Foreign exchange entitlement of a legal heir attracted statutory compliance, with contravention upheld but penalty reduced.

Section 10(1)(b) of the Foreign Exchange Regulation Act, 1947 applied where a legal heir became entitled to receive foreign exchange due to a deceased brother. The High Court noted that, without Reserve Bank permission, the heir was bound to take steps to secure receipt of the foreign exchange and could not avoid the statutory obligation by describing the claim as merely representative. Contravention was therefore upheld. The objection to the penalty was rejected in principle, but the circumstances justified mitigation, and the penalty was reduced to Rs. 5,000.

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Issues: Whether section 10(1)(b) of the Foreign Exchange Regulation Act, 1947 applied to a legal heir receiving foreign exchange due to the deceased brother, and whether the penalty imposed for contravention required interference.

Analysis: The right to receive the amounts in foreign exchange arose to the appellant as heir of his deceased brother, and such entitlement fell within the scope of section 10(1)(b). In the absence of permission from the Reserve Bank, the appellant was bound to take steps to secure receipt of the foreign exchange and could not avoid the statutory obligation by characterising the claim as one made only in a representative capacity. The authorities were therefore justified in holding that there was contravention. The objection that the quantum of penalty could not be sustained was also rejected, though the circumstances warranted some mitigation.

Conclusion: Section 10(1)(b) was applicable and the finding of contravention was upheld. The penalty was reduced to Rs. 5,000, and the appeal was dismissed in all other respects.

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