REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 10301 OF 2011 (Arising out of SLP(C) No.13932 of 2011)

Ketan V. Parekh … Appellant

versus

Special Director, Directorate of Enforcement  and another. … Respondent(s)

With

CIVIL APPEAL NO. 10302  OF 2011 (Arising out of SLP(C) No.13984 of 2011)

Kartik K. Parekh … Appellant

versus

Special Director, Directorate of Enforcement  and another. … Respondent(s)

CIVIL APPEAL NO.10303  OF 2011 (Arising out of SLP(C) No.13988 of 2011)

Panther Fincap and Management Services Ltd. … Appellant

versus

Special Director, Directorate of Enforcement  and another. … Respondent(s)

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J U D G M E N T

G. S. Singhvi, J.

1. Leave granted.

2. In these appeals prayer has been made for setting aside the order of the  

Division Bench of the Bombay High Court whereby the applications filed by  

the appellants for condonation of delay in filing appeals under Section 35 of the  

Foreign Exchange Management Act, 1999 (for short, `the Act’) were dismissed  

along  with  the  appeals  filed  against  order  dated  2.8.2007  passed  by  the  

Appellate Tribunal for Foreign Exchange (for short, `the Appellate Tribunal’).

Background facts

3. On an information received from the Reserve Bank of India that M/s.  

Classic Credit Ltd. and M/s. Panther Fincap and Management Services Ltd. had  

taken loan of 25 lakh shares each of DSQ Industries Ltd. on 1.3.2011 from M/s.  

Greenfield Investment Ltd, Mauritius and the Indus Ind Bank Ltd with whom  

M/s. Greenfield Investment Ltd. was maintaining NRE Account had informed  

that  records  did  not  indicate  any  such  transaction,  the  Directorate  of  

Enforcement,  Mumbai  conducted  enquiries  from different  sources  including  

Securities and Exchange Board of India,  Shri  Ketan Parekh, M/s.  Integrated  

Enterprises (I) Ltd., Chennai and Indsec Securities and Finance Ltd.  Thereafter,  

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show cause notice dated 23.9.2004 was issued to M/s. Greenfield Investments  

Ltd., Mauritius, Shri Pravin Guwalewala, Mauritius, Smt. Neena Guwalewala,  

Mauritius, Shri A. K. Sen, Mauritius, M/s. Classic Credit Ltd., Mumbai, M/s.  

Panther Fincap and Management Services Ltd., Mumbai, Shri Ketan Parekh,  

Shri  Kartik  K.  Parekh,  Shri  Kirit  Kumar  N.  Parekh and  Shri  Navinchandra  

Parekh for taking action against them for contravention of the provisions of the  

Act.  After hearing the noticees, the Special Director of Enforcement, Mumbai  

(for short, `the Special Director’) passed order dated 30.1.2006 and, whereby he  

held that some of the noticees had violated Sections 3(d) and 6(3)(e) of the Act  

and imposed penalty of Rs.40 crores on M/s. Classic Credit Ltd.; Rs.40 crores  

on M/s. Panther Fincap and Management Services Ltd.; Rs.75 crores on M/s.  

Greenfield Investments  Ltd.;  Rs.80 crores on Shri  Shri  Ketan Parekh; Rs.12  

crores on Shri Kartik K. Parekh; Rs.60 crores on Shri Pravin Guwalewala and  

Rs.20  crores  on  Shri  A.K.  Sen  with  a  direction  that  they  shall  deposit  the  

amount within 45 days from the date of receipt of the order.

4. The appellants  challenged the  aforesaid  order  by  filing  appeals  under  

Section  19  of  the  Act.   They  also  filed  applications  under  Rule  10  of  the  

Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules,  

2000 read with Section 19 (1) of the Act for dispensing with the requirement of  

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deposit of the amount of penalty.  In paragraphs 4 to 8 of the application filed  

by him, Shri Ketan V. Parekh made the following averments:

“4.  The applicant submits that no case is made out against the  applicant as Section 3 (d) of the Act is only attracted in case of  a  transaction  in  a  foreign  currency/foreign  security.   The  appellants case does not attract the provision of Section 3 (d) of  the Act.

5. That impugned order passed by Special Director is liable  to  be  set  aside  in  view  of  the  grounds  of  appeal  and  the  applicant has every hope of succeeding in the matter.  As such  the applicant has a very good prima facie case on merits and is  likely to succeed in the appeal.

6. That  the  applicant  is  suffering  from a  grave  financial  hardship since all his assets including, properties, movable and  immovable  have  been  attached  by  an  order  of  Ld.  Debt  Recovery  Tribunal  on  11th April,  2001  (a  copy  of  the  order  dated  11th April,  2001  is  annexed  herewith  and  marked  as  Annexure B-1).  Moreover the applicant/appellant is a notified  person  and  all  his  assets  including,  properties,  movable  and  immovable  have  been  attached  by  the  Government  of  India  pursuant to the Notification dated 6th October, 2001.  A copy of  the Notification dated  6th October, 2001 is attached herewith  and marked as Annexure B-2.

7. That  the  appellant  is  further  suffering  due  to  another  order  of  attachment  passed  by  the  Dy.  CIT,  Central  Cir  40  under  Section  281B of  the  Income  Tax Act  dated  7 th April,  2003 whereby accounts of the appellant have been attached.  A  copy of  the order  dated 07.04.2003 is  attached herewith and  marked as Annexure-B3.

8. That  by  order  dated  12th December,  2003  passed  by  SEBI, the applicant has also been prohibited from carrying out  its business activity at buying selling or dealing in securities in  any manner directly or indirectly and have also been debarred  from associating with the Securities market  for the period of  

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Fourteen years.  A copy of the SEBI order dated 12th December,  2003 is annexed herewith and marked as Annexure-B4.”

   In paragraphs 4 to 10 of his application, Kartik Parekh averred as  

under:

“4.  The applicant submits that no case is made out against the  applicant as Section 3 (d) of the Act is only attracted in case of  a  transaction  in  a  foreign  currency/foreign  security.   The  appellants case does not attract the provision of Section 3 (d) of  the Act.

5.  The  applicant  submits  that  the  appellant  was  at  a  same  footing as Mr. Kirit Kumar Parekh and Mr. Naveen Chandra  Parekh.  While the respondent has exonerated Mr. Kirit Kumar  Parekh and Mr. Naveen Chandra Parekh from all offences, he  has  perversely  held  the  applicant/appellant  liable  for  the  offences under the Act.

6.  In  any  event,  Mr.  Ketan  Parekh  in  his  letter  to  the  adjudicating  authority  has  admitted  that  the  control  and  management of the company fully vested in him and that the  applicant is not responsible for the day to day activities of the  company  and  hence  cannot  be  held  liable  for  the  alleged  contravention of provisions of the Act.  In any event, even for  the sake of argument it is admitted that the appellant was an  executive director of CCL and Panther, unless it can be proven  beyond any scope of doubt that the appellant was managing the  day to day operations of the aforesaid companies, he cannot be  held liable for any offence committed by the Company.  The  impugned order will be set aside on this ground itself. 7. That impugned order passed by Special Director is liable  to  be  set  aside  in  view  of  the  grounds  of  appeal  and  the  applicant has every hope of succeeding in the matter.  As such  the applicant has a very good prima facie case on merits and is  likely to succeed in the appeal.

