Supreme Court of India
KETAN V. PAREKHversusSPECIAL DIRECTOR, DIRECTORATE OF ENFORCEMENT AND ANOTHER.
- Citation
- 2011 INSC 825
- Decided
- 29 November 2011
- Disposal
- Dismissed
- Bench
- G S SINGHVI
Holding
Section 14 of the Limitation Act cannot be invoked to exclude the time spent on the Delhi High Court writ petitions, and the 1,056‑day delay in filing the appeal under Section 35 of the FEMA is not condonable.
Summary
The Special Director of Enforcement imposed a penalty on Ketan V. Parekh and others under the Foreign Exchange Management Act, 1999. The appellants filed appeals under Section 35 of the Act and sought condonation of a 1,056‑day delay, arguing that the time spent pursuing writ petitions in the Delhi High Court should be excluded under Section 14 of the Limitation Act, 1963. The Bombay High Court rejected the condonation, holding that the delay exceeded the 120‑day limit and that Section 14 could not be invoked because the appellants had not prosecuted the writs in good faith but engaged in forum‑shopping. The Supreme Court affirmed this view, stating that good faith is a sine qua non for invoking Section 14 and that the appellants deliberately delayed compliance and concealed their financial position. Consequently, the Court upheld the Appellate Tribunal’s order requiring a 50% pre‑deposit of the penalty and dismissed the appeals.
Issues considered
- The applicability of Section 14 of the Limitation Act, 1963 to exclude the period spent prosecuting writ petitions before a wrong forum for condoning delay in filing an appeal under Section 35 of the FEMA.
- Whether the Bombay High Court had the power to condone a delay of more than 120 days in filing an appeal under Section 35 of the FEMA.
- Whether the appellants acted in good faith and with due diligence in pursuing the writ petitions, or engaged in forum‑shopping.
- Whether the Appellate Tribunal was justified in directing the appellants to deposit 50% of the penalty as a pre‑condition for hearing the appeal.
- Whether the appellants’ claim of financial hardship could justify exemption from the pre‑deposit requirement.
Legislation cited
Subjects
Limitation ActSection 14Foreign Exchange Management ActSection 35condonation of delaygood faithforum shoppingpenalty pre‑depositfinancial hardshipAppellate Tribunal
Judgment
[2011] 14 (ADDL.) S.C.R. 1204
A KETAN V. PAREKH
v.
SPECIAL DIRECTOR, DIRECTORATE OF
ENFORCEMENT AND ANOTHER.
(Civil Appeal No. 10301 of 2011)
B NOVEMBER 29, 2011
[G.S. SINGHVI AND SUDHANSU JYOTI
MUKHOPADHAYA, JJ.]
C LIMITATION ACT, 1963: s.14 - Delay in filing appeal -
Condonation of - Imposition of penalty on the appellants for
contravening provisions of FEMA - Appellate tribunal directed
appellants to pay 50% of penalty as pre-condition of hearing
appeal - Writ petition filed before Delhi High Court, dismissed
D as non-maintainable - Appeal filed before Bombay High
Court uls.35 of FEMA against the order of the appellate
tribunal after delay of 1056 days - Bombay High court
declining condonation of delay in filing appeal - Plea of
appellant that Bombay High Court while computing period of
E limitation erred in not taking cognizance of s. 14 and in not
excluding the entire period during which writ petition remained
pending before Delhi High Court - Tenability of - Held: Not
tenable - Existence of good faith is a sine qua non for
invoking s. 14 of the Act - Appellants filed writ petition before
F wrong forum and came to the forum having jurisdiction to
entertain the appeal after delay of 1056 days and sought
condonation of delay- Delay was rightly held not condonable
since there was no averment in the applications seeking
condonation that they had been prosecuting·remedy before
G a wrong forum, i.e. the Delhi High Court with due diligence
and in good faith - Not only this, the prayer made in the
applications was for condonation of 1056 days' delay and not
for exclusion of the time spent in prosecuting the writ petitions
before the Delhi High Court - This showed that the appellants
KETAN V. PAREKH v. SPECIAL DIRECTOR, 1205
DIRECTORATE OF ENFORCEMENT
were seeking to invoke s. 5 which cannot be pressed into A
service in view of the language of s.35 of the FEMA -
Moreover, appellants were well conversant with various
statutory provisions including FEMA because several civil
and criminal cases were pending against them and they had
engaged a group of eminent Advocates to present their cause B
before the Delhi and the Bombay High Courts - There was
total absence of good faith, which is sine qua non for invoking
s.14 of the Act - Foreign Exchange Management Act, 1999
- Delay - Condonation of.
Foreign Exchange Management Act, 1999: s.19 - Pre- C
deposit of penalty - Dispensation of - Allegation of
contravention of provisions of the- Act - Appellate Tribunal
directed appellants to deposit 50% of the amount of penalty
as a pre-condition of hearing the appeal - On appeal, held:
The appellants miserably failed to make out a case, which D
could justify an order by the Appellate Tribunal to relieve them
of the statutory obligation to deposit the amount of penalty -
The appellants had the exclusive knowledge of their financial
condition/status and it was their duty to candidly disclose all
their assets, movable and immovable including those in E
respect of which orders of attachment may have been passed
by the judicial and quasi judicial forums - However, instead
of coming clean, they tried to paint a gloomy picture about
their financial position, which the Appellate Tribunal rightly
r~fused to accept - Appellants deliberately concealed the F
facts relat!ng to their financial condition - Therefore, the
Appellate Tribunal did not commit any error by refusing to
entertain their prayer for total exemption.
The Special Director of Enforcement, Mumbai passed G
an order imposing penalty on the appellants on the
ground of contravention of the provisions of the Foreign
Exchange Management Act, 1999. The appellants
challenged the said order by filing appeals under Section
19 of the Act. They also filed applications under Rule 10 H
1206 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A of the Foreign Exchange Management (Adjudication
Proceedings and Appeal) Rules, 2000 read with Section
19 (1) of the Act for dispensing with the requirement of
deposit of the amount of penalty. The Appellate Tribunal
passed order dated 2.8.2007 and directed the appellants
B to deposit 50% of the amount of penalty as a pre-
condition of hearing the appeal. The appellants filed writ
petitions in Delhi High Court which was dismissed on the
ground of non-maintainability. The appellants filed
appeals under Section 35 of the Act before the Bombay
c High Court. They also filed applications for condonation
of 1056 days' delay. The Bombay High Court dismissed
the applications for condonation of delay on the ground
that it did not have the power to entertain an appeal filed
beyond 120 days and even though in terms of the liberty
D given by the Delhi High Court, the appellants could have
filed appeals within 30 days, but they failed to do so and,
therefore, delay in filing the appeals could not be
condoned.
In the instant appeal, it was contended for the
E appellants that while dismissing the applications for
condonation of delay, the High Court did not take
cognizance of Section 14 of the Limitation Act, 1963; that
in terms of Section 14, entire period during which the writ
petitions filed by the appellants remajned pending before
F the Delhi High Court was liable to· be excluded while
computing the period of limitation and if that was done,
the appeals filed under Section 35 would have not been
barred by time.
