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2006 (8) TMI 326 - HC - Companies Law

Issues:
Constitutional validity of sections 19(1) and (2) of FEMA and rule 10 of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000.

Analysis:
The writ petition challenges the constitutional validity of section 19(1) and (2) of FEMA and rule 10 of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000. Section 19(1) allows for appeals to the Appellate Tribunal against orders made by Adjudication Authorities, subject to depositing the penalty amount. Section 19(2) specifies the timeline and requirements for filing an appeal. Rule 10 outlines the form and fee for appeals to the Appellate Tribunal, requiring depositing the penalty amount unless dispensed with by the Tribunal. The petitioner argues that these provisions are arbitrary, irrational, and violate Article 14 of the Constitution.

The petitioners were issued notices for violations of the Act, leading to penalties imposed by the Assistant Director. Upon filing a joint appeal, they were informed of the need for separate appeals and court fees totaling Rs. 50,000. The petitioners contend that requiring a court fee equal to the penalty amount is arbitrary and unconstitutional under Article 14. The respondent cites a Supreme Court judgment emphasizing the correlation between fees collected and services provided, arguing that the levy of court fees is not unconstitutional merely because it may seem harsh in individual cases.

The Court finds that the principles established by the Supreme Court judgment apply to the present case, rejecting the argument that the court fee requirement is arbitrary or unconstitutional. The Court highlights that the harshness of the fee in individual cases does not render the provision invalid. The Court declines to address the submission regarding the unjustified penalty, suggesting that the petitioner can raise this issue before the Appellate Tribunal after complying with the rules. Consequently, the writ petition challenging the constitutional validity of section 19 of FEMA and rule 10 is dismissed.

 

 

 

 

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