8. That  the  applicant  company  is  suffering  from  grave  financial  hardship  since  the  assets  of  the  applicant/appellant  

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have been attached pursuant to the order of the Hon’ble Debt  Recovery Tribunal, Mumbai dated 11th April, 2001 confirmed  on 25th September, 2001 ( a copy of the order dated 11th April,  2001 confirmed on 25th September, 2001 is annexed herewith  and marked as Annexure B-1).   

9. That  by  order  dated  12th December,  2003  passed  by  SEBI, the appellant has been prohibited from carrying out its  business activity of buying, selling or dealing in securities in  any manner directly or indirectly and have also been debarred  from associating with the Securities market  for the period of  fourteen  years.   (A  copy  of  the  SEBI  order  dated  12th  December, 2003 is annexed herewith and marked as Annexure- B4.”

10.  In view of the submissions made above it is respectfully  submitted  that  the  applicant/appellant  is  not  in  a  position  to  deposit the penalty amount of Rs.12,00,00,000 (Rupees Twelve  Crores)  imposed  in  the  impugned  order.   The  appellant/applicant has absolutely no means to pay the penalty  amount as pre-deposit and such pre-deposit would cause undue  hardship to the applicant/appellant.”

In  the  application  filed  on  behalf  of  M/s.  Panther  Fincap  and  

Management  Services Limited, the following averments were made:

“4.  The applicant submits that no case is made out against the  applicant as Section 3 (d) of the Act is only attracted in case of  a  transaction  in  a  foreign  currency/foreign  security.   The  appellants case does not attract the provision of Section 3 (d) of  the Act.

5. That impugned order passed by Special Director is liable  to  be  set  aside  in  view  of  the  grounds  of  appeal  and  the  applicant has every hope of succeeding in the matter.  As such  the applicant has a very good prima facie case on merits and is  likely to succeed in the appeal.

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6. That  the  applicant  is  suffering  from a  grave  financial  hardship  since  the  accounts  of  the  Company  have  also  been  attached by the Income Tax Department under Section 281B of  the Income Tax Act by order dated 7th April, 2003 passed by  Dy.  CIT,  Central  Cir.  40,  Mumbai.   Further  even  the  Bank  accounts and properties of the promoter and managing director  of the Company has also been attached under Section 281B of  the Income Tax Act by order dated 7th April, 2003 passed by  Dy. CIT, Central Cir. 40, Mumbai  ( a copy of the order dated  7th April, 2003 is annexed herewith and marked as Annexure B- 1).  

7. That  by  order  dated  12th December,  2003  passed  by  SEBI, the appellant company as well as its promoter have been  prohibited  from carrying  out  its  business  activity  of  buying,  selling  or  dealing  in  securities  in  any  manner  directly  or  indirectly and have also been debarred from associating with  the Securities market for the period of fourteen years.  (A copy  of  the  SEBI  order  dated  12th December,  2003  is  annexed  herewith and marked as Annexure-B2.

8.  In view of the submissions made above it is respectfully  submitted  that  the  applicant/appellant  is  not  in  a  position  to  deposit the penalty amount of Rs.40,00,00,000 (Rupees Forty  Crores)  imposed  in  the  impugned  order.   The  appellant/applicant has absolutely no means to pay the penalty  amount as pre-deposit and such pre-deposit would cause undue  hardship to the applicant/appellant.”

5. After hearing the counsel for the parties, the Appellate Tribunal passed  

order dated 2.8.2007 and directed the appellants to deposit 50% of the amount  

of  penalty  with  a  stipulation  that  if  they  fail  to  do  so,  the  appeals  will  be  

dismissed.   The relevant portion of that order is extracted below:

“Without discussing the merits of these appeals, we are of the  view that the adjudication order is not ex facie bad when the  

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price of the borrowed DSQ shares has not been discharged but  is required to be paid by the appellants which normally can be  at the place where creditor, i.e. GIL, resides or is engaged in  business, i.e. Mauritius. Therefore, allegations of contravention  of  Section 3(d) cannot be termed as ex facie  bad,  hence the  appellants have no prima facie case.  They have many questions  to  answer.   After  deciding  one  factor  included  in  “undue  hardship”, we proceed to look to the financial position of the  appellants.  It is the burden on the appellants to disclose correct  financial  position which in  these  appeals  the appellants  have  totally failed to disclose.  The appellants are not candid enough  to  bring  out  their  correct  financial  status.   Merely  because  Directorate of Enforcement has not come out forcefully against  the ground of financial disability, this Tribunal cannot believe  that appellants, who were roaring in crores at one time, are not  in  a  position  to  make  pre-deposit  of  the  penalty,  especially  when  this  Tribunal  is  simultaneously  duty-bound  to,  as  provided in Second Proviso of Section 19 (1) FEM Act, 1999,  to ensure recovery of penalty.  However, we are conscious that  this  Tribunal  may  not  unwittingly  pass  an  order  whereby  injustice can possibly be caused.”

(emphasis supplied)   

6. Shri  Ketan  Parekh  challenged  the  aforesaid  order  in  Writ  Petition  

No.8385 of 2007 filed in the Delhi High Court on  13.11.2007. The other two  

appellants,  namely,  Kartik  K.  Parekh  and  Panthar  Fincap  and  Management  

Services Ltd. filed Writ Petition Nos. 8231 and 8232 of 2007 on 5.11.2007 and  

prayed  for  quashing  the  order  of  the  Appellate  Tribunal.   After  taking  

cognizance of the judgment of this Court in Raj Kumar Shivhare v. Assistant  

Director,  Directorate  of  Enforcement  (2010)  4 SCC 772,  the learned Single  

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Judge  dismissed  the  writ  petitions  vide  order  dated  26.7.2010,  the  relevant  

portions of which are extracted below:

“1. There is a categorical pronouncement on 12th April 2010  by  the  Supreme  Court  in  Raj  Kumar  Shivhare  v.  Assistant  Director,  Directorate of  Enforcement  (2010)  4 SCC 772 that  even  an  order  passed  by  the  Appellate  Tribunal  in  an  application  seeking  dispensation  of  the  pre-deposit  of  the  penalty would be appealable under Section 35 of the Foreign  Exchange  Management  Act  1999  (`FEMA’)  and  that  the  remedy under Article 226 of the Constitution is not available  against such order.

2. In that view of the matter, the present petitions cannot be  entertained by this Court.  It is, however, open to the Petitioners  to avail of the appropriate remedy in terms of para 45 of the  above judgment of the Supreme Court.

3. The petitions are dismissed.”

7. Thereafter, the  appellants  filed  appeals  under  Section  35  of  the  Act  

before the Bombay High Court.  They also filed applications for condonation of  

1056 days’ delay.  The Division Bench of the Bombay High Court dismissed  

the applications for condonation of delay by observing that it does not have the  

power to entertain an appeal filed beyond 120 days and even though in terms of  

the  liberty  given  by  the  Delhi  High  Court,  the  appellants  could  have  filed  

appeals within 30 days, but they failed to do so and, therefore, delay in filing  

the appeals cannot be condoned.