Dismissing the appeals, the Court
G
HELD: 1. Section 14 of the Limitation Act cannot be
relied upon for exclusion of the period during which the
writ petitions filed by the appellants remained pending
before the Delhi High Court. In the applications filed by
H
KETAN V. PAREKH v. SPECIAL DIRECTOR, 1207
DIRECTORATE OF ENFORCEMENT
them before the Bombay High Court, the appellants had A
sought condonation of 1056 days' delay by stating that
after receiving copy of the order passed by the Appellate
Tribunal, they had filed writ petitions before the Delhi High
Court, which were disposed of on 26.7.2010 and,
thereafter, they filed appeals before the Bombay High B
Court under Section 35 of the Act. A careful reading of
the averments in applications for condonation of delay
showed that there was not even a whisper in the
applications filed by the appellants that they had been
prosecuting remedy before a wrong forum, i.e. the Delhi c
High Court with due diligence and in good faith. Not only
this, the prayer made in the applications was for
condonation of 1056 days' delay and not for exclusion
of the time spent in prosecuting the writ petitions before
the Delhi High Court. This showed that the appellants 0
were seeking. to invoke Section 5 of the Limitatio~ Act
which cannot be pressed into service in view of the
language of Section 35 of the Act and interpretation of
similar provisions by this Court. There is another reason
why the benefit of Section 14 of the Limitation Act cannot E
be extended to the appellants. All of them were well
conversant with various statutory provisions including
FEMA. One of them was declared a notified person under
Section 3(2) of the Special Court (Trial of Offences relating
to Transactions in Securities) Act, 1992 and several civil
· and criminal cases were pending against them. The very F
fact that they had engaged a group of eminent Advocates
to present their cause before the Delhi and the Bombay
High Courts showed that they had the assistance of legal
experts and this seemed to the reason why they invoked
the jurisdiction of the Delhi High Court and not of the G
Bombay High Court despite the fact that they were
residents of Bombay and had been contesting other
matters including the proceedings pending before the
Special Court at Bombay. It also appears that the
appellants were sure that keeping in view their past H
1208 SUPREME COURT REPORTS [2011) 14 (ADDL.) S.C.R.
A conduct, the Bombay High Court may not interfere with
the order of the Appellate Tribunal. Therefore, they took
a chance before the Delhi High Court and succeeded in
persuading Single Judge of the Court to entertain their
prayer for stay of further proceedings before the Appellate
B Tribunal. The promptness with which the counsel
appearing for appellant made a statement before the Delhi
High Court on 7.11.2007 that the writ petition may be
converted into an appeal and considered on merits is a
clear indication of the appellant's unwillingness to avail
c remedy before the Bombay High Court which had the
exclusive jurisdiction to entertain an appeal under
Section 35 of the Act. It is not possible to believe that as
on 7.11.2007, the appellants and their Advocates were not
aware of the judgment of this Court whereby dismissal
0 of the writ petition by the Delhi High Court the ground of
lack of territorial jurisdiction was confirmed and. it was
observed that the parties cannot be allowed to indulge
in forum shopping. After having made a prayer that the
writ petitions filed by them be treated as appeals under
E Section 35, two of the appellants filed applications for
recall of that order. No doubt, the Single Judge accepted
their prayer and the Division Bench confirmed the order
of the Single Judge but the manner in which the
appellants prosecuted the writ petitions before the Delhi
High Court leaves no room for doubt that they had done
F so with the sole object of delaying compliance of the
direction given by the Appellate Tribunal and, by no
. stretch of imagination, it can be said that they were bona
fide prosecuting remedy before a wrong forum. Rather,
there was total absence of good faith, which is sine qua
G non for invoking Section 14 of the Limitation Act. [Paras
21, 22, 23) [1236-C-E; 1238-D-H; 1239-A-H; 1240-A]
Union of India v. Popular Construction Co. (2001) 8 SCC
470: 2001 (3) Suppl. SCR 619: 2001 (3) Suppl. SCR 619;
H Singh Enterprises v. CCE (2008) 3 SCC 70: 2007 (13) SCR
KETAN V. PAREKH v. SPECIAL DIRECTOR, 1209
DIRECTORATE OF ENFORCEMENT
952; Commissioner of Customs, Central Excise v. Punjab A
Fibres Ltd. (2008) 3 SCC 73: 2008 (2) SCR 861;
Commissioner of Customs and Central Excise v. Hongo
India Private Limited (2009) 5 SCC 791; Chhattisgarh State
Electricity Board v. Central Electricity Regulatory Commission
and Ors. (2010) 5 SCC 23: 2010 (4) SCR 680; Hukumdev B
Narain Yadav v. La/it Narain Mishra (1974) 2 SCC 133: 1974
(3) SCR 31; Vidyacharan Shukla v. Khubchand Baghel AIR
1964 SC 1099: 1964 SCR 129; Hukumdev Narain Yadav v.
La/it Narain Mishra (1974) 2 SCC 133: 1974 (3 ) SCR 31 :;
Mangu Ram v. MCD (1976) 1 SCC 392: 1976 (2) SCR 260; C
Patel Naranbhai Marghabhai v. Dhu/abhai Galbabhai (1992)
4 sec 264: 1992 ( 3 ) SCR 384 - relied on.
State of Goa v. Western Builders (2006) 6 SCC 239:
2006 (3 ) Suppl. SCR 288; Consolidated Engineering
Enterprises v. Principal Secretary, Irrigation Department and D
Ors. (2008) 7 SCC 169: 2008 (5) SCR 1108; Coal India
Limited and Anr. v. UJial Transport Agency and Ors. (2011)
1 SCC
. 117; Ambica/ Industries v. Commissioner of Central
Excise (2007) 6 SCC 769: 2007 (7) SCR 685 - referred to.
E
2. The issue deserves to be considered from another
angle. By taking advantage of the liberty given by the
Single Judge of the Delhi High Court, the appellants
invoked the jurisdiction of the Bombay High Court under
Section 35 of the Act. However, while doing so, they F
violated the time limit specified in brder dated 26.7.2010.
Indeed, it is not even the case of the appellants that they
had filed appeals under Section 35 of the Act within 30
days computed from 26.7.2010. Therefore, the Division
Bench of the Bombay High Court rightly observed that G
even though the issue relating to jurisdiction of the Delhi
High Court to grant time to the appellants to file appeals
is highly debatable, the time specified in the order passed
by the Delhi High Court cannot be extended. [Para 24]
[1240-B•D]
H
1210 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A 3. As regards the plea of financial crisis, the
appellants miserably failed to make out a case, which
could justify an order by the Appellate Tribunal to relieve
them of the statutory obligation to deposit the amount of
penalty. The appellants have the exclusive knowledge of
s their financial condition/status and it was their duty to
candidly disclose all their assets, movable and
immovable including those in respect of which orders of
attachment may have been passed by the judicial and
quasi judicial forums. However, instead of coming clean,
c they tried to paint a gloomy picture about their financial
position, which the Appellate Tribunal rightly refused to
accept. If what was stated in the applications filed by the
appellants and affidavit dated 10.10.2008 is correct, then
the appellants must be in a state of begging which not
0 even a man of ordinary prudence will be prepared to
accept. It is clear that the appellants deliberately
concealed the facts relating to their financial condition.
Therefore, the Appellate Tribunal did not commit any error
by refusing to entertain their prayer for total exemption.
E [Para 26] [1240-F-H; 1241-A-B]
Benara Values Ltd. v. Commissioner of Central Excise
(2006) 13 sec 347: 2006 (9) Suppl. SCR 341; Siliguri
Municipality v. Amalendu Das (1984) 2 SCC 436: 1984 (2)
SCR 344; Samarias Trading Co. (P) Ltd. v. S. Samuel (1984)
F 4 SCC 666: 1985 (2) SCR 24; Commissioner of Central
Excise v. Dunlop India Ltd. (1985) 1 SCC 260: 1985 (2) SCR
190; lndu Nissan Oxo Chemicals Industries Ltd. v. Union of
India (2007) 13 sec 487: 2007 (13) SCR 173 - relied on
Case Law Reference:
G
2006 (3 ) Suppl. SCR 288Referred to. Para 8
2008 (5) SCR 1108 Referred to. Para 8
2011 (1) sec 111 Referred to. Para 8
H
KETAN V. PAREKH v. SPECIAL DIRECTOR, 1211
DIRECTORATE OF ENFORCEMENT
2001 (3) Suppl. SCR 619 Relied on. _ Para 11 A
-
2007 (13) SCR 952 Relied on. Para 11
2008 (2) SCR 861 Relied on. Para 11
(2009) s sec 191 Relied on. Para 11
B
2010 (4) SCR 680 Relied on. Para 11
1974 (3) SCR 31 Relied on. Para 12
1964 SCR 129 Relied on. Para 13
c
1974 (3) SCR 31 Relied on. Para 13
1976 (2) SCR 260 Relied on. Para 13
1992 (3) SCR 384 Relied on. Para 13
2007 (7) SCR 685 Referred to. Para 23 .D
2006 (9 ) Suppl. SCR 341 Relied on. Para 27
1984 (2) SCR 344 Relied on. Para 27
1985 (2) SCR 24 Relied on. Para 27 E
1985 (2) SCR 190 Relied on. Para 27
2007 (13) SCR 173 Relied on. Para 27
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
F
10301 of 2011.
From the Judgment & Order dated 18.02.2011 of the High
Court of Bombay in FEMA Appeal (ST) No. 22247 of 2010.
WITH
G
C.A. Nos. 10302 & 10303 of 2011.
Ranjit Kumar, Manik Dogra, Bharat Arora, Navin Chawla,
Amit Mahajal for the Appellant.
H
1212 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A A.K. Panda, P .K. Dey, B. Krishna Prasad for the
Respondents.
The Judgment of the Court was delivered by
G.S. SINGHVI, J. 1. Leave granted.
B
2. In these appeals prayer has been made for setting
aside the order of the Division Bench of the Bombay High Court
whereby the applications filed by the appellants for condonation
of delay in filing appeals under Section 35 of the Foreign
c Exchange Management Act, 1999 (for short, 'the Act') were
dismissed along with the appeals filed against order dated
2.8.2007 passed by the Appellate Tribunal for Foreign
Exchange (for short, 'the Appellate Tribunal').
