Foreign exchange received from a relative abroad can amount to acquisition under exchange-control law, despite hospitality arguments.

Section 4(1) of the Foreign Exchange Regulation Act, 1947 was construed as a broad prohibition on buying, borrowing or otherwise acquiring foreign exchange without Reserve Bank permission. Receipt of foreign exchange from another person, including a gratuitous payment by a relative for travel and incidental expenses abroad, was treated as "otherwise acquiring" because it involves transfer of title, possession and the ability to appropriate the currency. The Foreign Travel Scheme and exchange-control manual did not imply permission for such private receipt abroad, and a hospitality-based characterisation did not remove the transaction from the statutory ban.

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Issues: Whether the receipt of foreign exchange from a brother abroad for travel, boarding, lodging and incidental expenses amounted to "otherwise acquiring" foreign exchange within the meaning of Section 4(1) of the Foreign Exchange Regulation Act, 1947.

Analysis: Section 4(1) was construed as a broad regulatory prohibition against buying, borrowing, or otherwise acquiring foreign exchange except with the Reserve Bank's permission. The phrase "otherwise acquired" was held to cover transactions where foreign exchange is received from another person with entitlement to use it as one's own. A gratuitous payment of foreign exchange, including one made by a relative to meet expenses abroad, was treated as acquisition because it involves transfer of title, possession, and capacity to appropriate. The Foreign Travel Scheme and the exchange-control manual did not confer any implied permission to receive foreign exchange from a private host while abroad, and the alleged hospitality character did not take the transaction outside the statutory prohibition.

Conclusion: Receipt of U.S. dollars from the brother constituted acquisition of foreign exchange within Section 4(1), and the contravention finding was upheld.

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