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Arguments

8. Shri Ranjit Kumar, learned senior counsel appearing for the appellants  

argued  that  the  impugned  order  is  liable  to  be  set  aside  because  while  

dismissing the applications for condonation of delay, the Division Bench of the  

High Court did not take cognizance of Section 14 of the Limitation Act, 1963.  

Learned senior  counsel  submitted that in terms of that section,  entire period  

during which the writ petitions filed by the appellants remained pending before  

the Delhi High Court is liable to be excluded while computing the period of  

limitation  and if  that  is  done,  the appeals  filed  under  Section 35 cannot  be  

treated as barred by time. Learned senior counsel referred to Section 29(2) of  

the Limitation Act and the judgments of this Court in State of Goa v. Western  

Builders (2006) 6 SCC 239, Consolidated Engineering Enterprises v. Principal  

Secretary,  Irrigation  Department  and  others  (2008)  7  SCC  169,  Coal  India  

Limited and another v. Ujjal Transport Agency and others (2011) 1 SCC 117  

and argued that even though the period of limitation prescribed under Section  

35  of  the  Act  is  different  from the  period  specified  in  Article  137  of  the  

Schedule appended to the Limitation Act, in the absence of express exclusion of  

Section 14 of the Limitation Act, the appellants are entitled to seek exclusion of  

the time spent  by them in bona fide prosecution of remedy before a wrong  

forum.  Shri Ranjit  Kumar submitted that at the time of filing writ petitions  

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before  the  Delhi  High  Court,  all  the  High  Courts  were  entertaining  such  

petitions and granting relief  to the aggrieved parties  and it  is  only after  the  

judgment  in  Raj  Kumar  Shivhare  v.  Assistant  Director,  Directorate  of  

Enforcement (supra) that the High Courts cannot entertain writ petition because  

of the availability of the statutory remedy of appeal under Section 35 of the Act.  

Learned senior counsel further submitted that if the period between 7.11.2007,  

i.e. the date on which the writ petitions were filed before the Delhi High Court  

and 26.7.2010, i.e. the date on which the same were dismissed is excluded, the  

appeals filed before the Bombay High Court on 27.8.2010 cannot be treated as  

barred by time. Learned senior counsel then argued that financial condition of  

the  appellant  is  extremely  precarious  and the  Appellate  Tribunal  committed  

serious error by directing them to deposit 50% of the penalty imposed by the  

Special Director as a condition for hearing the appeals.   He also referred to  

affidavit  dated  10.10.2008  filed  by  appellant  Ketan  V.  Parekh  before  the  

Appellate Tribunal to show that he was declared a notified person in terms of  

Section 3(2) of the Special Court (Trial of Offences relating to Transactions in  

Securities) Act, 1992 and all his moveable and immovable properties including  

bank accounts have been attached and he has been prohibited from operating  

the same.

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9. Shri A. K. Panda, learned senior counsel appearing for the respondents  

supported  the  impugned  order  and  argued  that  the  Division  Bench  of  the  

Bombay  High Court  did  not  commit  any  error  by  declining the  appellants’  

prayer  for  condonation  of  delay  because  the  appeals  were  filed  beyond the  

maximum  period  prescribed  under  Section  35  and  the  provisions  of  the  

Limitation Act cannot be invoked for condonation of delay or for exclusion of  

the  time  during  which  the  writ  petitions  filed  by  the  appellants  remained  

pending before the Delhi High Court.  Shri Panda emphasized that even before  

the  judgment  of  this  Court  in  Raj  Kumar  Shivhare  v.  Assistant  Director,  

Directorate of Enforcement (supra), the legal position was crystal clear and in  

terms of Section 35 of the Act an appeal could be filed against any decision or  

order of the Appellate Tribunal within 60 days from the date of communication  

of the decision or order and in terms of proviso to that section, the High Court  

can extend the period by another 60 days and no more.  Learned senior counsel  

then submitted that the appellants cannot invoke Section 14 of the Limitation  

Act because their action of filing the writ petitions before the Delhi High Court  

was not bona fide.  He pointed out that vide order dated 7.11.2007, the learned  

Single Judge of the Delhi High Court had accepted the request made by counsel  

appearing for  the appellants  and treated the writ  petition filed by Kartik  K.  

Parekh as an appeal and similar order appears to have been passed in the case of  

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M/s. Panther Fincap and Management Services Limited but those orders were  

subsequently  recalled  at  the  instance  of  the  two  appellants.   Shri  Panda  

submitted that the Appellate Tribunal did not commit any error by directing the  

appellants  to  deposit  50%  of  the  penalty  imposed  by  the  Special  Director  

because they had been found guilty of clandestine monetary transactions and  

did not disclose their true financial position. .

The relevant provisions :

10. Section 35 of the Act as also Sections 5, 14 and 29(1) and (2) of the  

Limitation Act, which have bearing on the decision of the issue raised in the  

appeals, read as under –

“35.  Appeal  to  High  Court  -  Any  person  aggrieved  by  any  decision or order of the Appellate Tribunal may file an appeal  to  the  High  Court  within  sixty  days  from  the  date  of  communication  of  the  decision  or  order  of  the  Appellate  Tribunal  to  him on any question  of  law arising  out  of  such  order:

Provided that  the  High  Court  may,  if  it  is  satisfied  that  the  appellant  was  prevented  by  sufficient  cause  from  filing  the  appeal  within  the  said  period,  allow  it  to  be  filed  within  a  further period not exceeding sixty days.

Explanation.—In this section "High Court" means— (a)  the  High  Court  within  the  jurisdiction  of  which  the  aggrieved  party  ordinarily  resides  or  carries  on  business  or  personally works for gain; and (b) where the Central Government is the aggrieved party, the  High Court within the jurisdiction of which the respondent, or  in a case where there are more than one respondent, any of the  

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respondents,  ordinarily  resides  or  carries  on  business  or  personally works for gain.”

5. Extension of prescribed period in certain cases - Any appeal  or any application, other than an application under any of the  provisions of Order XXI of the Code of Civil Procedure, 1908  (5 of 1908), may be admitted after the prescribed period, if the  appellant  or  the  applicant  satisfies  the  court  that  he  had  sufficient  cause  for  not  preferring  the  appeal  or  making  the  application within such period.

Explanation - The fact that the appellant or the applicant was  misled by any order, practice or judgment of the High Court in  ascertaining  or  computing  the  prescribed  period  may  be  sufficient cause within the meaning of this section.

14. Exclusion of time of proceeding bona fide in court without  jurisdiction - (1) In computing the period of limitation for any  suit  the time during which the plaintiff  has been prosecuting  with due diligence another civil proceeding, whether in a court  of  first  instance  or  of  the  appeal  or  revision,  against  the  defendant shall be excluded, where the proceeding relates to the  same matter in issue and is prosecuted in good faith in a court  which,  from  defect  of  jurisdiction  or  other  cause  of  a  like  nature, is unable to entertain it.