Background facts
0
3. On an information received from the Reserve Bank of
India that M/s. Classic Credit Ltd. and M/s. Panther Fincap and
Management Services Ltd. had taken loan of 25 lakh shares
each of DSQ Industries Ltd. on 1.3.2011 from M/s. Greenfield
E Investment Ltd, Mauritius and the Indus Ind Bank Ltd with whom
M/s. Greenfield Investment Ltd. was maintaining NRE Account
had informed that records did not indicate any such transaction,
the Directorate of Enforcement, Mumbai conducted enquiries
from different sources including Securities and Exchange
F Board of India, Shri Ketan Parekh, Mis. Integrated Enterprises
(I) Ltd., Chennai and lndsec Securities and Finance Ltd.
Thereafter, show cause notice dated 23.9.2004 was issued to
M/s. Greenfield Investments Ltd., Mauritius, Shri Pravin
Guwalewala, Mauritius, Smt. Neena Guwalewala, Mauritius,
G Shri A. K. Sen, Mauritius, M/s. Classic Credit Ltd., Mumbai, M/
s. Panther Fincap and Management Services Ltd., Mumbai,
Shri Ketan Parekh, Shri Kartik K. Parekh, Shri Kirit Kumar N.
Parekh and Shri Navinchandra Parekh for taking action against
them for contravention of the provisions of the Act. After hearing
H the noticees, the Special Director of Enforcement, Mumbai (for
KETAN V. PAREKH v. SPECIAL DIRECTOR, 1213
DIRECTORATE OF ENFORCEMENT [G.S. SINGHVI, J.]
short, 'the Special Director') passed order dated 30.1.2006 A
and, whereby he held that some of the noticees had violated
Sections 3(d) and 6(3)(e) of the Act and imposed penalty of
Rs.40 crores on M/s. Classic Credit Ltd.; Rs.40 crores on M/
s. Panther Fincap and Management Services Ltd.; Rs.75
crores on M/s. Greenfield Investments Ltd.; Rs.80 crores on Shri B
Shri Ketan Parekh; Rs.12 crores on Shri Kartik K. Parekh;
Rs.60 crores on Shri Pravin Guwalewala and Rs.20 crores on
Shri AK. Sen with a direction that they shall deposit the amount
within 45 days from the date of receipt of the order.
4. The appellants challenged the aforesaid order by filing C
appeals under Section 19 of the Act. They also filed
applications under Rule 10 of the Foreign Exchange
Management (Adjudication Proceedings and Appeal) Rules,
2000 read with Section 19 (1) of the Act for dispensing with
the requirement of deposit of the amount of penalty. In D
paragraphs 4 to 8 of the application filed by him, Shri Ketan
.· V. Parekh made the following averments:
"4. The applicant submits that no case is made out against
the applicant as Section 3 (d) of the Act is only attracted E
in case of a transaction in a foreign currency/foreign
security. The appellants case does not attract the provision
of Section 3 (d) of the Act.
5. That impugned order passed by Special Director is
liable to be set aside in view of the grounds of appeal and F
the applicant has every hope of succeeding in the matter.
As such the applicant has a very good prima facie case
on merits and is likely to succeed in the appeal.
6. That the applicant is suffering from a grave financial G
hardship since all his assets including, properties, movable
and immovable have been attached by an order of Ld.
Debt Recovery Tribunal on 11th April, 2001 (a copy of the ·
order dated 11th April, 2001 is annexed herewith and
marked as Annexure B-1 ). Moreover the applicant/ H
1214 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A appellant is a notified person and all his assets including,
properties, movable and immovable have been attached
by the Government of India pursuant to the Notification
dated 6th October, 2001. A copy of the Notification dated
6th October, 2001 is attached herewith and marked as
8 Annexure 8-2.
7. That the appellant is further suffering due to another
order of attachment passed by the Dy. Cl'!°, Central Cir 40
under Section 2818 of the Income Tax Act dated 7th April,
2003 whereby accounts of the appellant have been
c attached. A copy of the order dated 07.04.2003 is attached
herewith and marked as Annexure-83.
8. That by order dated 12th December, 2003 passed by
SE81, the applicant has also been prohibited from carrying
D out its business activity at buying selling or dealing in
securities in any manner directly or indirectly and have also
been debarred from associating with the Securities market
for the period of Fourteen years. A copy of the SE81 order
dated 12th December, 2003 is annexed herewith and
E marked as Annexure-84."
In paragraphs 4 to 10 of his application, Kartik Parekh
averred as under:
"4. The applicant submits that no case is made out against
F the applicant as Section 3 (d) of the Act is only attracted
in case of a transaction in a foreign currency/foreign
security. The appellants case does not attract the provision
of Section 3 (d) of the Act.
G 5. The applicant submits that the appellant was at a same
footing as Mr. Kirit Kumar Parekh and Mr. Naveen
Chandra Parekh. While the respondent has exonerated
Mr. Kirit Kumar Parekh and Mr. Naveen Chandra Parekh
from all offences, he has perversely held the applicant/
appellant liable for the offences under the Act.
H
KETAN V. PAREKH v. SPECIAL DIRECTOR, 1215
DIRECTORATE OF ENFORCEMENT [G.S. SINGHVI, J.]
6. In any event, Mr. Ketan Parekh in his letter to the A
adjudicating authority has admitted that the control and
management of the company fully vested in him a11d that
the applicant is not responsible for the day to day activities
of the company and· hence cannot be held liable for the
alleged contravention of provisions of the Act. In any event, 8
even for the sake of argument it is admitted that the
appellant was an executive director of CCL and Panther,
unless it can be proven beyond any scope of doubt that
the appellant was managing the day to day operations of
the aforesaid companies, he cannot be held liable for any c
offence committed by the Company. The impugned order
will be set aside on this ground itself.
7. That impugned order passed by Special Director is
liable to be set aside in view of the grounds of appeal and
the applicant has every hope of succeeding in the matter. D
As :such the applicant has a very good prima facie case
on merits and is likely to succeed in the appeal.
8. That the applicant company is suffering from grave
financial hardship since the assets of the applicanU E
appellant have been attached pursuant to the order of the
Hon'ble Debt Recovery Tribunal, Mumbai dated, 11th April,
2001 confirmed on 25th September, 2001 ( a copy of the
order dated 11th April,· 2001 confirmed on 25th
September, 2001 is annexed herewith and marked as F
Annexure 8-1).
9. That by order dated 12th December, 2003 passed by
SE81, the appellant has been prohibited from carrying out
its business activity of buying, selling or dealing in
securities in any manner directly or indirectly and have also G
been debarred from associating with the Securities market
for the period of fourteen years. (A copy of the SE81 order
dated 12th December, 2003 is annexed herewith and
marked as Annexure-84."
H
1216 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A 10. In view of the submissions made above it is respectfully
submitted that the applicanUappellant is not in a position
to deposit the penalty amount of Rs.12,00,00,000 (Rupees
Twelve Crores) imposed in the impugned order. The
appellanUapplicant has absolu~ly no means to pay the
B penalty amount as pre-deposit and such pre-deposit would
cause undue hardship to the applicanUappellant."
In the application filed on behalf of M/s. Panther Fincap
and Management Services Limited, the following averments
were made:
c
"4. The applicant submits that no case is made out against
the applicant as Section 3 (d) of the Act is only attracted
in case of a transaction in a foreign currency/foreign
security. The appellants case does not attract the provision
D of Section 3 (d) of the Act.
5. That impugned order passed by Special Director is
liable to be set aside in view of the grounds of appeal and
the applicant has every hope of succeeding in the matter.
As such the applicant has a very good prima facie case
E
on merits and is likely to succeed in the appeal.
6. That the applicant is suffering from a grave financial
hardship since the accounts of the Company have also
been attached by the Income Tax Department under
F Section 2818 of the Income Tax Act by order dated 7th
April, 2003 passed by Dy. CIT, Central Cir. 40, Mumbai.
Further even the Bank accounts and properties of the
promoter and managing director of the Company has also
been attached under Section 281 B of the Income Tax Act
G by order dated 7th April, 2003 passed by Dy. CIT, Central
Cir. 40, Mumbai ( a copy of the order dated 7th April, 2003
is annexed herewith and marked as Annexure 8-1).
7. That by order dated 12th December, 2003 passed by
SEBI, the appellant company as well as its promoter have
H
KETAN V. PAREKH v. SPECIAL DIRECTOR, 1217
DIRECTORATE OF ENFORCEMENT [G.S. SINGHVI, J.]
been prohibited from carrying out its business activity of A
buying, selling or dealing in securities in any manner
directly or indirectly and have also been debarred from
associating with the Securities market for the period of
fourteen years. (A copy of the SEBI order dated 12th
December, 2003 is annexed herewith and marked as B
An nexu re-82.
8. In view of the submissions made above it is respectfully
submitted that the applicant/appellant is not in a position
to deposit the penalty amount of Rs.40,00,00,000 (Rupees C
Forty Crores) imposed in the impugned order. The
appellant/applicant has absolutely no means to pay the
penalty amount as pre-deposit and such pre-deposit would
cause undue hardship to the applicant/appellant."
