fixes the

discretion to any authority, it is to the satisfaction of that authority it should

exercise such discretion. Moreover, the words used in the second proviso to

Section 19(1) also states that 'the appellate Tribunal is of the opinion'. It

means, if the Tribunal forms an opinion that some discretion has to be

exercised in a particular case, then only such a discretion has to be used.

17. Therefore, with regard the question of forming an opinion, it is fully

left to the discretion of the Tribunal. Whether such opinion that the Tribunal

had formed was based on the merits of case, cannot be gone into by sitting

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over on appeal by this Court and therefore, ultimately such kind of discretion

if it is exercised by the original authority to whom such power of discretion is

vested, it normally would not be touched upon by the appellate forums.

18. Here in the case in hand, in fact the Tribunal has exercised its

discretion by reducing the pre-deposit of penalty only to 20%. Therefore, it

is a case where the Tribunal, after having formed an opinion based on the

facts and circumstances of the case, has reduced the pre-deposit of penalty

to only 20%. Hence, it cannot be stated that the Tribunal has not exercised

its discretion under Second proviso to Section 19(1) of the Act.

19. Moreover, the imposition of penalty is also for the purpose of

safeguarding the realization of penalty as, that also has to be taken into

account. Therefore, by striking a balance between 'undue hardship' and

'safeguarding the realization of penalty', in between the two, the discretion

of the Tribunal has to be exercised. Such a discretion cannot be exercised in

the manner expected by the litigant in any lis. Since the discretionary power

vested under the second proviso to Section 19(1) of the Act to the Tribunal

has been exercised properly in this case, we do not find any reason to

interfere with the same.

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20. Resultantly, all these appeals are liable to be dismissed and

accordingly the same are dismissed. No costs. Consequently, connected

miscellaneous petitions are closed.

(R.SURESH KUMAR, J.) (A.D.MARIA CLETE, J.) 17-04-2025 Index:Yes Speaking order : Yes Internet:Yes Neutral Citation:Yes

KST Note : Issue order copy on 21.04.2025

To

1. The Additional Director Adjudicating Authority Directorate of Enforcement Chennai Zone-1, 3rd Floor, Murugesa Naicker Officer Complex, 84, Greams Road, Chennai-

600006

2.Shri R.Kumar The Assistant Director, Directorate of Enforcement, Directorate of Enforcement Chennai Zone-1, 3rd Floor, Murugesa Naicker Officer Complex, 84, Greams Road, Chennai-

600006

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R.SURESH KUMAR J.

AND A.D.MARIA CLETE J.

KST

CMA Nos. 2802, 2815, 2812 and 2806 of 2024

17.04.2025

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