Partly allowed¶51

S.Rajendran v. the Appellate Tribunal for

Madras HC27 Oct 2025WP/1012/2009

Case brief

AI extract

What is this about?

FERA 1973; Section 52 and second proviso to Section 52(2); waiver/conditional pre-deposit of penalty; Appellate Tribunal for Foreign Exchange; Special Director, Enforcement Directorate; show cause notices T-4/26-M/98(SCN-I) and adjudication order SDE (SSBE)/IV/49/2003; Sterling Exchange Corporation; Good Luck Forex India Pvt. Ltd.; 50% deposit reduced to 25%; acquittal in EOCC.No.450 of 2002; writ of certiorari under Article 226; Madras High Court, W.P.No.1012 of 2009, decided 27.10.2025.

What did the court decide?

Conditional pre-deposit ordered by the Appellate Tribunal reduced from 50% to 25% of the penalty imposed by the adjudicating authority; connected miscellaneous petition closed; no costs. ¶51

S.Rajendran Vs the Appellate Tribunal for — Writ and Judicial Review | Madras HC (2025)

What the court decided

AI extract

Outcome

Conditional pre-deposit ordered by the Appellate Tribunal reduced from 50% to 25% of the penalty imposed by the adjudicating authority; connected miscellaneous petition closed; no costs.

¶51

Issue for consideration

Whether the power of waiver of the pre-deposit, vested in the Appellate Board under the second proviso to Section 52(2) FERA, was exercised as a discretion taking into consideration the petitioner's plea. +1 more

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Court's answer

The scope of the writ petition is extremely limited: the question is whether the waiver power vested in the Appellate Board was exercised as a discretion, taking into consideration the petitioner's plea.

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Ratio / Principle

An appeal lies under Section 52 FERA, which requires the penalty amount to be deposited before the appeal is taken up for hearing; the second proviso to Sub-Section (2) of Section 52 enables the Appellate Board to dispense with the deposit totally, or subject to such conditions as it may impose, where the deposit would cause hardship.

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Key takeaways

Taking into consideration the petitioner's subsequent acquittal in EOCC.No.450 of 2002 within a few months of filing of the writ petition, the court modified the Tribunal's direction, reducing the pre-deposit from 50% of the penalty amount to 25% of the penalty amount imposed by the adjudicating authority (i.e., waiver in entirety was not granted).ratio¶50

Detailed headnote1 paragraphs

Madras High Court (V. Lakshminarayanan, J.), W.P.No.1012 of 2009 & M.P.No.1 of 2009, decided 27.10.2025 - FERA penalty pre-deposit. S. Rajendran, proprietor of M/s. Sterling Exchange Corporation, whose premises were searched on 22.12.1997 by the Enforcement Directorate, was penalised by the adjudicating authority under successive show cause notices totalling Rs. 4,02,00,00,000 (Rs. 40,00,000; Rs. 20,00,000 twice; Rs. 30,00,00,000; Rs. 3,00,00,000; Rs. 5,00,00,000; Rs. 2,00,00,000) for contraventions of Sections 7(2)(v), 7(4)/6(4), 8(1), 8(2), 48, 49, 63(2), 64(2)(b), 9(1)(d) and 8(1)/9(1)(a) of FERA, 1973 and clauses 11, 22, 23, 24 and 26 of the FLM Memorandum of Instructions. By common order dated 25.07.2008 in Appeal No.63 of 2008 (appeals clubbed with those of S. Hema), the Appellate Tribunal for Foreign Exchange directed deposit of 50% of the penalty within 45 days before hearing. Challenging the conditional deposit by writ of certiorari under Article 226, the petitioner pleaded for complete waiver, his acquittal in EOCC.No.450 of 2002 on 05.11.2009 intervening. The court held the writ's scope extremely limited - whether the waiver power vested in the Appellate Board under the second proviso to Section 52(2) FERA was exercised as a discretion; Section 52 mandates pre-deposit before an appeal is heard, dispensable wholly or on conditions where hardship arises. Considering the acquittal, the pre-deposit was reduced from 50% to 25% of the adjudicated penalty; writ petition partly allowed, connected miscellaneous petition closed, no costs.

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W.P.No.1012 of 2009

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED : 27.10.2025

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CORAM

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THE HONOURABLE MR.JUSTICE V.LAKSHMINARAYANAN

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W.P.No.1012 of 2009 and M.P.No.1 of 2009

S.Rajendran

.. Petitioner

Vs.

1.The Appellate Tribunal for foreign exchange,

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4^th floor, B wing, Jan path Bhavan, Jan path, New Delhi – 110 001.