(2) In computing the period of limitation for any application,  the time during which the applicant has been prosecuting with  due diligence another civil  proceeding, whether in a court of  first instance or of appeal or revision, against the same party for  the  same  relief  shall  be  excluded,  where  such  proceeding  is  prosecuted in good faith in a court of first instance or of appeal  or revision, against the same party for the same relief shall be  excluded, where such proceeding is prosecuted in good faith in  a court which, from defect of jurisdiction or other cause of a  like nature, is unable to entertain it.  

(3)  Notwithstanding  anything  contained  in  rule  2  of  Order  XXIII of the Code of Civil Procedure, 1908 (5 of 1908), the  provisions of sub-section (1) shall apply in relation to a fresh  suit instituted on permission granted by the court under rule 1  

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of that Order, where such permission is granted on the ground  that  the  first  suit  must  fail  by  reason  of  a  defect  in  the  jurisdiction of the court of other cause of a like nature.

Explanation - For the purpose of this section, -  

(a) In excluding the time during which a former civil  proceeding was pending, the day on which that proceeding was  instituted and the day on which it ended shall both be counted;

(b)  a  plaintiff  or  an  applicant  resisting  an  appeal  shall  be  deemed to be prosecuting a proceeding;

(c) Misjoinder of parties or of causes of action shall be deemed  to be a cause of a like nature with defect of jurisdiction.

29. Savings - (1) Nothing in this Act shall affect section 25 of  the Indian Contract Act,1872. ( 9 of 1872).

(2)  Where  any  special  or  local  law prescribes  for  any  suit,  appeal or application a period of limitation different from the  period prescribed by the Schedule, the provisions of section 3  shall apply as if such period were the period prescribed by the  Schedule  and  for  the  purpose  of  determining  any  period  of  limitation prescribed for any suit, appeal or application by any  special or local law, the provisions contained in sections 4 to 24  (inclusive) shall  apply only in so far as,  and to the extent to  which, they are not expressly excluded by such special or local  law.”

11. The  question  whether  the  High  Court  can  entertain  an  appeal  under  

Section 35 of the Act beyond 120 days does not require much debate and has to  

be answered against the appellants in view of the law laid down in Union of  

India v. Popular Construction Co. (2001) 8 SCC 470,  Singh Enterprises v. CCE  

15

(2008) 3 SCC 70,  Commissioner of Customs, Central Excise v. Punjab Fibres  

Ltd.  (2008)  3  SCC  73,  Consolidated  Engineering  Enterprises  v.  Principal  

Secretary, Irrigation Department and others (supra),  Commissioner of Customs  

and Central  Excise  v.  Hongo India  Private  Limited  (2009)  5  SCC 791 and  

Chhattisgarh  State  Electricity  Board  v.  Central  Electricity  Regulatory  

Commission and others  (2010) 5 SCC 23.        

12. In  Hukumdev Narain Yadav v.  Lalit Narain Mishra (1974) 2 SCC 133,  

this Court interpreted Section 29(2) of the Limitation Act in the context of the  

provisions of the Representation of the People Act, 1951. It was argued that the  

words “expressly excluded” appearing in Section 29(2) would mean that there  

must be an explicit mention in the special or local law to the specific provisions  

of the Limitation Act of which the operation is to be excluded. While rejecting  

the argument, the three-Judge Bench observed:  

“ … what we have to see is whether the scheme of the special  law, that is in this case the Act, and the nature of the remedy  provided therein are such that the legislature intended it to be a  complete code by itself which alone should govern the several  matters  provided by it.  If  on  an  examination  of  the  relevant  provisions it is clear that the provisions of the Limitation Act  are  necessarily  excluded,  then  the  benefits  conferred  therein  cannot be called in aid to supplement the provisions of the Act.  In  our  view,  even in  a  case  where  the  special  law does  not  exclude the provisions of Sections 4 to 24 of the Limitation Act  by an express reference, it would nonetheless be open to the  court to examine whether and to what extent the nature of those  

16

provisions or the nature of the subject-matter and scheme of the  special law exclude their operation.”

(emphasis supplied)

13. In Union of India v. Popular Construction Company (supra), this Court  

considered the question whether Section 5 of the Limitation Act can be invoked  

for  condonation  of  delay  in  filing  an  application  under  Section  34  of  the  

Arbitration and Conciliation Act, 1996. The two-Judge Bench referred to earlier  

decisions in  Vidyacharan Shukla v.  Khubchand Baghel AIR 1964 SC 1099,  

Hukumdev Narain Yadav v.  Lalit Narain Mishra (1974) 2 SCC 133,  Mangu  

Ram v.  MCD (1976) 1 SCC 392, Patel Naranbhai Marghabhai v.  Dhulabhai  

Galbabhai (1992) 4 SCC 264 and held:  

“As  far  as  the  language  of  Section  34  of  the  1996  Act  is  concerned, the crucial words are ‘but not thereafter’ used in the  proviso to sub-section (3).  In our opinion,  this phrase would  amount to an express exclusion within the meaning of Section  29(2)  of  the  Limitation  Act,  and  would  therefore  bar  the  application of Section 5 of that Act. Parliament did not need to  go further. To hold that the court could entertain an application  to set aside the award beyond the extended period under the  proviso,  would  render  the  phrase  ‘but  not  thereafter’  wholly  otiose. No principle of interpretation would justify such a result.

Furthermore,  Section  34(1)  itself  provides  that  recourse  to  a  court  against  an  arbitral  award  may  be  made  only  by  an  application for  setting aside such award ‘in accordance with’  sub-section (2) and sub-section (3). Sub-section (2) relates to  grounds for setting aside an award and is not relevant for our  purposes. But an application filed beyond the period mentioned  in Section 34, sub-section (3) would not be an application ‘in  

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accordance with’  that  sub-section.  Consequently  by virtue of  Section 34(1), recourse to the court against an arbitral award  cannot be made beyond the period prescribed. The importance  of  the  period  fixed  under  Section  34  is  emphasised  by  the  provisions of Section 36 which provide that:

‘36.  Enforcement.—Where  the  time  for  making  an  application to set aside the arbitral award under Section  34 has expired … the award shall be enforced under the  Code of Civil Procedure, 1908 (5 of 1908) in the same  manner as if it were a decree of the court.’

This  is  a  significant  departure  from  the  provisions  of  the  Arbitration Act, 1940. Under the 1940 Act, after the time to set  aside the award expired, the court was required to ‘proceed to  pronounce  judgment  according  to  the  award,  and  upon  the  judgment  so pronounced a decree shall  follow’ (Section 17).  Now the consequence of the time expiring under Section 34 of  the  1996  Act  is  that  the  award  becomes  immediately  enforceable without any further act of the court. If there were  any residual doubt on the interpretation of the language used in  Section 34, the scheme of the 1996 Act would resolve the issue  in favour of curtailment of the court's powers by the exclusion  of the operation of Section 5 of the Limitation Act.”

