Strict construction of vicarious liability under foreign exchange law upheld; conviction stood, but imprisonment was replaced by a fine.

Liability under section 23C(1) of the Foreign Exchange Regulation Act, 1947 was treated as subject to strict construction: a person is in charge of a firm only when he has overall control of its day-to-day business, not merely a formal or policy role. On the facts, the appellant's own statement that he alone looked after the firm's affairs was decisive, and his temporary absence abroad did not displace that position without evidence of handover of control; the finding of liability was upheld. On sentencing, however, the Court considered the absence abroad and the possibility of lack of knowledge or due diligence, so the conviction stood but rigorous imprisonment was replaced by a fine.

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Issues: (i) Whether the appellant was a person in charge of and responsible for the conduct of the business of the firm within section 23C(1) of the Foreign Exchange Regulation Act, 1947. (ii) Whether, on the facts, the sentence of imprisonment should be maintained or modified.

Issue (i): Whether the appellant was a person in charge of and responsible for the conduct of the business of the firm within section 23C(1) of the Foreign Exchange Regulation Act, 1947.

Analysis: The provision creating liability was treated as highly penal and therefore liable to strict construction. A person is in charge of the business when he has overall control of the day-to-day affairs of the firm, and not merely a formal or policy-making role. The appellant's own statement that he alone looked after the affairs of the firm was decisive. His temporary absence abroad did not, by itself, show that he had ceased to be in charge, in the absence of evidence that charge had been handed over to another person.

Conclusion: The appellant was held to be in charge of the business within section 23C(1), and the finding of liability was upheld.

Issue (ii): Whether, on the facts, the sentence of imprisonment should be maintained or modified.

Analysis: The Court considered the appellant's absence abroad at the time of contravention and the possibility that the offence may have occurred without his knowledge or due diligence. In such a case of vicarious punishment, the sentencing court could take those circumstances into account even though the conviction remained undisturbed.

Conclusion: The sentence of rigorous imprisonment was set aside and replaced by a fine of Rs. 2,000.

Final Conclusion: The conviction remained in force, but the punishment was reduced to fine only, resulting in partial relief to the appellant.

Ratio Decidendi: For section 23C(1), a person is in charge of a company or firm when he has overall control of its day-to-day business, and temporary absence does not end that charge unless there is evidence of relinquishment or transfer of control.

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