Prima facie foreign exchange violation and bail conditions can justify release even during an early-stage documentary investigation.

Receipt of drafts in India on behalf of a person resident outside India may amount to a prima facie breach of the Foreign Exchange Regulation Act, 1973, because the prohibition covers payment received otherwise than through an authorised dealer and the Act's currency definition includes drafts and similar instruments. At the bail stage, the court accepted the prosecution version that the drafts were received and handed over to the non-resident, and rejected the argument that liability arose only on cash realisation or foreign-account credit. Bail was nevertheless granted because the investigation was at an early stage, evidence was largely documentary, the accused was not shown to be a flight risk, and conditions could secure attendance and cooperation.

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Issues: (i) Whether the petitioner was prima facie liable under section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 for receiving drafts on behalf of a person resident outside India. (ii) Whether, on the facts of the investigation, the petitioner was entitled to bail.

Issue (i): Whether the petitioner was prima facie liable under section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 for receiving drafts on behalf of a person resident outside India.

Analysis: The provision prohibited receipt in India of payment by order or on behalf of a person resident outside India otherwise than through an authorised dealer, unless covered by a general or special exemption of the Reserve Bank. The definition of currency in section 2(f) of the Act expressly included cheques, drafts and similar instruments. On the prosecution version, the petitioner had received drafts on behalf of a non-resident and had handed them over to that person. The Court held that, at the stage of bail, the plea that liability could arise only on actual cash realisation or crediting of the foreign account was not persuasive.

Conclusion: The petitioner was prima facie shown to have attracted section 9(1)(b) of the Foreign Exchange Regulation Act, 1973.

Issue (ii): Whether, on the facts of the investigation, the petitioner was entitled to bail.

Analysis: The offence carried a substantial possible sentence, but the investigation was at an early stage and most evidence was documentary. The Court noted that the petitioner was not shown to be a flight risk, that his passport had been seized, and that suitable conditions could address any concern about interference with the investigation. It also held that continued custody was not necessary merely because further investigation might continue.

Conclusion: The petitioner was entitled to bail on conditions securing attendance and cooperation with the investigation.

Final Conclusion: Bail was granted, subject to conditions, while leaving the merits of the alleged foreign exchange violation open for trial.

Ratio Decidendi: For bail purposes under the Foreign Exchange Regulation Act, 1973, receipt of drafts on behalf of a non-resident may constitute a prima facie violation of the payment restrictions, and bail may nevertheless be granted where custodial detention is not necessary and conditions can adequately protect the investigation.

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