Natural justice and corroboration requirements defeated an ex parte foreign exchange penalty based on uncertain attribution and weak evidence.

An adjudication penalty under the Foreign Exchange Regulation Act, 1973 was held unsustainable where the proceedings were conducted ex parte without adequate proof of effective notice, the appellant was not independently identified by bankers or recipients, and the order relied on uncorroborated statements and materials. The reasoning also failed to clearly establish the appellant's role and improperly attributed a co-noticee's acts to him. Because the order was arbitrary, inadequately reasoned, and contrary to the principles of natural justice, the penalty was set aside.

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Issues: Whether the adjudication order imposing penalty for alleged contraventions of the Foreign Exchange Regulation Act, 1973 was sustainable in the absence of adequate opportunity, reliable evidence, and proper application of mind.

Analysis: The record showed that the proceedings were conducted ex parte, that only a few hearing dates were fixed without satisfactory proof of effective notice, and that the appellant was not independently identified by bankers or recipients. The impugned order relied heavily on statements and materials without sufficient corroboration, while similar allegations in other proceedings had resulted in discharge or dropping of proceedings against the appellant. The reasoning also showed confusion regarding the appellant's role and attribution of the co-noticee's acts to him. The order was found to be arbitrary, inadequately reasoned, and in breach of the principles of natural justice.

Conclusion: The penalty order was unsustainable and was set aside in favour of the appellant.

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