14. In Singh Enterprises v. CCE (supra), the Court interpreted Section 35 of  

the Central Excise Act, 1944 which is pari materia to Section 35 of the Act and  

observed:  

“The  Commissioner  of  Central  Excise  (Appeals)  as  also  the  tribunal  being  creatures  of  statute  are  not  vested  with  jurisdiction to condone the delay beyond the permissible period  provided under the statute. The period up to which the prayer  for condonation can be accepted is statutorily provided. It was  submitted  that  the  logic  of  Section  5  of  the  Limitation  Act,  1963  (in  short  ‘the  Limitation  Act’)  can  be  availed  for  

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condonation of delay. The first proviso to Section 35 makes the  position clear that the appeal has to be preferred within three  months from the date of communication to him of the decision  or  order.  However,  if  the  Commissioner  is  satisfied  that  the  appellant was prevented by sufficient cause from presenting the  appeal within the aforesaid period of 60 days, he can allow it to  be presented within a further period of 30 days. In other words,  this clearly shows that the appeal has to be filed within 60 days  but in terms of the proviso further 30 days' time can be granted  by the appellate authority to entertain the appeal. The proviso to  sub-section (1) of Section 35 makes the position crystal clear  that the appellate authority has no power to allow the appeal to  be presented beyond the period of 30 days. The language used  makes  the  position  clear  that  the  legislature  intended  the  appellate authority to entertain the appeal by condoning delay  only up to 30 days after  the expiry of  60 days which is  the  normal  period  for  preferring  appeal.  Therefore,  there  is  complete  exclusion  of  Section  5  of  the  Limitation  Act.  The  Commissioner and the High Court were therefore justified in  holding that there was no power to condone the delay after the  expiry of 30 days' period.”

15. In Consolidated Engineering Enterprises v. Principal Secretary, Irrigation  

Department and others (supra), a three-Judge Bench again considered Section  

34(3) of the Arbitration and Conciliation Act, 1996.  J.M. Panchal, J., speaking  

for  himself  and  Balakrishnan,  C.J.,  referred  to  the  relevant  provisions  and  

observed:

“….When  any  special  statute  prescribes  certain  period  of  limitation  as  well  as  provision  for  extension  up to  specified  time-limit, on sufficient cause being shown, then the period of  limitation prescribed under the special law shall prevail and to  that  extent  the  provisions  of  the  Limitation  Act  shall  stand  excluded. As the intention of the legislature in enacting sub- section (3) of Section 34 of the Act is that the application for  

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setting aside the award should be made within three months and  the period can be  further  extended on sufficient  cause  being  shown  by  another  period  of  30  days  but  not  thereafter,  this  Court is of the opinion that the provisions of Section 5 of the  Limitation  Act  would  not  be  applicable  because  the  applicability of Section 5 of the Limitation Act stands excluded  because  of  the provisions  of  Section 29(2)  of  the Limitation  Act.”  

16. In Commissioner of Customs and Central Excise v. Hongo India (P) Ltd.  

(supra),  another three-Judge Bench considered the question whether Section 5  

of  the Limitation  Act  can  be invoked for  condonation of  delay  in  filing an  

appeal or reference to the High Court, referred to the judgments in  Union of  

India v. Popular Construction Co. (supra), Singh Enterprises v. CCE (supra) and  

observed –

“As pointed out earlier, the language used in Sections 35, 35-B,  35-EE, 35-G and 35-H makes the position clear that an appeal  and reference  to the High Court  should be made within 180  days only from the date of communication of the decision or  order.  In  other  words,  the language used in  other  provisions  makes  the  position  clear  that  the  legislature  intended  the  appellate  authority  to  entertain  the  appeal  by  condoning  the  delay only up to 30 days after expiry of 60 days which is the  preliminary  limitation  period for  preferring an appeal.  In  the  absence  of  any  clause  condoning  the  delay  by  showing  sufficient  cause after the prescribed period, there is complete  exclusion of Section 5 of the Limitation Act. The High Court  was, therefore, justified in holding that there was no power to  condone the delay after expiry of the prescribed period of 180  days.”

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17. In Chhattisgarh State Electricity Board v. Central Electricity Regulatory  

Commission  (supra),  a  two-Judge  Bench  interpreted  Section  125  of  the  

Electricity Act, 2003, which is substantially similar to Section 35 of the Act and  

observed:

“Section  125  lays  down  that  any  person  aggrieved  by  any  decision or order of the Tribunal can file an appeal to this Court  within 60 days from the date of communication of the decision  or order of the Tribunal. Proviso to Section 125 empowers this  Court to entertain an appeal filed within a further period of 60  days if it is satisfied that there was sufficient cause for not filing  appeal within the initial period of 60 days. This shows that the  period of limitation prescribed for filing appeals under Sections  111(2)  and  125  is  substantially  different  from  the  period  prescribed under the Limitation Act for filing suits, etc. The use  of the expression “within a further period of not exceeding 60  days” in the proviso to Section 125 makes it clear that the outer  limit for filing an appeal is 120 days. There is no provision in  the Act under which this Court  can entertain an appeal filed  against the decision or order of the Tribunal after more than 120  days.

The object underlying establishment of a special adjudicatory  forum i.e. the Tribunal to deal with the grievance of any person  who may be aggrieved by an order of an adjudicating officer or  by  an  appropriate  Commission  with  a  provision  for  further  appeal to this Court and prescription of special limitation for  filing  appeals  under  Sections  111  and  125  is  to  ensure  that  disputes emanating from the operation and implementation of  different  provisions  of  the  Electricity  Act  are  expeditiously  decided by an expert body and no court, except this Court, may  entertain challenge to the decision or order of the Tribunal. The  exclusion of the jurisdiction of the civil  courts (Section 145)  qua an order made by an adjudicating officer is also a pointer in  that direction.

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It is thus evident that the Electricity Act is a special legislation  within  the  meaning  of  Section  29(2)  of  the  Limitation  Act,  which lays down that where any special or local law prescribes  for  any  suit,  appeal  or  application  a  period  of  limitation  different  from  the  one  prescribed  by  the  Schedule,  the  provisions of Section 3 shall apply as if such period were the  period prescribed by the Schedule and provisions contained in  Sections  4  to  24  (inclusive)  shall  apply  for  the  purpose  of  determining any period of  limitation  prescribed for  any suit,  appeal or application unless they are not expressly excluded by  the special or local law.”

The Court then referred to some of the precedents and held:

“In view of the above discussion, we hold that Section 5 of the  Limitation Act cannot be invoked by this Court for entertaining  an appeal  filed against  the decision  or  order  of  the Tribunal  beyond the period of 120 days specified in Section 125 of the  Electricity Act and its  proviso.  Any interpretation of  Section  125 of the Electricity Act which may attract the applicability of  Section 5 of the Limitation Act read with Section 29(2) thereof  will  defeat  the  object  of  the  legislation,  namely,  to  provide  special  limitation  for  filing an appeal  against  the decision or  order of the Tribunal and proviso to Section 125 will become  nugatory.”