5. After hearing the counsel for the parties, the Appellate D
Tribunal passed order dated 2.8.2007 and directed the
appellants to deposit 50% of the amount of penalty with a
stipulation that if they fail to do so, the appeals will be
dismissed. The relevant portion of that order is extracted below:
E
"Without discussing the merits of these appeals, we are
of the view that the adjudication order is not ex facie bad
when the price of the borrowed DSQ shares has not been
discharged but is required to be paid by the appellants
which normally can be at the place where creditor, i.e. GIL,
F
resides or is engaged in business, i.e. Mauritius.
Therefore, allegations of contravention of Section 3(d)
cannot be termed as ex facie bad, hence the appellants
have no prima facie case. They have many questions to
answer. After deciding one factor included in "undue
hardship'', we proceed to look to the financial position of G
the appellants. It is the burden on the appellants to
disclose correct financial position which in these appeals
the appellants have totally failed to disclose. The
appellants are not candid enough to bring out their
H
1218 SUPREME COURT REPORTS [2011] 14 {ADDL.) S.C.R.
A correct financial status. Merely because Directorate of
Enforcement has not come out forcefully against the
ground of financial disability, this Tribunal cannot believe
that appellants, who were roaring in crores at one time,
are not in a position to make pre-deposit of the penalty,
B especially when this Tribunal is simultaneously duty-
bound to, as provided in Second Proviso of Section 19
(1) FEM Act, 1999, to ensure recovery of penalty.
However, we are conscious that this Tribunal may not
unwittingly pass an order whereby injustice can possibly
c be caused."
(emphasis supplied)
6. Shri Ketan Parekh challenged the aforesaid order in
Writ Petition No.8385 of 2007 filed in the Delhi High Court on
D 13.11.2007. The other two appellants, namely, Kartik K. Parekh
and Panthar Fincap and Management Services Ltd. filed Writ
Petition Nos. 8231 and 8232 of 2007 on 5.11.2007 and prayed
for quashing the order of the Appellate Tribunal. After taking
cognizance of the judgment of th rs Court in Raj Kumar Shivhare
· E v. Assistant Director, Directorate of Enforcement (2010) 4
SCC 772, the learned Single Judge dismissed the writ petitions
vide order dated 26. 7.2010, the relevant portions of which are
extracted below:
"1. There is a categorical pronouncement on 12th April
F 2010 by the Supreme Court in Raj Kumar Shivhare v.
Assistant Director, Directorate of Enforcement (2010) 4
sec 772 that even an order passed by the Appellate
Tribunal in an application seeking dispensation of the pre-
deposit of the penalty would be appealable under Section
G 35 of the Foreign Exchange Management Act 1999
CFEMA') and that the remedy under Article 226 of the
Constitution is not available against such order.
2. In that view of the matter, the present petitions cannot
H be entertained by this Court. It is, however, open to the
KETAN V. PAREKH v. SPECIAL DIRECTOR, 1219
DIRECTORATE OF ENFORCEMENT [G.S. SINGHVI, J.]
Petitioners to avail of the appropriate remedy in terms of A
· para 45 of the above judgment of the Supreme Court.
3. The petitions are dismissed."
7. Thereafter, the appellants filed appeals under Section
35 of the Act before the Bombay High Court. They also filed B
applications for condonation of 1056 days' delay. The Division
Bench of the Bombay High Court dismissed the applications
for condonation of delay by observing that it does not have the
power to entertain an appeal filed beyond 120 days and even
though in terms of the liberty given by the Delhi High Court, the C
appellants could have filed appeals within 30 days, but they
failed to do so and, therefore, delay in filing the appeals cannot
be condoned.
Arguments D
8. Shri Ranjit Kumar, learned senior counsel appearing for
the appellants argued that the impugned order is liable to be
set aside because while dismissing the applications for
condonation of delay, the Division Bench of the High Court did
not take cognizance of Section 14 of the Limitation Act, 1963. E
Learned senior counsel submitted that in terms of that section,
entire period during which the writ petitions filed by the
appellants remained pending before the Delhi High Court is
liable to be excluded while computing the period of limitation
and if that is done, the appeals filed under Section 35 cannot F
J;>e treated as barred by time. Learned senior counsel referred
to Section 29(2) of the Limitation Act and the judgments of this
Court in State of Goa v. Western Builders (2006) 6 SCC 239,
Consolidated Engineering Enterprises v. Principal Secretary,
Irrigation Department and others (2008) 7 SCC 169, Coal G
India Limited and another v. Ujjal Transport Agency and
others (2011) 1 sec 117 and argued that even though the
period of limitation prescribed unde; Section 35 of the Act is
different from the period specified in Article 137 of the Schedule
appended to the Limitation A-::t, in the absence of express H
1220 SUPREME COURT REPORTS (2011] 14 (ADDL.) S.C.R.
A exclusion of Section 14 of the Limitation Act, the appellants are
entitled to seek exclusion of the time spent by them in bona fide
prosecution of remedy before a wrong forum. Shri Ranjit Kumar
submitted that at the time of filing writ petitions before the Delhi
High Court, all the High Courts were entertaining such petitions
B and granting relief to the aggrieved parties and it is only after
the judgment in Raj Kumar Shivhare v. Assistant Director,
Directorate of Enforcement (supra) that the High Courts cannot
entertain writ petition because of the availability of the statutory
remedy of appeal under Section 35 of the Act. Learned senior
c counsel further submitted that if the period between 7.11.2007,
i.e. the date on which the writ petitions were filed before the
Delhi High Court and 26.7.2010, i.e. the date on which the same
were dismissed is excluded, the appeals filed before the
Bombay High Court on 27.8.2010 cannot be treated as barred
0 by time. Learned senior counsel then argued that financial
condition of the appellant is extremely precarious and the
Appellate Tribunal committed serious error by directing them
to deposit 50% of the penalty imposed by the Special Director
as a condition for hearing the appeals. He also referred to
E affidavit dated 10.10.2008 filed by appellant Ketan V. Parekh
before the Appellate Tribunal to show that he was declared a
notified person in terms of Section 3(2) of the Special Court
· (Trial of Offences relating to Transactions in Securities) Act,
1992 and all his moveable and immovable properties including
bank accounts have been attached and he has been prohibited
F from operating the same.
9. Shri A. K. Panda, learned senior counsel appearing for
the respondents supported the impugned order and argued that
the Division Bench of the Bombay High Court did not commit
G any error by declining the appellants' prayer for condonation of
delay because the appeals were filed beyond the maximum
period prescribed under Section 35 and the provisions of the
Limitation Act cannot be invoked for condonation of delay or
for exclusion of the time during which the writ petitions filed by
H the appellants remained pending before the Delhi High Court.
KETAN V. PAREKH v. SPECIAL DIRECTOR, 1221
DIRECTORATE OF ENFORCEMENT [G.S. SINGHVI, J.]
Shri Panda emphasized that even before the judgment of this A
Court in Raj Kumar Shivhare v. Assistant Director, Directorate
of Enforcement (supra}, the legal position was crystal clear and
in terms of Section 35 of the Act an appeal could be filed
against any decision or order of the Appellate Tribunal within
60 days from the date of communication of the decision or B
order and in terms of proviso to that section, the High Court
can extend the period by another 60 days and no more.
Learned senior counsel then submitted that the appellants
cannot invoke Section 14 of the Limitation Act because their
action of filing the writ petitions before the Delhi High Court was c
not bona fide. He pointed out that vide order dated 7 .11.2007,
the learned Single Judge of the Delhi High Court had accepted
the request made by counsel appearing for the appellants and
treated the writ petition filed by Kartik K. Parekh as an appeal
and similar order appears to have been passed in the case of
0
M/s. Panther Fincap and Management Services Limited but
those orders were subsequently recalled at the instance of the
two appellants. Shri Panda submitted that the Appellate Tribunal
did not commit any error by directing the appellants to deposit
50% of the penalty imposed by the Special Director because
they had been found guilty of clandestine monetary transactions E
and did not disclose their true financial position.
The relevant provisions :
10. Section 35 of the Act as also Sections 5, 14 and 29(1) F
and (2) of the Limitation Act, which have bearing on the
decision of the issue raised in the appeals, read as under -
"3.5. Appeal to High Court - Any person aggrieved by any
decision or order of the Appellate Tribunal may file an
appeal to the High Court within sixty days from the date of G
communication of the decision or order of the Appellate
Tribunal to him on any question of law arising out of such
order:
Provided that the High Court may, if it is satisfied that the H
1222 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A appellant was prevented by sufficient cause from filing the
appeal within the said period, allow it to be filed within a
further period not exceeding sixty days.
Explanation.-ln this section "High Court" means-
B (a) the High Court within the jurisdiction of which the
aggrieved party ordinarily resides or carries on business
or personally works for gain; and
(b) where the Central Government is the aggrieved party,
c the High Court within the jurisdiction of which the
respondent. or in a case where there are more than one
respondent, any of the respondents, ordinarily resides or
carries on business or personally works for gain."
