Foreign exchange contravention not made out where agent paid foreign principals' funds in ordinary business and disclosed transactions

Disbursing amounts from foreign ship owners' funds in the ordinary course of business did not amount to contravention of foreign exchange restrictions where the appellant acted as agent for foreign principals, maintained a running account, made payments on their instructions, and disclosed the transactions to the Reserve Bank of India from time to time. With no concealment shown and the business unable to be carried on otherwise, the finding of contravention under the Foreign Exchange Regulation Act was not justified. The appellant was therefore not liable for the alleged breach.

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Issues: Whether the appellant was liable for contravention of Section 5(1)(c) and Section 9(1)(a) of the Foreign Exchange Regulation Act for disbursing amounts from foreign ship owners' funds in the ordinary course of business and after disclosure to the Reserve Bank of India.

Analysis: The appellant acted as agent for foreign principals and maintained a running account in the usual course of business. The payments were made on instructions of the foreign ship owners, there was no concealment, and the transactions were disclosed to the Reserve Bank of India from time to time. In these circumstances, the business could not be carried on otherwise, and the finding that the appellant had committed a contravention was not justified.

Conclusion: The appellant was not liable for the alleged contravention and the appeal succeeded.

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