18. The question whether Section 14 of the Limitation Act can be relied upon  

for excluding the time spent in prosecuting remedy before a wrong forum was  

considered by a two Judge Bench in State of Goa v. Western Builders (supra) in  

the context  of  the provisions  contained in  Arbitration and Conciliation Act,  

1996.  The Bench referred to the provisions of the two Acts and observed:

“There is no provision in the whole of the Act which prohibits  discretion of the court. Under Section 14 of the Limitation Act  

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if the party has been bona fidely prosecuting his remedy before  the court which has no jurisdiction whether the period spent in  that proceedings shall be excluded or not. Learned counsel for  the  respondent  has  taken  us  to  the  provisions  of  the  Act  of  1996: like Section 5, Section 8(1), Section 9, Section 11, sub- sections (4), (6), (9) and sub-section (3) of Section 14, Section  27, Sections 34, 36, 37, 39(2) and (4), Section 41, sub-section  (2), Sections 42 and 43 and tried to emphasise with reference to  the aforesaid sections that wherever the legislature wanted to  give  power  to  the  court  that  has  been  incorporated  in  the  provisions, therefore, no further power should lie in the hands  of  the  court  so  as  to  enable  to  exclude  the  period  spent  in  prosecuting the remedy before other forum. It is true but at the  same time there is no prohibition incorporated in the statute for  curtailing  the  power  of  the  court  under  Section  14  of  the  Limitation  Act.  Much  depends  upon  the  words  used  in  the  statute  and  not  general  principles  applicable.  By  virtue  of  Section 43 of the Act of 1996, the Limitation Act applies to the  proceedings under the Act of 1996 and the provisions of the  Limitation Act can only stand excluded to the extent wherever  different period has been prescribed under the Act, 1996. Since  there is no prohibition provided under Section 34, there is no  reason why Section 14 of the Limitation Act (sic not) be read in  the Act of 1996, which will advance the cause of justice. If the  statute  is  silent  and there  is  no  specific  prohibition  then the  statute  should  be  interpreted  which  advances  the  cause  of  justice.”

19. The  same  issue  was  again  considered  by  the  three-Judge  Bench  in  

Consolidated  Engineering  Enterprises  v.  Principal  Secretary,  Irrigation  

Department  (supra)  to  which  reference  has  been  made  hereinabove.   After  

holding that Section 5 of the Limitation Act cannot be invoked for condonation  

of delay, Panchal, J (speaking for himself and  Balakrishnan, C.J.) observed:

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“Section 14 of the Limitation Act deals with exclusion of time  of  proceeding  bona  fide  in  a  court  without  jurisdiction.  On  analysis  of  the  said  section,  it  becomes  evident  that  the  following conditions must be satisfied before Section 14 can be  pressed into service:

(1)  Both  the  prior  and  subsequent  proceedings  are  civil  proceedings prosecuted by the same party;

(2)  The  prior  proceeding  had  been  prosecuted  with  due  diligence and in good faith;

(3)  The failure  of  the prior  proceeding was due to defect  of  jurisdiction or other cause of like nature;

(4) The earlier proceeding and the latter proceeding must relate  to the same matter in issue and;

(5) Both the proceedings are in a court.

The policy of the section is to afford protection to a litigant  against  the bar  of  limitation  when he institutes  a  proceeding  which by reason of some technical defect cannot be decided on  merits  and is  dismissed.  While  considering the provisions of  Section 14 of the Limitation Act, proper approach will have to  be adopted and the provisions will have to be interpreted so as  to  advance  the  cause  of  justice  rather  than  abort  the  proceedings. It will be well to bear in mind that an element of  mistake is inherent in the invocation of Section 14. In fact, the  section is intended to provide relief against the bar of limitation  in cases of mistaken remedy or selection of a wrong forum. On  reading  Section  14  of  the  Act  it  becomes  clear  that  the  legislature  has  enacted  the  said  section  to  exempt  a  certain  period covered by a bona fide litigious activity. Upon the words  used in the section, it is not possible to sustain the interpretation  that the principle underlying the said section, namely, that the  bar of limitation should not affect a person honestly doing his  best to get his case tried on merits but failing because the court  is unable to give him such a trial, would not be applicable to an  

24

application  filed  under  Section  34  of  the  Act  of  1996.  The  principle  is  clearly applicable  not  only to  a  case  in  which a  litigant brings his application in the court, that is, a court having  no jurisdiction to entertain it but also where he brings the suit or  the application in the wrong court in consequence of bona fide  mistake or (sic of) law or defect of procedure. Having regard to  the intention of the legislature this Court is of the firm opinion  that the equity underlying Section 14 should be applied to its  fullest extent and time taken diligently pursuing a remedy, in a  wrong court, should be excluded.

At this stage it would be relevant to ascertain whether there is  any express provision in the Act of 1996, which excludes the  applicability of Section 14 of the Limitation Act. On review of  the provisions of the Act of 1996 this Court finds that there is  no provision in the said Act which excludes the applicability of  the  provisions  of  Section  14  of  the  Limitation  Act  to  an  application submitted under Section 34 of the said Act. On the  contrary, this Court finds that Section 43 makes the provisions  of  the  Limitation  Act,  1963  applicable  to  arbitration  proceedings.  The  proceedings  under  Section  34  are  for  the  purpose  of  challenging  the  award  whereas  the  proceeding  referred to under Section 43 are the original proceedings which  can  be  equated  with  a  suit  in  a  court.  Hence,  Section  43  incorporating the Limitation Act will apply to the proceedings  in the arbitration as it applies to the proceedings of a suit in the  court.  Sub-section (4)  of Section 43,  inter  alia,  provides that  where the court orders that an arbitral award be set aside, the  period between the commencement of the arbitration and the  date of the order of the court shall be excluded in computing the  time  prescribed  by  the  Limitation  Act,  1963,  for  the  commencement of the proceedings with respect to the dispute  so submitted. If the period between the commencement of the  arbitration proceedings till the award is set aside by the court,  has  to  be  excluded  in  computing  the  period  of  limitation  provided for any proceedings with respect to the dispute, there  is  no  good reason  as  to  why it  should  not  be  held  that  the  provisions  of  Section  14  of  the  Limitation  Act  would  be  applicable to an application submitted under Section 34 of the  Act  of  1996,  more  particularly  where  no  provision  is  to  be  

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found in the Act of 1996, which excludes the applicability of  Section 14 of the Limitation Act, to an application made under  Section 34 of the Act. It is to be noticed that the powers under  Section 34 of the Act can be exercised by the court only if the  aggrieved party makes  an application.  The jurisdiction under  Section 34 of the Act, cannot be exercised suo motu. The total  period of four months within which an application, for setting  aside an arbitral award, has to be made is not unusually long.  Section 34 of the Act of 1996 would be unduly oppressive, if it  is held that the provisions of Section 14 of the Limitation Act  are not applicable to it, because cases are no doubt conceivable  where an aggrieved party, despite exercise of due diligence and  good faith, is unable to make an application within a period of  four months. From the scheme and language of Section 34 of  the Act of 1996, the intention of the legislature to exclude the  applicability of Section 14 of the Limitation Act is not manifest.  It  is well to remember  that Section 14 of the Limitation Act  does  not  provide  for  a  fresh  period  of  limitation  but  only  provides for the exclusion of a certain period. Having regard to  the legislative intent, it will have to be held that the provisions  of Section 14 of the Limitation Act, 1963 would be applicable  to an application submitted under Section 34 of the Act of 1996  for setting aside an arbitral award.”