5. Extension of prescribed period in certain cases - Any
D
appeal or any application, other than an application under
any of the provisions of Order XXI of the Code of Civil
Procedure, 1908 (5 of 1908), may be admitted after the
prescribed period, if the appellant or the applicant satisfies
the court that he had sufficient cause for not preferring the
E appeal or making the application within such period.
Explanation - The fact that the appellant or the applicant
was misled by any order, practice or judgment of the High
Court in ascertaining or computing the prescribed period
F may be sufficient cause within the meaning of this section.
14. Exclusion of time of ~roceeding bo.na fide in court
without jurisdiction - (1) In computing the period of limitation
for any suit the time during which the plaintiff has been
prosecuting with due diligence another civil proceeding,
G whether in a court of first instance or of the appeal or
revision, against the defendant shall be excluded, where
the proceeding relates to the same matter in issue and is
prosecuted in good faith in a court which, from defect of
jurisdiction or other cause of a like nature, is unable to
H entertain it.
KETAN V. PAREKH v. SPECIAL DIRECTOR, 1223
DIRECTORATE OF ENFORCEMENT [G.S, SINGHVI, J.]
(2) In computing the period of limitation for any application, A
the time during which the applicant has been prosecuting
with due diligence another civil proceeding, whether in a
court of f[rst instance or of appeal or revision, against the
s,ame party for the same relief shall be excluded, where
, such proceeding is prosecuted in good faith in a court of B
first instance or of appeal or revision, against the same
party for the same relief shall be excluded, where such
proceeding is prosecuted in good faith in a court which,
from defect of jurisdiction or other cause of a like nature,
is unable to entertain it. c
(3) Notwithstanding anything contained in rule 2 of Order
XXlll of the Code of Civil Procedure, 1908 (5 of 1908), the
provisions of sub-section (1) shall apply in relation to a fresh
suit instituted on permission granted by the court under rule
1 of that Order, where such permission is granted on the D
ground that the first suit must fail by reason of a defect in
the jurisdiction of the court of other cause of a like nature.
Explanation - For the purpose of this section, -
E
(a) In excluding the time during which a former civil
proceeding was pending, the day on which that proceeding
was instituted and the day on which it ended shall both be
counted;
(b) a plaintiff or an applicant resisting an appeal shall be F
deemed to be prosecuting a proceeding;
(c) Misjoinder of parties or of causes of action shall be
deemed to be a cause of a like nature with defect of
jurisdiction. G
29. Savings - (1) Nothing in this Act shall affect section 25
of the Indian Contract Act, 1872. ( 9 of 1872).
(2) Where any special or local law prescribes for any suit,
.H
1224 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A appeal or appiication a period of limitation different from
the period prescribed by the Schedule, the provisions of
section 3 shall apply as if such period were the period
prescribed by the Schedule and for the purpose of
determining any period of limitation prescribed for any suit,
B appeal or application by any special or local law, the
provisions contained in sections 4 to 24 (inclusive) shall
apply only in so far as, and to the extent to which, they are
not expressly excluded by such special or local law."
11. The question whether the High Court can entertain an
C appeal under Section 35 of the Act beyond 120 days does not
require much debate and has to be answered against the
appellants in view of the law laid down in Union of India v.
Popular Construction Co. (2001) 8 SCC 4 70, Singh
Enterprises v. CCE (2008) 3 SCC 70, Commissioner of
D Customs, Central Excise v. Punjab Fibres Ltd. (2008) 3 SCC
73, Consolidated Engineering Enterprises v. Principal
Secretary, Irrigation Department and others (supra),
Commissioner of Customs and Central Excise v. Hongo
India Private Limited (2009) 5 SCC 791 and Chhattisgarh
E State Electricity Board v. Central Electricity Regulatory
Commission and others (2010) 5 SCC 23.
12. In Hukumdev Narain Yadav v. La/it Narain Mishra
(1974) 2 SCC 133, this Court interpreted Section 29(2) of the
F Limitation Act in the context of the provisions of the
Representation of the People Act, 1951. It was argued that the
words "expressly excluded" appearing in Section 29(2) would
mean that there must be an explicit mention in the special or
local law to the specific provisions of the Limitation Act of which
G the operation is to be excluded. While rejecting the argument,
the three-Judge Bench observed:
" ... what we have to see is whether the scheme of the
special law, that is in this case the Act, and the nature of
the remedy provided therein are such that the legislature
H
KETAN V. PAREKH v. SPECIAL DIRECTOR, 1225
DIRECTORATE OF ENFORCEMENT [G.S. SINGHVI, J.]
intended it to be a complete code by itself which alone A
should govern the several matters provided by it. If on an
examination of the relevant provisions it is clear that the
provisions of the Limitation Act are necessarily excluded,
then the benefits conferred therein cannot be called in aid
to supplement the provisions of the Act. In our view, even B
in a case where the special law .does not exclude the
provisions of Sections 4 to 24 of the Limitation Act by an
express reference, it would nonetheless be open to the
court to examine whether and to what extent the nature
of those provisions or the nature of the subject-matter and c
scheme of the special law exclude their operation."
(emphasis supplied)
13. In Union of India v. Popular Construction Company
(supra), this Court considered the question whether Section 5 D
of the Limitation Act can be invoked for condonation of delay
in filing an application under Section 34 of the Arbitration and
Conciliation Act, 1996. The two-Judge Bench referred to earlier
decisions in Vidyacharan .Shukla v. Khubchand Baghel AIR
1964 SC 1099, Hukumdev Narain Yadav v. La/it Narain E
Mishra ·(1974) 2 SCC 133, Mangu Ram v. MCD (1976) 1
SCC 392, Patel Naranbhai Marghabhai v. Dhulabhai
Galbabhai (1992) 4 SCC 264 and held:
"As far as the language of Section 34 of the 1996 Act is F
concerned, the crucial words are 'but not thereafter' used
in the proviso to sub-section (3). In our opinion, this phrase
would amount to an express exclusion within the meaning
of Section 29(2) of the Limitation Act, and would therefore
bar the application of Section 5 of that Act. Parliament did
not need to go further. To hold that the court could entertain G
an application to set aside tbe award beyond the extended
period under the proviso, would render the phrase 'but not
thereafter' wholly otiose. No principle of interpretation
would justify such a result.
H
1226 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A Furthermore, Section 34(1) itself provides that recourse to
a court against an arbitral award may be made only by an
application for setting aside such award 'in accordance
with' sub-section (2) and sub-section (3). Sub-section (2)
relates to grounds for setting aside an award and is not
B relevant for our purposes. But an application filed beyond
the period mentioned in Section 34, sub-section (3) would
not be an application 'in accordance with' that sub-section.
Consequently by virtue of Section 34(1), recourse to the
court against an arbitral award cannot be made beyond
c the period prescribed. The importance of the period fixed
under Section 34 is emphasised by the provisions of
Section 36 which provide that:
'36. Enforcement-Where the time for making an
application to set aside the arbitral award under
D Section 34 has expired ... the award shall be
enforced under the Code of Civil Procedure, 1908
(5 of 1908) in the same manner as if it were a
decree of the court.'
E This is a significant departure from the provisions of the
Arbitration Act, 1940. Under the 1940 Act, after the time
to set aside the award expired, the court was required to
'proceed to pronounce judgment according to the award,
and upon the judgment so pronounced a decree shall
F follow' (Section 17). Now the consequence of the time
expiring under Section 34 of the 1996 Act is that the award
becomes immediately enforceable without any further act
of the court. If there were any residual doubt on the
interpretation of the language used in Section 34, the
scheme of the 1996 Act would resolve the issue in favour
G
of curtailment of the court's powers by the exclusion of the
operation of Section 5 of !he Limitation Act."
14. In Singh Enterprises v. CCE (supra), the Court
interpreted Section 35 of the Central Excise Act, 1944 which
H is pari materia to Section 35 of the Act and observed:
KETAN V. PAREKH' v. SPECIAL DIRECTOR, 1227
DIRECTORATE OF ENFORCEMENT [G.S. SINGHVI, J.]
"The Commissioner of Central Excise (Appeals) as also A
the tribunal being creatures of statute are not vested with
jurisdiction to condone the delay beyond the permissible
period provided under the statute. The period up to which
the prayer for condonation can be accepted is statutorily
provided. It was submitted that the logic of Section 5 of B
the Limitation Act, 1963 (in short 'the Limitation Act') can
be availed for condonation of delay. The first proviso to
Section 35 makes the position clear that the appeal has
to be preferred within three months from the date of
communication to him of the decision or order. However, c
if the Commissioner is satisfied that the appellant was
prevented by sufficient cause from presenting the appeal
within the aforesaid period of 60 days, he can allow it to
be presented within a further period of 30 days. In other
words, this clearly shows that the appeal has to be filed
0
within 60 days but in terms of the proviso further 30 days'
time can be granted by the appellate authority to entertain
the appeal. The proviso to sub-section (1) of Section 35
makes the position crystal clear that the appellate authority
has no power to allow the appeal to be presented beyond E
the period of 30 days. The language used makes. the
position clear that the legislature intended the appellate
authority to entertain the appeal by condoning delay only
up to 30 days after the expiry of 60 days which is the
normal period for preferring appeal. Therefore, •nere is
complete exclusion of Section 5 of the Limitatio·. Act. The F
Commissioner and the High Court were therefore justified
in holding that there was no power to condone the delay
after the expiry of 30 days' period."
