Foreign exchange penalty upheld where admitted cheque receipts lacked RBI permission and no waiver-violating denial of cross-examination was shown.

In foreign exchange adjudication, denial of cross-examination did not vitiate the penalty proceedings because the appellants had admitted receipt of the cheque amounts, were given personal hearing notices, and did not avail the opportunity or insist on cross-examination, amounting to waiver. The tribunal also held that receipt of cheque amounts without general or special RBI permission, coupled with no satisfactory explanation for the payer-recipient relationship, could be proved on preponderance of probabilities. Mens rea was not essential for penalty under the civil liability standard, so the contravention was established and the penalty maintained.

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Issues: (i) Whether the appellants were denied a fair opportunity by not being allowed cross-examination and whether such denial vitiated the penalty proceedings; (ii) Whether the receipt of cheque amounts without any general or special permission from the Reserve Bank of India amounted to a proved contravention of Section 9(1)(a) of the Foreign Exchange Regulation Act, 1973.

Issue (i): Whether the appellants were denied a fair opportunity by not being allowed cross-examination and whether such denial vitiated the penalty proceedings.

Analysis: The appellants had admitted receipt of the cheque amounts and had also been given notices for personal hearing. They chose not to appear on the later hearing date and did not insist upon cross-examination. Proceedings under foreign exchange law are adjudicatory in nature, and the rules applicable to such proceedings do not confer an absolute right of cross-examination in every case. On the facts, the opportunity granted was sufficient and the appellants' conduct amounted to waiver.

Conclusion: The objection based on denial of cross-examination was rejected and the proceedings were not vitiated.

Issue (ii): Whether the receipt of cheque amounts without any general or special permission from the Reserve Bank of India amounted to a proved contravention of Section 9(1)(a) of the Foreign Exchange Regulation Act, 1973.

Analysis: The appellants admitted receipt of cheques. No general or special permission from the Reserve Bank of India was produced. In the absence of any satisfactory explanation of the relationship between the payer and the recipients, and in view of the surrounding circumstances, an adverse inference was permissible. Foreign exchange adjudication proceeds on the basis of civil liability and preponderance of probabilities, and mens rea is not essential for penalty in such proceedings.

Conclusion: The contravention of Section 9(1)(a) was proved and the penalty was upheld.

Final Conclusion: The appeal failed on both the procedural challenge and the merits, and the penalty order was maintained.

Ratio Decidendi: In foreign exchange adjudication, admitted receipt of foreign exchange-related payment without requisite permission, coupled with an unexplained absence of a credible relationship or justification, can sustain penalty on a preponderance of probabilities, and refusal to avail the hearing opportunity may justify rejection of a later complaint of denial of cross-examination.

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