In his concurring judgment, Raveendran, J. referred to the judgment in  

State of Goa v. Western Builders (supra) and observed:

“On the  other  hand,  Section  14 contained  in  Part  III  of  the  Limitation  Act  does  not  relate  to  extension  of  the  period of  limitation,  but  relates  to  exclusion  of  certain  period  while  computing the period of limitation. Neither sub-section (3) of  Section 34 of the AC Act nor any other provision of the AC Act  exclude the applicability of Section 14 of the Limitation Act to  applications under Section 34(1) of the AC Act. Nor will the  proviso to Section 34(3) exclude the application of Section 14,  as  Section  14  is  not  a  provision  for  extension  of  period  of  limitation, but for exclusion of certain period while computing  the period of limitation. Having regard to Section 29(2) of the  Limitation Act, Section 14 of that Act will be applicable to an  

26

application  under  Section  34(1)  of  the  AC  Act.  Even  when  there  is  cause  to  apply  Section  14,  the  limitation  period  continues to be three months and not more, but in computing  the limitation period of three months for the application under  Section  34(1)  of  the  AC  Act,  the  time  during  which  the  applicant  was  prosecuting  such application  before  the wrong  court is excluded, provided the proceeding in the wrong court  was prosecuted bona fide, with due diligence. Western Builders  therefore lays down the correct legal position.”

20. The  same  view  was  reiterated  in Coal India Limited v. Ujjal Transport  

Agency (supra).

21. The aforesaid three judgments do support the argument of Shri Ranjit  

Kumar that even though Section 5 of the Limitation Act cannot be invoked for  

condonation  of  delay  in  filing  an  appeal  under  the  Act  because  that  would  

tantamount to amendment of the legislative mandate by which special period of  

limitation has been prescribed, Section 14 can be invoked in an appropriate case  

for  exclusion  of  the  time  during  which  the  aggrieved  person  may  have  

prosecuted with due diligence remedy before a wrong forum, but on a careful  

scrutiny of the record of these cases, we are satisfied that Section 14 of the  

Limitation Act cannot be relied upon for exclusion of the period during which  

the writ  petitions filed by the appellants  remained pending before the Delhi  

High Court.   In the applications filed by them before the Bombay High Court,  

the appellants had sought condonation of 1056 days’ delay by stating that after  

27

receiving copy of the order passed by the Appellate Tribunal, they had filed  

writ  petitions  before  the  Delhi  High  Court,  which  were  disposed  of  on  

26.7.2010 and,  thereafter,  they filed appeals  before the Bombay High Court  

under Section 35 of the Act.   Paragraphs 1, 2 and 3 of the applications for  

condonation of delay which are identical in all the cases were as under:

“1. The  Appellant  above  named  has  preferred  an  Appeal  against the order dated 2nd August 2007 (hereinafter referred to  as  the  “impugned  order”)  passed  by  the  Respondent  No.1  against the Appellant above named.  The Appellant states that  the  impugned  order  was  received  by  the  Appellant  on  5 th  October  2007.  The Appellant  states  that  there  is  a  delay of  1056 days in filing the above appeal, the reasons for which are  being stated in detail  hereunder and, therefore,  the Appellant  above named prays that the delay in filing the present appeal  may please be condoned.

2. RELIEFS SOUGHT :

(a) That this Hon’ble Court be pleased to condoned the delay  of 1056 days in filing the said Appeal;  

(b)  That  such  further  and  other  reliefs  as  the  facts  and  circumstances may require.

3. REASONS FOR THE DELAY :

3.1 The Appellant declares that there is delay of 1056 days in  filing the appeal as prescribed in the Limitation Act, 1963.

3.2 The Appellant further states that the delay occurred as the  Writ  Petition  was  filed  before  Delhi  High  Court  on  5th  November, 2007.  The said writ was filed under the provisions  of Articles 226 and 227 of the Constitution of  India seeking  

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issuance of a writ order or direction in the nature of Mandamus  or any other writ for setting aside the impugned order dated 2nd  August,  2007,  passed  by  the  Appellate  Tribunal  for  Foreign  Exchange under Rule 10 of the Adjudicating Proceedings and  Appeal, 2000 for Dispensation.  In the said Writ proceedings  Hon’ble High Court of Delhi had passed an order on 26th July  2010.  Vide the said order dated 26th July, 2010, while relying  on the judgment of the Hon’ble Supreme Court, it was held by  the Hon’ble Delhi High Court that even an order passed by the  Appellate  Tribunal  in  an  application  seeking  dispensation  of  pre-deposit of the penalty would be appealable under section 35  of the FEMA and that remedy under Article 226 is not available  against such an order.

Further,  Hon’ble Delhi High Court also held that the present  petition cannot be entertained by this Court.   It  is,  however,  open to the Appellant’s to avail of the appropriate remedy in  terms of para 45 of the above judgment of the Supreme Court.

3.3 Hence,  pursuant  to  the  said  order  passed  by  Hon’ble  Delhi High Court the Appellant above named prefers an appeal  before this Hon’ble Bombay High Court.

3.4 Under the said circumstances the Appellant most humbly  prays that this Hon’ble Court may be pleased to condone the  delay.

3.5 It  is  submitted  that  the  delay,  in  filing  of  the  present  Appeal  has  not  prejudiced  the  Respondent  in  any  manner,  whatsoever,  and,  therefore,  this  Hon’ble  Court  be pleased to  condone the said delay.

3.6 It  is,  further  submitted  that  the delay  of  1056 days  in  filing  the  present  Appeal  was  bonafide,  unintentional  and  inadvertent.”

22. A careful reading of the above reproduced averments shows that there  

was not even a whisper in the applications field by the appellants that they had  

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been prosecuting remedy before a wrong forum, i.e. the Delhi High Court with  

due  diligence  and  in  good  faith.   Not  only  this,  the  prayer  made  in  the  

applications was for condonation of 1056 days’ delay and not for exclusion of  

the time spent in prosecuting the writ petitions before the Delhi High Court.  

This  shows  that  the  appellants  were  seeking  to  invoke  Section  5  of  the  

Limitation Act, which, as mentioned above, cannot be pressed into service in  

view of  the language of  Section 35 of  the Act and interpretation of  similar  

provisions by this Court.