15. In Consolidated Engineering Enterprises v. Principal G
Secretary, Irrigation Department and others (supra), a three-
Judge Bench again considered Section 34(3) of the Arbitration
and Conciliation Act, 1996. J.M. Panchal, J., speaking for
himself and Balakrishnan, C.J., referred to the relevant
provisions and observed: H
1228 SUPREME COURT REPORTS 12011] 14 (ADDL.) S.C.R.
A ".... When any special statute prescribes certain period of
limitation as well as provision for extension up to specified
time-limit, on sufficient cause being shown, then the period
of limitation prescribed under the special law shall prevail
and to that extent the provisions of the Limitation Act shall
B stand excluded. As the intention of the legislature in
enacting sub-section (3) of Section 34 of the Act is that
the application for setting aside the award should be made
within three months and the period can be further extended
on sufficient cause being shown by another period of 30
c days but not thereafter, this Court is of the opinion that the
provisions of Section 5 of the Limitation Act would not be
applicable because the applicability of Section 5 of the
Limitation Act stands excluded because of the provisions
of Section 29(2) of the Limitation Act."
D 16. In Commissioner of Customs and Central Excise v.
Hongo India (P) Ltd. (supra), another three-Judge Bench
considered the question whether Section 5 of the Limitation Act
can be invoked for condonation of delay in filing an appeal or
reference to the High Court, referred to the judgments in Union
E of India v. Popular Construction Co. (supra), Singh
Enterprises v. CCE (supra) and observed -
"As pointed out earlier, the language used in Sections 35,
35-8, 35-EE, 35-G and 35-H makes the position clear that
F an appeal and reference to the High Court should be made
within 180 days only from the date of communication of the
decision or order. In other words, the language used in
other provisions makes the position clear that the
legislature intended the appellate authority to entertain the
appeal by condoning the delay only up to 30 days after
G
expiry of 60 days which is the preliminary limitation period
for preferring an appeal. In the absence of any clause
condoning the delay by showing sufficient cause after the
prescribed period, there is complete exclusion of Section
5 of the Limitation Act. The High Court was, therefore,
H
KETAN V. PAREKH v. SPECIAL DIRECTOR, 1229
DIRECTORATE OF ENFORCEMENT [G.S. SINGHVI, J.]
justified in holding that there was no power to condone the A
delay after expiry of the prescribed period of 180 days."
17. In Chhattisgarh State Electricity Board v. Central
Electricity Regulatory Commission (supra), a two-Judge
Bench interpreted Section 125 of the Electricity Act, 2003, 8
which is substantially similar to Section 35 of the Act and
observed:
"Section 125 lays down that any person aggrieved by any
decision or order of the Tribunal can file an appeal to this
Court within 60 days from the date of communication of C
the decision or order of the Tribunal. Proviso to Section ·
125 empowers this Court to entertain an appeal filed within
a further period of 60 days if it is satisfied that there was
sufficient cause for not filing appeal within the initial period
of 60 days. This shows that the period of limitation D
prescribed for filing appeals under Sections 111 (2) and
125 is substantially different from the period prescribed
under the Limitation Act for filing suits, etc. The use of the
expression "within a further period of not exceeding 60
days" in the proviso to Section 125 makes it clear that the E
outer limit for filing an appeal is 120 days. There is no
provision in the Act under which this Court can entertain
an appeal filed against the decision or order of the Tribunal
after more than 120 days.
The object underlying establishment of a special
F
adjudicatory forum i.e. the Tribunal to deal with the
grievance of any person who may be aggrieved by an
order. of an adjudicating officer or by an appropriate
Commission with a provision for further appeal to this
Court and prescription of special limitation for filing G
appeals under Sections 111 and 125 is to ensure that
disputes emanating from the operation and implementation
of different provisions· of the Electricity Act are
expeditiously decided by an expert body and no court;
. except this Court, may entertain challenge to the decision · H
1230 SUPREME COURT REPORTS (2011) 14 (ADDL.) S.C.R.
A or order of the Tribunal. The exclusion of the jurisdiction of
the civil courts (Section 145) qua an order made by an
adjudicating officer is also a pointer in that direction.
It is thus evident that the Electricity Act is a special
legislation within the meaning of Section 29(2) of the
B
Limitation Act, which lays down that where any special or
local law prescribes for any suit, appeal or application a
period of limitation different from the one prescribed by the
Schedule, the provisions of Section 3 shall apply as if such
period were the period prescribed by the Schedule and
c provisions contained in Sections 4 to 24 (inclusive) shall
apply for the purpose of determining any period of
limitation prescribed for any suit, appeal or application
unless they are not expressly excluded by the special or
local law."
D
The Court then referred to some of the precedents and
held:
"In view of the above discussion, we hold that Section 5
E
of the Limitation Act cannot be invoked by this Court for
entertaining an appeal filed against the decision or order
of the Tribunal beyond the period of 120 days specified in
Section 125 of the Electricity Act and its proviso. Any
interpretation of Section 125 of the Electricity Act which
may attract the applicability of Section 5 of the Limitation
F
Act read with Section 29(2) thereof will defeat the object
of the legislation, namely, to provide special limitation for
filing an appeal against the decision or order of the Tribunal
and proviso to Section 125 will become nugatory."
G 18. The question whether Section 14 of the Limitation Act
can be relied upon for excluding the time spent in prosecuting
remedy before a wrong forum was considered by a two Judge
Bench in State of Goa v. Western Builders (supra) in the
context of the provisions contained in Arbitration and
H
KETAN V. PAREKH v. SPECIAL DIRl:.CTOR, 1231
DIRECTORATE OF ENFORCEMENT [G.S. SINGHVI, J.]
Conciliation Act, 1996. The Bench referred to the provisions A
of the two Acts and obseNed:
"There is no provision in the whole of the Act which
prohibits discretion of the court. Under Section 14 of the
Limitation Act if the party has been bona fidely
8
prosecuting his remedy before the court which has no
jurisdiction whether the period spent in that proceedings
shall be excluded or not. Learned counsel for the
respondent has taken us to the provisions of the Act of
1996: like Section 5, Section 8(1), Section 9, Section 11, C
sub-sections (4), (6), (9) and sub-section (3) of Section
14, Section 27, Sections 34, I
36, 37, 39(2) and (4),
Section 41, sub-section (2), Sections 42 and 43 and tried
to emphasise with reference to the aforesaid sections that
wherever the legislature wanted to give power to the court
that has been incorporated in the provisions, therefore, D
no further power should lie in the hands of the court so
as to enable to exclude the period spent in prosecuting
the remedy before other forum. It is true but at the same
time there is no prohibition incorporated in the statute for
curtailing the power of the cour;t under Section 14 of the E
Limitation Act. Much depends upon the words used in the
statute and not general principles applicable. By virtue
of Section 43 of the Act of 1.996, the Limitation Act
applies to the proceedings under the Act of 1996 and the -
provisions of the Limitation Act can only stand excluded F
to the extent wherever different period has been
prescribed under the Act, 1996. Since there is no
prohibition provided under Section 34, there is no reason
why Section 14 of the Limitation Act (sic not) be read in
the Act of 1996, which will advance the cause of justice. G
If the statute is silent and there is no specific prohibition
then the statute should be interpreted which advances the
cause of justice."
19. The same issue was again considered by the three- H
1232 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A Judge Bench in Consolidated Engineering Enterprises v.
Principal Secretary, Irrigation Department (supra) to which
reference has been made hereinabove. After holding that
Section 5 of the Limitation Act cannot be invoked for
condonation of delay, Panchal, J (speaking for himself and
B Balakrishnan, C.J.) observed:
"Section 14 of the Limitation Act deals with exclusion of
time of proceeding bona fide· in a court without jurisdiction.
On analysis of the said section, it becomes evident that
the following conditions must be satisfied before Section
c 14 can be pressed into service:
(1) Both the prior and subsequent proceedings are civil
proceedings prosecuted by the same party;
o (2) The prior proceeding had been prosecuted with due
diligence and in good faith;
(3) The failure of the prior proceeding was due to defect
of jurisdiction or other cause of like nature;
E (4) The earlier proceeding and the latter proceeding must
relate to the same matter in issue and;
(5) Both the proceedings are in a court.
