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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