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2.The Special Director of Enforcement Directorate, Enforcement Directorate, 6^th Floor, Loknayak Bhavan, Khan Market, New Delhi – 3. .. Respondents

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Prayer : Writ Petition filed under Article 226 of the Constitution of India praying to issue a writ of certiorari, calling for the records relating to the order of the 1^st respondent in APPEAL No.63 of 2008 made in Common order in appeal No.63 to 75 of 2008 and 87-92 of 2008 dated 25.07.2008 insisting the petitioner to deposit the fifty percentage of personal penalty as against the order no.SDE (SSBE)/IV/49/2003-DT 31.10.2003 pursuant to the show cause notice in T-4/26-M/98(SCN-I) dated 21.12.1998 by the 2^nd respondent and quash the same.

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For Petitioner : Mr.Ramkumar for Mr.S.Kameshwaran

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https://www.mhc.tn.gov.in/judis

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W.P.No.1012 of 2009

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For R1 : Mr.C.Gurulingam,SCGSC For R2 : Mr.V.Lokesh for Mr.N.Ramesh Special Government Pleader O R D E R

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The petitioner challenges the order of conditional deposit ordered

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by the Appellate Forum for Foreign Exchange, New Delhi.

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2.The petitioner is the proprietor of M/s.Sterling Exchange

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Corporation. The premises of the Corporation were searched on 22.12.1997. The search resulted in seizure of documents, as well as currency. At that time, the officials belonging to the Special Director of Enforcement Directorate recorded the statements from the writ petitioner and other directors of M/s.Good Luck Forex India Pvt. Limited.

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3.On the basis of the search and subsequent statements, a show cause notice was issued to all the firms, alleging that they have violated the provisions of Sections 7(2)(v), 7(4) read with 6(4); 8(1), 8(2), 48 & 49 of the Foreign Exchange Regulation Act, 1973, read with clause 11, 22, 23, 24 and 26 of the FLM Memorandum of Instructions issued under Sections 73(3), apart from Sections 63(2), 64(2)(b) and 9(1)(d) of the FERA Act, 1973.

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https://www.mhc.tn.gov.in/judis

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W.P.No.1012 of 2009

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4.The adjudicating authority considered the reply of the writ petitioner and came to a conclusion that the petitioner is in contravention of the aforesaid provisions of the Act and imposed penalty on the writ petitioner. Under show cause notice No.1, penalty of Rs.40,00,000/- was imposed on the petitioner, under show cause No.2, a penalty of Rs.20,00,000/- was imposed on the petitioner and the other directors for having acquired and made a payment of US $150000, equivalent to AED 551250/-, in contravention to Section 8(1) and 9(1)(a) of the FERA Act, 1973. Similarly, penalty for a sum of Rs.20,00,000/- was imposed on the petitioner under the third show cause notice, for having acquired and made payment of US $150000, equivalent to AED 551250/-, for having contravened the provisions of Sections 8(1) & 9(1)(a) of the FERA Act, 1973.

¶28

5.The show cause notice No.IV imposed a penalty of Rs.30,00,00,000/- on the writ petitioner, show cause notice No.V imposed a penalty of Rs.3,00,00,000/- on the writ petitioner; show cause notice No.VI imposed the penalty of Rs.5,00,00,000/- on the petitioner; show cause notice No.VII imposed a penalty of Rs.2,00,00,000/- on the writ petitioner. Challenging the same, several appeals were preferred

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https://www.mhc.tn.gov.in/judis

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W.P.No.1012 of 2009

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before the Appellate Tribunal for Foreign Exchange. The appeals filed by the writ petitioner herein, and the writ petitioner in W.P.No.1011 of 2009 viz.,S.Hema, were clubbed together and disposed of on 25.07.2008.

¶33

6.In terms of the order, the Tribunal directed the petitioner to pay 50% of the penalty amount in the respective appeals, and 45 days time was granted for deposit, and adjourned the matter to enable the petitioner to pay the same. Aggrieved by the said order, the present writ petition.

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7.I heard Mr.Ramkumar for Mr.S.Kameshwaran representing the petitioner, Mr.C.Gurulingam, SCGSC for the 1^st respondent and Mr.V.Lokesh for Mr.N.Ramesh, Special Government Pleader representing the 2^nd respondent.

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8.I had adjourned the matter to enable Mr.V.Lokesh to find out whether the appeals were still pending consideration before the appellate Tribunal for Foreign Exchange.

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9.On instructions, Mr.V.Lokesh reports that the appeals are still

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pending.

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https://www.mhc.tn.gov.in/judis

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W.P.No.1012 of 2009

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10.The counsel for the petitioner pleads that imposing 50% of the penalty amount on each appeal is an exorbitant as the case of the petitioner had not been analyzed in detail by the Appellate Authority. He further adds that pending this writ petition, the writ petitioner had undergone the ordeal of trial and had been acquitted of all the charges framed against him in EOCC.No.450 of 2002 on 05.11.2009. Hence, he pleads for the conditional pre-deposit to be waived in its entirety.