The policy of the section is to afford protection to a litigant
F against the bar of limitation when he institutes a
proceeding which by reason of some technical defect
cannot be decided on merits and is dismissed. While
considering the provisions of Section 14 of the Limitation
Act, proper approach will have to be adopted and the
G provisions will have to be interpreted so as to advance
the cause of justice rather than abort the proceedings. It
will be well to bear in mind that an element of mistake is
inherent in the invocation of Section 14. In fact, the
section is intended to provide relief against the bar of
H
KETAN V. PAREKH v. SPECIAL DIRECTOR, 1233
DIRECTORATE OF ENFORCEMENT [G.S. SINGHVI, J.]
limitation in cases of mistaken remedy or selection of a A
wrong forum. On reading Section 14 of the Act it becomes
clear that the legislature has enacted the said section to
exempt a certain period covered by a bona fide litigious
activity. Upon the words used in the section, it is not
possible to sustain the interpretation that the principle B
underlying the said section, namely, that the bar of
limitation should not affect a person honestly doing his ·
best to get his case tried on merits but failing because
the court is unable to give him such a trial, would not be
applicable to an application filed under Section 34 of the c
Act of 1996. The principle is clearly applicable not only
to a case in which a litigant brings his application in the
court,· that is, a court having no jurisdiction to entertain it
but also where he brings the suit or the application in the
wrong court in consequence of bona fide mistake or (sic
0
of) law or defect of procedure. Having regard to the
intention of the legislature this Court is of the firm opinion
that the equity underlying Section 14 should be applied
to its fullest extent and time taken diligently pursuing a
remedy, in a wrong court, should be excluded.
E
At this stage it would be relevant to ascertain whether
there is any express provision in the Act of 1996, which
excludes the applicability of Section 14 of the Limitation
Act. On review of the provisions of the Act of 1996 this
Court finds that there is no provision in the said Act which F
excludes the applicability of the provisions of Section 14
of the Limitation Act to an application submitted under
Section 34 of the said Act. On the contrary, this Court finds
that Section 43 makes the provisions of the I-imitation Act,
1963 applicable to arbitration proceedings. The G
proceedings under Section 34 are for the purpose of
challenging the award whereas the proceeding referred to
under Section 43 are the original proceedings which can
be equated with a suit in a court. Hence, Section 43
incorporating the Limitation Act will apply to the H
1234 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A proceedings in the arbitration as it applies to the
proceedings of a suit in the court. Sub-section (4) of
Section 43, inter alia, provides that where the court orders
that an arbitral award be set aside, the period between the
commencement of the arbitration and the date of the order
B of the court shall be excluded in computing the time
prescribed by the Limitation Act, 1963, for the
commencement of the proceedings with respect to the
dispute so submitted. If the period between the
commencement of the arbitration proceedings till the
c award is set aside by the court, has to be excluded in
computing the period of limitation provided for any
proceedings with respect to the dispute, there is no good
reason as to why it should not be held that the provisions
of Section 14 of the Limitation Act would be applicable to
an application submitted under Section 34 of the Act of
D
1996, more particularly where no provision is to be found
in the Act of 1996, which excludes the applicability of
Section 14 of the Limitation Act, to an application made
under Section 34 of the Act. It is to be noticed that the
powers under Section 34 of the Act can be exercised by
E the court only if the aggrieved party makes an application.
The jurisdiction under Section 34 of the Act, cannot be
exercised suo motu. The total period of four months within
which an application, for setting aside an arbitral award,
has to be made is not unusually long. Section 34 of the
F Act of 1996 would be unduly oppressive, if it is held that
the provisions of Section 14 of the Limitation Act are not
applicable to it, because cases are no doubt conceivable
where an aggrieved party, despite exercise of due
diligence and good faith, is unable to make an application
G within a period of four months. From the scheme and
language of Section 34 of the Act of 1996, the intention of
the legislature to exclude the applicability of Section 14 of
the Limitation Act is not manifest. It is well to remember
that Section 14 of the Limitation Act does not provide for
H
KETAN V. PAREKH v. SPECIAL DIRECTOR, 1235
DIRECTORATE OF ENFORCEMENT [G.S. SINGHVI, J.]
a fresh period of limitation but only provid~s for the A
exclusion of a certain period. Having regard to the
legislative intent, it will have to be held that the provisions
of Section 14 of the Limitation Act, 1963 would be
applicable to an application submitted under Section 34
of the Act of 1996 for setting aside an arbitral award." B
In his concurring judgment, Raveendran, J.referred to the
judgment in State of Goa v. Western Builders (supra) and
observed:
"On the other hand, Section 14 contained in Part Ill ofthe- C
Limitation Act does not relate to extension of the period
of limitation, but relates to exclusion of certain period while
computing the period of limitation. Neither sub~section (3) ·
of Section 34 of the AC Act nor any other provision of the
AC Act exclude the applicability of Section 14 of the D
Limitation Act to applications under Section 34(1) of the
AC Act. Nor will the proviso to Section 34(3) exclude the
application of Section 14, as Section 14 is not a provision
for extension of period of limitation, but for exclusion of
certain period while computing the period of limitation. E
Having regard to Section 29(2) of the Limitation Act,
Section 14 of that Act will be applicable to an application
under Section 34(1) of the AC Act. Even when there is
cause to apply Section 14, the limitation period continues
to be three months and not more, but in computing the F
limitation period of three months·for the application under
Section 34(1) of the AC Act, the time during which the
applicant was prosecuting such application before the
wrong court is excluded, provided the proceeding in the
wrong court was prosecuted bona fide, with due diligence. G
Western Builders therefore lays down the correct legal
position."
20. The same view was reiterated in Coal India Limited
v. Ujjal Transport Agency (supra).
H
1236 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A 21. The aforesaid three judgments do support the argument
of Shri Ranjit Kumar that even though Section 5 of the
Limitation Act cannot be invoked for condonation of delay in
filing an appeal under the Act because that would tantamount
to amendment of the legislative mandate by which special
B period of limitation has been prescribed, Section 14 can be
invoked in an appropriate case for exclusion of the time during
which the aggrieved person may have prosecuted with due
diligence remedy before a wrong forum, but on a careful scrutiny
of the record of these cases, we are satisfied that Section 14
c of the Limitation Act cannot be relied upon for exclusion of the
period during which the writ petitions filed by the appellants
remained pending before the Delhi High Court. In the
applications filed by them before the Bombay High Court, the
appellants had sought condonation of 1056 days' delay by
D stating that after receiving copy of the order passed by the
Appellate Tribunal, they had filed writ petitions before the Delhi
High Court, which were disposed of on 26.7.2010 and,
thereafter, they filed appeals before the Bombay High Court
under Section 35 of the Act Paragraphs 1, 2 and 3 of the
E applications for condonation of delay which are identical in all
the cases were as under:
"1. The Appellant ab ove'.named has preferred an Appeal
against the order dated 2nd August 2007 (hereinafter
referred to as the "impugned order") passed by the
F Respondent No.1 against the Appellant above named. The
Appellant states that the impugned order was received by
the Appellant on 5th October 2007. The Appellant states
that there is a delay of 1056 days in filing the above
appeal, the reasons for which are being stated in detail
G hereunder and, therefore, the Appellant above named
prays that the delay in filing the present appeal may please
be condoned.
2. RELIEFS SOUGHT :
H (a) That this Hon'ble Court be pleased to condoned the,
KETAN V. PAREKH v. SPECIAL DIRECTOR, 1237
DIRECTORATE OF ENFORCEMENT [G.S. SINGHVI, J.]
delay of 1056 days in filing the said Appeal; A
(b) That such further and other reliefs as the facts and
circumstances may require.
3. REASONS FOR THE DELAY :
B
3.1 The Appellant declares that there is delay of 1056 days
in filing the appeal as prescribed in the Limitation Act,
1963.
3.2 The Appellant further states that the delay occurred as C
the Writ Petition was filed before Delhi High Court on 5th
November, 2007. The said writ was filed under the
provisions of Articles 226 and 227 of the Constitution of
India seeking issuance of a writ order or direction in tl'e
nature of Mandamus or any other writ for setting aside the D
impugned order dated 2rid August, 2007, passed by the
Appellate Tribunal for Foreign Exchange under Rule 10 of
the Adjudicating Proceedings and Appeal, 2000 for
Dispensation. In the said Writ proceedings Hon'ble High
Court of Delhi had passed an order on 26th July 2010.
Vide the said order dated 26th July, 2010, while relying E
on the judgment of the Hon'ble Supreme Court, it was held
by the Hon'bleDelhi High Court that even an order passed
by the Appellate Tribunal in an application seeking·
dispensation of pre-deposit .pf the penalty would be
appealable under section 35 of the FEMA and that remedy F
under Article 226 is not available against such an order.
