Important Point
While dealing with the application of appeal/stay, consideration of undue hardship aspect and imposition of conditions to safeguard the realization of penalty have to be kept in view.

Judgment

Dr. Arijit Pasayat, J —

1.Leave granted.

2.Challenge in this appeal is to the Order passed by a Division Bench of the Calcutta High Court dismissing the appeal filed by the appellant under Section 35 of Foreign Exchange Management Act, 1999 (in short the ‘Act’).

3.Background facts in a nutshell are as follows :

Memorandum was issued by the Enforcement Directorate, Ministry of Finance. On the basis of certain statements recorded it was indicated therein that M/s Godsons (India) and its proprietor, the present appellant had acquired foreign exchange contravening the provisions of Section 8(1) of the Foreign Exchange Regulation Act, 1973 (in short the ‘Foreign Exchange Act’) thereby rendering him liable to be proceeded under Section 50 of the Foreign Exchange Act. The memorandum was issued under Rule 3 of the Adjudication Proceedings and Appeal Rules, 1974 (in short ‘Adjudication Rules’). The reply to the show cause notice was filed by the appellant. The Special Director, of Foreign Exchange Act passed an Order on 13th May, 2005 imposing penalty of Rs.25 lakhs on the appellant. The appellant preferred an appeal before the Appellate Tribunal (Foreign Exchange) (in short the ‘Tribunal’) and filed an application for dispensing with the requirement of pre-deposit. By Order dated 7.3.2006 the Tribunal passed an Order directing deposit of 60% of the penalty amount for the purpose of entertaining the appeal. An appeal was filed under Section 35 of the Act which came to be dismissed by the High Court holding that no case for hardship was made out either before the Tribunal or before it and, therefore, there was no scope of interference with the Order of the Tribunal. However, time permitting the deposit was extended.

4.In support of the appeal, learned counsel for the appellant submitted that a case for dispensing with pre-deposit was made out. In any event, in compliance with this Court’s interim Order dated 5.2.2007 the amount of Rs.10,00,000/- has been deposited with the concerned Directorate.

5.Learned counsel for the respondents on the other hand submitted that the appellant did not make out a case for dispensing with pre-deposit and, therefore, the Order of the Tribunal as affirmed by the High Court does not suffer from any infirmity.

6.Principles relating to grant of stay pending disposal of the matters before the concerned forums have been considered in several cases. It is to be noted that in such matters though discretion is available, the same has to be exercised judicially.

7.The applicable principles have been set out succinctly in Silliguri Municipality and Ors. v. Amalendu Das and Ors.,1 (AIR 1984 SC 653) and M/s Samarias Trading Co. Pvt. Ltd. v. S. Samuel and Ors.,2 (AIR 1985 SC 61) and Assistant Collector of Central Excise v. Dunlop India Ltd.,3 (AIR 1985 SC 330).

8.It is true that on merely establishing a prima facie case, interim Order of protection should not be passed. But if on a cursory glance it appears that the demand raised has no leg to stand, it would be undesirable to require the assessee to pay full or substantive part of the demand. Petitions for stay should not be disposed of in a routine matter unmindful of the consequences flowing from the Order requiring the assessee to deposit full or part of the demand. There can be no rule of universal application in such matters and the Order has to be passed keeping in view the factual scenario involved. Merely because this Court has indicated the principles that does not give a license to the forum/authority to pass an Order which cannot be sustained on the touchstone of fairness, legality and public interest. Where denial of interim relief may lead to public mischief, grave irreparable private injury or shake citizens’ faith in the impartiality of public administration, interim relief can be given.

9.It has become an unfortunate trend to casually dispose of stay applications by referring to decisions in Siliguri Municipality and Dunlop India cases (supra) without