Section 27 of FERA construed narrowly: business promotion for export sales was not participation in a foreign concern as promoter.

Section 27 of the Foreign Exchange Regulation Act, 1973 was construed narrowly: the words "whether as promoter or otherwise" were read ejusdem generis with "promoter", so liability arises only where the conduct has the essential attributes of participation as a promoter in a foreign concern, including a financial or proprietary stake. On that construction, permitting foreign bottlers to use trade marks, provide technical assistance, and incur overseas advertising expenditure was treated as business promotion for export sales, not participation in the foreign concerns as promoters. As the petitioners had no share in profits or financial interest and had disclosed the arrangements to the Reserve Bank, the prosecution could not be sustained and the accused were discharged.

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Issues: Whether the petitioners' conduct in permitting foreign bottlers to use trade marks, provide technical assistance, and incur advertising expenditure abroad amounted to associating with or participating in a concern outside India as promoter or otherwise without previous permission under section 27 of the Foreign Exchange Regulation Act, 1973.

Analysis: The expression "whether as promoter or otherwise" in section 27 was construed in the setting of the Act and its scheme, including the regulatory framework governing foreign exchange and the grant of permission. The Court held that the phrase must be read narrowly and ejusdem generis with the word "promoter". On that construction, the proscribed conduct must partake of the attributes of a promoter, namely a financial or proprietary stake in the running of the foreign concern. The petitioners had no share in the profits, no financial interest in the foreign bottling concerns, and had disclosed the franchise arrangements to the Reserve Bank. Their activities were found to be business promotion for export sales and not participation in the foreign concerns as promoters.

Conclusion: The petitioners' conduct did not fall within section 27 of the Foreign Exchange Regulation Act, 1973, and the prosecution could not be sustained.

Final Conclusion: The criminal proceedings were quashed and the accused were discharged.

Ratio Decidendi: The words "whether as promoter or otherwise" in section 27 of the Foreign Exchange Regulation Act, 1973 are to be construed ejusdem generis with "promoter", so liability arises only when the conduct bears the essential attributes of participation as a promoter in the foreign concern.

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