IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 17-09-2025 CORAM THE HONOURABLE MR JUSTICE R. SURESH KUMAR AND THE HONOURABLE MR.JUSTICE HEMANT CHANDANGOUDAR CMA No. 2309 of 2025 and CMP No. 19583 of 2025

1. Shri.Mallikarjunan nair @ Arjun Nair Proprietor, M/s.Hindustan Hair Products Pvt Ltd., No.144, Lamech Street, Janaki Nagar, Valasaravakkam, Chennai - 600 087.

Appellant(s)

Vs

1. Union of India Represented by Additional Director, Directorate of Enforcement, Southern Regional Office, IIIrd Floor, Murugesan Complex, No.84, Greams Road, Chennai - 600 006.

2.Shri Mallikaarjuna Nair @ Arjun Nair Proprietor of M/s.Pallika Global Co., 128-129, A.R.Street, Janaki Nagar, Valasaravakkam, Chennai - 600 087.

3.M/s. Hindustan Hair Products Pvt Ltd., 144, Lamech Street, Janaki Nagar, Valasaravakkam, Chennai - 87.

Respondent(s)

PRAYER: Civil Miscellaneous Appeal filed under Section 35 of the Foreign Exchange Management Act, to set aside the order passed in MP-FE-158/2024 (Pre-deposit) in FPA -FE-95/CHN/2019, on the file of Appellate Tribunal under SAFEMA at New Delhi/ the 1st Respondent herein.

For Appellant(s): Mr.M.Velmurugan for Mr.S.Arivazhagan For Respondent(s): Mr.N.Ramesh, Special Public Prosecutor for R1

JUDGMENT

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

This Civil Miscellaneous Appeal has been directed against the order passed on 09.01.2025 made in MP-FE-158/2024 (Pre-deposit) in FPA-FE-95/CHN/2019, on the file of Appellate Tribunal under SAFEMA at New Delhi.

2.Against the appellant and others adjudication proceedings were initiated by the Special Director, Directorate of Enforcement, Chennai and it was concluded by an order dated 16.10.2019, whereby, penalty has been imposed in respect of the appellant and others.

3.Insofar as the present appellant is concerned penalty to the extent of Rs.9,85,30,000/- was imposed by the adjudicating authority.

4.Like that various amounts of penalties have been imposed to other persons also. As against the said order passed by the appellate authority, the appellant and others preferred an appeal before the Tribunal where as per Section 19 of the FEMA Act, the amount shall be deposited as a pre-deposit in order to waive such pre-deposit of penalty. Two instant applications were filed including the one filed by the appellant seeking for such waiver of pre-deposit of penalty. Those waiver applications having been considered, the Tribunal by exercising its discretion under the second proviso to Section 19 (5) of the Act has directed to make a pre-deposit of penalty of Rs.98,50,000/- being the 10%

of the penalty awarded by the adjudicating authority.

5.This order passed by the Tribunal directing the appellant to pay only

10% of the amount imposed by the authority by way of penalty as a pre-deposit to entertain the appeal by the Tribunal has now been questioned in the present appeal.

6.Mr.M.Velmurugan, learned counsel representing Mr.S.Arivazhagan, learned counsel for the appellant would submit that under Section 19 (1) of the Act, any aggrieved person against the order passed by the adjudicating authority may prefer an appeal to the appellate Tribunal. However, in the first proviso, at the time of filing the appeal against the order passed by the adjudicating authority levying any penalty deposit, the amount of such penalty must be deposited with such authority as may be notified by the Central Government. He would also invite our attention that under second proviso to Section 19 (1), in any particular case, if the appellate Tribunal is of the opinion that deposit of the penalty would cause undue hardship to a person, the appellate Tribunal may dispense with such deposit subject to the condition as it may deem fit to impose so as to safe guard the realization of penalty.

7.Relying upon the second proviso to Section 19 (1) of the Act, learned counsel appearing for the appellant would contend that if there has been any undue hardship is placed before the Tribunal, the Tribunal by exercising its power as we