Statutory remittances immunity protected foreign exchange receipts, barring enforcement action under foreign exchange law.

Foreign exchange received during the operation of a statutory remittances immunity scheme remained protected from proceedings under the Foreign Exchange Regulation Act, 1973 where the receipt itself fell within the scheme's coverage. The court noted that alleged payment in Indian currency to a resident intermediary and onward transfer abroad did not, on the facts found, remove the transaction from the statutory immunity. It also noted procedural infirmities, including denial of material and cross-examination. The proceedings and penalty were therefore not maintainable against the recipients.

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Issues: Whether the appellants were protected under the remittances immunity scheme so that no action could be initiated against them under Section 9(1)(f)(i) of the Foreign Exchange Regulation Act, 1973 for receiving foreign exchange through the arrangement alleged by the enforcement authorities.

Analysis: The remittances were received by the appellants in October 1991, when the immunity scheme was in force. The scheme, read with the enabling statute, granted protection to recipients of foreign exchange received during its operation. Once the receipt of US$ 25,000 by each appellant fell within that protected regime, proceedings alleging violation of Section 9(1)(f)(i) could not be sustained merely because the investigation suggested an arrangement involving payment in Indian currency to a resident intermediary and onward transfer abroad. The finding that the appellants had paid Indian currency to a resident in India did not, on the facts found, take the case outside the statutory immunity. The orders below were also affected by procedural infirmity, including denial of material and opportunity of cross-examination.

Conclusion: The appellants were entitled to the benefit of the immunity scheme, and the proceedings and penalty under the Foreign Exchange Regulation Act, 1973 could not be maintained against them.

Ratio Decidendi: Where foreign exchange is received during the currency of a statutory immunity scheme, proceedings for contravention based on the same receipt cannot be sustained if the scheme grants protection to such receipt.

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