Further, Hon'ble Delhi High Court also held that the present
petition cannot be entertained by this Court. It is, however,
open to the Appellant's to avai! of the appropriate remedy G
in terms of para 45 of the above judgment of the Supreme
Court. '
3.3 Hence, pursuant to the said order passed by Hon'ble
Delhi High Court the Appellant above named prefers an
H
1238 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A appeal before this Hon'ble Bombay High Court.
3.4 Under the said circumstances the Aopellant most
humbly prays that this Hon'ble Court may be pleased to
condone the delay.
B 3.5 It is submitted that the delay, in filing of the present
Appeal has not prejudiced the Respondent in any manner,
whatsoever, and, therefore, this Hon'ble Court be pleased
to condone the said delay.
c 3.6 It is, further submitted that the delay of 1056 days in
filing the present Appeal was bonafide, unintentional and
inadvertent"
22. A careful reading of the above reproduced averments
D shows that there was not even a whisper in the applications
field by the appellants that they had been prosecuting remedy
before a wrong forum, i.e. the Delhi High Court with due
diligence and in good faith. Not only this, the prayer made in
the applications was for con donation of 1056 days' delay and
not for exclusion of the time spent in prosecuting the writ
E petitions before the Delhi High Court. This shows that the
appellants were seeking to invoke Section 5 of the Limitation
Act, which, as mentioned above, cannot be pressed into service
in view of the language of Section 35 of the Act and
interp~etation of similar provisions by this Court.
F
23. There is another reason why the benefit of Section 14
of the Limitation Act cannot be extended to the appellants. All
of them are well conversant with various statutory provisions
including FEMA. One of them was declared a notified person
G under Section 3(2) of the Special Court (Trial of Offences
relating to Transactions in Securities) Act, 1992 and several civil
and criminal cases are pending against him. The very fact that
they had engaged a group of eminent Advocates to present
their cause before the Delhi and the Bombay High Courts
H
KETAN V. PAREKH v. SPECIAL DIRECTOR, 1.239
DIRECTORATE OF ENFORCEMENT [G.S. SINGHVI, J.]
shows that they have the assistance of legal experts and this A
seems to the reason why they invoked the jurisdiction of the
Delhi High Court and not of the Bombay High Court despite
the fact that they are residents of Bombay and have been
contesting other matters including the proceedings pending
before the Special Court at Bombay. It also appears that the B
appellants were sure that keeping in view their past conduct,
the Bombay High Court may not interfere with the order of the .
Appellate Tribunal. Therefore, they took a chance before the
Delhi High Court and succeeded in persuading learned Single
Judge of the Court to entertain their prayer for stay of further c
proceedings before the Appellate Tribunal. The promptness
·with which the learned senior counsel. appearing for appellant
""' Kartik K. Parekh made a statement before the Delhi High
Court on 7.11.2007 that the writ petition may be converted into
an appeal and considered on merits is a clear indication of the D
appellant's unwillingness to avail remedy before the High Court,
i.e. the Bombay High Court which had the exclusive jurisdiction
to entertain an appeal under Section 35 of the Act. It is not
possible to believe that as on 7. 11 .2007, the appellants and
their Advocates were not aware of the judgment of this Court
in Ambica Industries v. Commissioner of Central Excise (2007) E
6 SCC 769 whereby dismissal of the writ petition by the Delhi
High Court on the ground of lack of territorial jurisdiction was
confirmed and it was observed t~at the parties cannot be
allowed to indulge in forum shopping. It has not at all surprised
us that after having made a prayer that the writ petitions filed F
by them be treated as appeals under Section 35, two of the
appellants filed applications for recall of that order. No doubt,
the learned Single Judge accepted their prayer and the Division
Bench confirmed the order of the learned Single Judge but the
manner in which the appellants prosecuted the writ petitions G
before the Delhi High Court leaves no room for doubt that they
had done so with the sole object of delaying compliance of the ·
direction given by the Appellate Tribunal and, by no stretch of
imagination, it can be said that they were bona fide
prosecuting remedy before a wrong forum. Rather, there was H
1240 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A total absence of good faith, which is sine qua non for invoking
Section 14 of the Limitation Act.
24. The issue deserves to be consiJered from another
angle. By taking advantage of the liberty given by the learned
B Single Judge of the Delhi High Court, the appellants invoked
the jurisdiction of the Bombay High Court under Section 35 of
the Act. However, while doing so, they violated the time limit
specified in order dated 26.7.2010 which, in turn, is based on
paragraph 45 of the judgment of this Court in Raj Kumar
C Shivhare v. Assistant Director, Directorate of Enforcement
(supra). Indeed, it is not even the case of the appellants that
they had filed appeals under Section 35 of the Act within 30
days computed from 26.7.2010. Therefore, the Division Bench
of the Bombay High Court rightly observed that even though the
issue relating to jurisdiction of the Delhi High Court to grant time
D to the appellants to file appeals is highly debatable, the time
specified in the order passed by the Delhi High Court cannot
be extended.
25. In view of the above discussion, we hold that the
E impugned order does not suffer from any legal infirmity.
26. Notwithstanding the above conclusion, we have
considered the submission of Shri Ranjit Kumar that the
appellants are facing huge financial crises and the Appellate
F Tribunal committed serious error by not entertaining their prayer
to dispense with the requirement of deposit of the amount of
penalty in its entirety, but have not felt convinced. In our
considered view, the appellants miserably failed to make out
a case, which could justify an order by the Appellate Tribunal
to relieve them of the statutory obligation to deposit the amount
G of penalty. The appellants have the exclusive knowledge of their
financial condition/status and it was their duty to candidly
disclose all their assets, movable and immovable including
those in respect of which orders of attachment may have been
passed by the judicial and quasi judicial forums. However,
H instead of coming clean, they tried to paint a gloomy picture
KETAN V. PAREKH v. SPECIAL DIRECTOR, 1241
DIRECTORATE OF ENFORCEMENT (G.S. SINGHVI, J.]
about their financial position, which the AppellateTribunal rightly A
refused to accept. If what was stated in the applications filed
by the appellants and affidavit dated 10.10.2008 is correct, then
the appellants must be in a state of begging which not even a
man of ordinary prudence will be prepared to accept. To us, it
is clear that the appellants deliberately concealed the facts B
relating to their financial condition. Therefore, the Appellate
Tribunal did not commit any error by refusing to entertain their
prayer for total exemption.
27. In this context, reference can usefully be made to the
judgment of this Court in Benara Values Ltd. v. Commissioner C
of Central Excise (2006) 13 SCC 347. In that case, a two
Judge Bench interpreted Section 35-F of the Central Excise
Act, 1944, which is pari materia to Section 19(1) of the Act,
referred to the judgments in Siliguri Municipality v. Amalendu
Das (1984) 2 SCC 436, Samarias Trading Co. (P) Ltd. v. S. D
Samuel (1984) 4 SCC 666, Commissioner of Central Excise
v. Dunlop India Ltd. (1985) 1 SCC 260 and observed:
"Two significant expressions used in the provisions are
"undue hardship to such person" and "safeguard the E
interests of the Revenue". Therefore, while dealing with the
application twin requirements of considerations i.e.
consideration of undue hardship aspect and imposition of
conditions to safeguard the interests of the Revenue have
to be kept in view. F
As noted above there are two important expressions in
Section 35-F. One is undue hardship. This is a. matter
within the special knowledge of the applicant for waiver and
has to be established by him. A mere assertion about
undue hardship would not be sufficient. It was noted by this G
Court in S. Vasudeva v. State of Kamataka that under
Indian conditions expression "undue hardship" is normally
related to economic hardship. "Undue" which means
something which is not merited by the conduct of the
claimant, or is very much disproportionate to it. Undue H
1242 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A hardship is caused when the hardship is not warranted by
the circumstances.
For a hardship to be "undue" it must be shown that the
particular burden to observe or perform the requirement
is out of proportion to the nature of the requirement itself,
B
and the benefit which the applicant would derive from
compliance with it.
)he word "undue" adds something more than just hardship.
It means an excessive hardship or a hardship greater than
c the circumstances warrant.
The other aspect relates to imposition of condition to
safeguard the interests of the Revenue. This is an aspect
which the Tribunal has to bring into focus. It is for the
) Tribunal to impose such conditions as are deemed proper
to safeguard the interests of the Revenue. Therefore, the
Tribunal while dealing with the application has to consider
materials to be placed by the assessee relating to undue
hardship and also to stipulate conditions as required to
safeguard the interests of the Revenue."
E
28. The same view was reiterated in lndu Nissan Oxo
Chemicals Industries Ltd. v. Union of India (2007) 13 SCC
487 by considering proviso to Section 129-E of the Customs
Act, 1962, which is almost identical to Section 19 of the Act.
F
29. In the result, the appeals are dismissed. Four weeks'
further time is allowed to the appellants to comply with the
direction given by the Appellate Tribunal, failing which the
appeals filed by them shall stand automatically dismissed. The
G parties are left to bear their own costs.
D.G. Appeals dimissed.
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