Strict liability and corporate responsibility under foreign exchange law allowed independent prosecution without prior adjudication.

Foreign exchange contraventions under FERA were treated as a special economic offence attracting a statutory scheme of corporate and vicarious responsibility. The Court found section 68 constitutionally valid because liability was confined to persons in charge of and responsible for the company's business, with safeguards for lack of knowledge and due diligence. It also treated the core prohibitory offences as strict liability offences, so mens rea was not essential for every contravention and section 59 did not impose a universal culpable mental state requirement. Prosecution under section 56 could proceed independently of adjudication and penalty proceedings, and the notices to company officers were upheld as sufficient.

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Issues: (i) Whether section 68 of the Foreign Exchange Regulation Act, 1973 was unconstitutional as violative of Articles 14 and 21 of the Constitution of India. (ii) Whether mens rea was an essential ingredient of contraventions under the Act and whether section 59 impliedly required it in all prosecutions. (iii) Whether prosecution under section 56 could proceed independently of adjudication and penalty proceedings under sections 50 and 51. (iv) Whether section 68 applied to penalty proceedings and whether the notices issued to company officers were valid.

Issue (i): Whether section 68 of the Foreign Exchange Regulation Act, 1973 was unconstitutional as violative of Articles 14 and 21 of the Constitution of India.

Analysis: The classification created by section 68 was held to be linked to the object of foreign exchange control. The provision fastened liability only on persons in charge of and responsible for the conduct of the company's business at the time of contravention. The Court held that the statute dealt with a special economic offence affecting national foreign exchange and that the legislative scheme was neither arbitrary nor unfair. The safeguard of proving absence of knowledge or due diligence, together with the overall statutory scheme, was treated as sufficient to meet constitutional scrutiny.

Conclusion: Section 68 was held not to violate Articles 14 or 21, and the challenge to its constitutional validity failed.

Issue (ii): Whether mens rea was an essential ingredient of contraventions under the Act and whether section 59 impliedly required it in all prosecutions.

Analysis: The Court held that the Act created strict liability for the core prohibitory contraventions and that mens rea was excluded by necessary implication for such offences. Section 59 was construed as operating only where the relevant offence itself required a culpable mental state. It was not read as making mens rea an ingredient of every contravention under the Act. The burden-shifting mechanism in section 68 and the presumption in section 59 were treated as consistent with the statutory scheme.

Conclusion: Mens rea was not held to be essential for every contravention under the Act, and section 59 was not construed as importing a universal mens rea requirement.

Issue (iii): Whether prosecution under section 56 could proceed independently of adjudication and penalty proceedings under sections 50 and 51.

Analysis: The Court distinguished the earlier statutory scheme and held that under the 1973 Act, adjudication and prosecution were independent. Section 56 opened without prejudice to the penalty power of the adjudicating officer, and the two remedies were not made conditional upon one another. Parallel proceedings were therefore permissible and did not depend on prior completion of adjudication.

Conclusion: Prosecution under section 56 could proceed independently of adjudication and penalty proceedings.

Issue (iv): Whether section 68 applied to penalty proceedings and whether the notices issued to company officers were valid.

Analysis: Section 68 was construed as a provision for offences by companies and the identification of persons liable to punishment, not as a provision governing penalty proceedings. On the notices, the Court held that the description of the officers' positions and responsibility was sufficient; the words "in charge of" and "responsible to" were treated as substantially synonymous for the purpose of the provision. The notices were not found defective on the ground urged.

Conclusion: Section 68 was held inapplicable to penalty proceedings, but the notices were not invalid on the ground of insufficiency.

Final Conclusion: The constitutional and statutory challenges failed, and the petitions were dismissed.

Ratio Decidendi: In offences under the foreign exchange law, liability may be fastened through a statutory scheme of corporate and vicarious responsibility, strict liability may exclude mens rea where the statute so indicates, and prosecution need not await adjudication unless the enactment expressly makes the remedies interdependent.

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