23. There is another reason why the benefit of Section 14 of the Limitation  

Act cannot be extended to the appellants.  All of them are well conversant with  

various statutory provisions including FEMA.  One of  them was declared a  

notified  person  under  Section  3(2)  of  the  Special  Court  (Trial  of  Offences  

relating to Transactions in Securities) Act, 1992 and several civil and criminal  

cases are pending against him.  The very fact that they had engaged a group of  

eminent  Advocates to  present  their  cause before the Delhi  and the Bombay  

High Courts shows that they have the assistance of legal experts and this seems  

to the reason why they invoked the jurisdiction of the Delhi High Court and not  

of the Bombay High Court despite the fact that they are residents of Bombay  

and  have  been  contesting  other  matters  including  the  proceedings  pending  

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before the Special Court at Bombay.  It also appears that the appellants were  

sure that keeping in view their past conduct, the Bombay High Court may not  

interfere  with  the  order  of  the  Appellate  Tribunal.   Therefore,  they  took  a  

chance before the Delhi High Court and succeeded in persuading learned Single  

Judge  of  the  Court  to  entertain  their  prayer  for  stay  of  further  proceedings  

before the Appellate Tribunal.   The promptness with which the learned senior  

counsel appearing for appellant – Kartik K. Parekh made a statement before the  

Delhi High Court on 7.11.2007 that the writ petition may be converted into an  

appeal  and  considered  on  merits  is  a  clear  indication  of  the  appellant’s  

unwillingness to avail  remedy before the High Court,  i.e.  the Bombay High  

Court which had the exclusive jurisdiction to entertain an appeal under Section  

35 of the Act.  It is not possible to believe that as on 7.11.2007, the appellants  

and their Advocates were not aware of the judgment of this Court in Ambica  

Industries  v.  Commissioner  of  Central  Excise  (2007)  6  SCC  769  whereby  

dismissal of the writ petition by the Delhi High Court on the ground of lack of  

territorial jurisdiction was confirmed and it was observed that the parties cannot  

be allowed to indulge in forum shopping.  It has not at all surprised us that after  

having made a prayer that the writ petitions filed by them be treated as appeals  

under Section 35, two of the appellants filed applications for recall of that order.  

No  doubt,  the  learned  Single  Judge  accepted  their  prayer  and  the  Division  

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Bench confirmed the order of the learned Single Judge but the manner in which  

the appellants prosecuted the writ petitions before the Delhi High Court leaves  

no  room for  doubt  that  they  had  done  so  with  the  sole  object  of  delaying  

compliance of the direction given by the Appellate Tribunal and, by no stretch  

of  imagination,  it  can be said that  they were bona fide  prosecuting remedy  

before a wrong forum.  Rather, there was total absence of good faith, which is  

sine qua non for invoking Section 14 of the Limitation Act.

24. The  issue  deserves  to  be  considered  from another  angle.   By  taking  

advantage of the liberty given by the learned Single Judge of the Delhi High  

Court, the appellants invoked the jurisdiction of the Bombay High Court under  

Section 35 of the Act. However, while doing so, they violated the time limit   

specified in order dated 26.7.2010 which, in turn, is based on paragraph 45 of  

the  judgment  of  this  Court  in  Raj  Kumar  Shivhare  v.  Assistant  Director,  

Directorate  of  Enforcement  (supra).   Indeed,  it  is  not  even the  case  of  the  

appellants that they had filed appeals under Section 35 of the Act within 30  

days computed from 26.7.2010.  Therefore, the Division Bench of the Bombay  

High Court rightly observed that even though the issue relating to jurisdiction  

of the Delhi High Court to grant time to the appellants to file appeals is highly  

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debatable, the time specified in the order passed by the Delhi High Court cannot  

be extended.

25. In view of the above discussion, we hold that the impugned order does  

not suffer from any legal infirmity.

26. Notwithstanding  the  above  conclusion,  we  have  considered  the  

submission of Shri Ranjit Kumar that the appellants are facing huge financial  

crises and the Appellate Tribunal committed serious error by not entertaining  

their  prayer  to  dispense  with  the  requirement  of  deposit  of  the  amount  of  

penalty in its entirety, but have not felt convinced.  In our considered view, the  

appellants miserably failed to make out a case, which could justify an order by  

the Appellate Tribunal to relieve them of the statutory obligation to deposit the  

amount  of  penalty.   The  appellants  have  the  exclusive  knowledge  of  their  

financial  condition/status and it  was their  duty to candidly disclose all  their  

assets, movable and immovable including those in respect of which orders of  

attachment  may have been passed by the judicial and quasi  judicial  forums.  

However, instead of coming clean, they tried to paint a gloomy picture about  

their financial position, which the Appellate Tribunal rightly refused to accept.  

If what was stated in the applications filed by the appellants and affidavit dated  

10.10.2008 is correct, then the appellants must be in a state of begging which  

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not even a man of ordinary prudence will be prepared to accept.  To us, it is  

clear  that  the  appellants  deliberately  concealed  the  facts  relating  to  their  

financial condition.  Therefore, the Appellate Tribunal did not commit any error  

by refusing to entertain their prayer for total exemption.

27. In this context, reference can usefully be made to the judgment of this  

Court in Benara Values Ltd. v. Commissioner of Central Excise (2006) 13 SCC  

347.  In that case, a two Judge Bench interpreted Section 35-F of the Central  

Excise Act, 1944, which is pari materia to Section 19(1) of the Act, referred to  

the judgments in Siliguri Municipality v. Amalendu Das (1984) 2 SCC 436,  

Samarias Trading Co. (P) Ltd. v. S. Samuel (1984) 4 SCC 666, Commissioner  

of Central Excise v. Dunlop India Ltd. (1985) 1 SCC 260 and observed:

“Two significant expressions used in the provisions are “undue  hardship  to  such  person” and “safeguard  the  interests  of  the  Revenue”.  Therefore, while dealing with the application twin  requirements  of  considerations  i.e.  consideration  of  undue  hardship aspect and imposition of conditions to safeguard the  interests of the Revenue have to be kept in view.

As noted above there are two important expressions in Section  35-F. 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 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  

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the  claimant,  or  is  very  much  disproportionate  to  it.  Undue  hardship is caused when the hardship is not warranted by the  circumstances.

For  a  hardship  to  be  “undue”  it  must  be  shown  that  the  particular burden 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.

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

The other aspect relates to imposition of condition to safeguard  the  interests  of  the  Revenue.  This  is  an  aspect  which  the  Tribunal has to bring into focus. It is for the Tribunal to impose  such conditions as are deemed proper to safeguard the interests  of the Revenue. Therefore, the Tribunal while dealing with the  application  has  to  consider  materials  to  be  placed  by  the  assessee  relating  to  undue  hardship  and  also  to  stipulate  conditions  as  required  to  safeguard  the  interests  of  the  Revenue.”

28. The same view was reiterated in Indu Nissan Oxo Chemicals Industries  

Ltd. v. Union of India (2007) 13 SCC 487 by considering proviso to Section  

129-E of the Customs Act, 1962, which is almost identical to Section 19 of the  

Act.

29. In the result,  the  appeals  are  dismissed.   Four  weeks’  further  time  is  

allowed to the appellants to comply with the direction given by the Appellate  

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Tribunal,  failing  which  the  appeals  filed  by  them shall  stand  automatically  

dismissed.  The parties are left to bear their own costs.   

..…..…..…….………………….…J. [G.S. Singhvi]

……..…..……..…..………………..J.                          [Sudhansu Jyoti Mukhopadhaya]  

New Delhi November 29, 2011.

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