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11.I have carefully considered the submissions of both sides and I have gone through the records in detail.

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12.The scope of the writ petition is extremely limited. The issue is whether the power of waiver, had been exercised as a power of discretion, which has been vested with the Appellate Board, taking into consideration the plea of the petitioner. An appeal to the appellate authority is permissible under Section 52 of the FERA Act, 1973. Section 52 demands that the amount imposed by way of penalty would have to be deposited before the appeal is taken up for hearing. The second proviso to Sub-Section (2) to Section 52 enables the Appellate Board to dispense

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W.P.No.1012 of 2009

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with the deposit totally, or subject to such conditions as may be imposed

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by it. This proviso is attracted when the Appellate Board is of the opinion

¶49

that such deposit will cause hardship to the petitioner.

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13.The Appellate Authority has come to a conclusion that the impugned order is not prima facie bad for it to have exercised waiver in its entirety. However, it has come to a conclusion that as the penalty imposed is enormous, 50% be deposited by the writ petitioner. Taking into consideration the subsequent acquittal of the petitioner within few months of filing of the writ petition, I am inclined to modify the order directing to deposit 50% of penalty amount, to that of 25% of the penalty amount imposed by the adjudicating authority.

¶51

14.With the above modification, the writ petition is partly allowed. Consequently, the connected miscellaneous petition is closed. No costs.

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27.10.2025 (2/2)

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krk
Index	: Yes / No
Internet	: Yes / No
Neutral Citation	: Yes / No

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W.P.No.1012 of 2009

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1.The Appellate Tribunal for foreign exchange,

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4^th floor, B wing, Jan path Bhavan, Jan path, New Delhi – 110 001.

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2.The Special Director of Enforcement Directorate, Enforcement Directorate, 6^th Floor, Loknayak Bhavan, Khan Market, New Delhi – 3.

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https://www.mhc.tn.gov.in/judis

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W.P.No.1012 of 2009

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V.LAKSHMINARAYANAN, J.

krk

W.P.No.1012 of 2009

27.10.2025 (2/2)

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https://www.mhc.tn.gov.in/judis

Procedural history

How this case reached the court

AI extract

Order under challenge
Common order of the Appellate Tribunal for Foreign Exchange in Appeal No.63 of 2008 (common order in appeals No.63 to 75 of 2008 and 87-92 of 2008) dated 25.07.2008, insisting the petitioner deposit fifty percent of personal penalty arising from adjudication order no.SDE (SSBE)/IV/49/2003 dated 31.10.2003 passed pursuant to show cause notice T-4/26-M/98(SCN-I) dated 21.12.1998 issued by the 2nd respondent.¶13
Appellate Tribunal for Foreign Exchange, New Delhi · 25.07.2008
Prior proceeding
Premises of M/s.Sterling Exchange Corporation (petitioner's proprietorship) searched on 22.12.1997; documents and currency seized; statements recorded from the petitioner and directors of M/s.Good Luck Forex India Pvt. Limited.¶22
Prior proceeding
Show cause notices issued to all the firms alleging contravention of FERA provisions and FLM Memorandum clauses.¶23
Prior proceeding
Adjudicating authority found the petitioner in contravention and imposed penalties under successive show cause notices: Rs.40,00,000 (SCN No.1); Rs.20,00,000 (SCN No.2, with other directors, for US $150000/AED 551250); Rs.20,00,000 (third SCN, for US $150000/AED 551250); Rs.30,00,00,000 (SCN No.IV); Rs.3,00,00,000 (SCN No.V); Rs.5,00,00,000 (SCN No.VI); Rs.2,00,00,000 (SCN No.VII).¶27
Prior proceeding
Several appeals preferred before the Appellate Tribunal for Foreign Exchange; petitioner's appeals clubbed with those of S.Hema (writ petitioner in W.P.No.1011 of 2009) and disposed of on 25.07.2008.¶32
Prior proceeding
Tribunal directed petitioner to pay 50% of the penalty amount in the respective appeals, granting 45 days for deposit, and adjourned the matters.¶33
Prior proceeding
Tribunal's reasoning: impugned order not prima facie bad for waiver in its entirety, but as the penalty imposed was enormous, 50% was directed to be deposited.¶50
Prior proceeding
During pendency of the writ petition, the petitioner was acquitted of all charges in EOCC.No.450 of 2002 on 05.11.2009.¶41

S.Rajendran v. the Appellate Tribunal for

Case brief

What is this about?

What did the court decide?

S.Rajendran v. the Appellate Tribunal for

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

Issues for consideration

Statutes considered

Procedural history

Parties & counsel

Coram

Case details

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