M/S HUSSNAIN INTERNATIONAL Vs UNION OF INDIA .
Bench: R.V. RAVEENDRAN,A.K. PATNAIK, , ,
Case number: C.A. No.-001980-001981 / 2011
Diary number: 34192 / 2007
Advocates: Vs
ARVIND KUMAR SHARMA
Non-reportable IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos. 1980-1981 OF 2011 (Arising out of S.L.P. (C) NOs.13619-13620 OF 2008)
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
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.
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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.
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