Undisclosed material cannot support a foreign exchange penalty; the order was set aside for lack of fair notice.

A penalty order under the Foreign Exchange Regulation Act could not be sustained where it was founded on documents and evidence not supplied with the show cause notice. The tribunal noted that the authority had relied on correspondence, bank documents, credit vouchers and deposit slips that were never disclosed to the noticee, depriving him of an effective opportunity to answer the case. A penalty must rest only on material made available to the person proceeded against, and findings based on undisclosed material violate basic administrative law requirements. The penalty order was therefore held unsustainable and set aside.

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Issues: Whether the penalty order under the Foreign Exchange Regulation Act could be sustained when it was founded on documents and evidence not supplied to the appellant with the show cause notice.

Analysis: The penalty was imposed for alleged violation of Sections 8(1) and 9(1)(a) read with Section 64(2) of the Foreign Exchange Regulation Act. The record showed that the authority relied upon material including correspondence, bank documents, credit vouchers, and deposit slips that were not part of the show cause notice and had not been furnished to the appellant. A penalty order must rest only on material disclosed to the noticee so that an effective opportunity to meet the case is available. Findings based on undisclosed material offend basic administrative law requirements and cannot be upheld.

Conclusion: The penalty order was unsustainable and was set aside.

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