Foreign exchange liability upheld where residency was factual, appellate review was permitted, and the corporate veil was pierced.

Residency under foreign exchange law was treated as a factual inquiry, and the appellant's inconsistent stands and the record supported the finding that he was resident in India; the earlier habeas corpus judgment was used only as supporting material. The appellate authority was held competent under its statutory powers to examine the existing evidence, confirm, modify or set aside the adjudication, and correct findings that did not follow from the record. Allegations of bias and denial of natural justice failed because no disqualifying involvement in the investigation was shown and a fair opportunity was given. The corporate form was disregarded where the company was found to be a shell used for the transactions, so liability could be fastened on the director.

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Issues: (i) Whether the appellate authority was justified in relying on the earlier habeas corpus judgment to hold that the appellant was a resident within India and liable to be proceeded against under the foreign exchange law. (ii) Whether the appellate authority could, in exercise of its powers of appeal, reassess the evidence and modify the findings recorded by the adjudicating authority. (iii) Whether the adjudicating authority was disqualified for bias or violation of natural justice on the ground of its involvement in the investigation. (iv) Whether the separate legal personality of the company barred fastening liability on the director and whether the corporate veil could be lifted on the facts of the case.

Issue (i): Whether the appellate authority was justified in relying on the earlier habeas corpus judgment to hold that the appellant was a resident within India and liable to be proceeded against under the foreign exchange law.

Analysis: The residency question was treated as a question of fact and the record showed that the appellant had taken inconsistent stands in different proceedings. The adjudicating authority had independently reached the same conclusion as the earlier judgment, and the appellate authority only treated that judgment as supporting material. No separate legal infirmity was shown in the finding that the appellant was not a person resident outside India for the relevant purpose.

Conclusion: The finding that the appellant was resident in India was upheld and the issue was decided against the appellant.

Issue (ii): Whether the appellate authority could, in exercise of its powers of appeal, reassess the evidence and modify the findings recorded by the adjudicating authority.

Analysis: The appellate authority had power under Section 52(3) and Section 52(4) of the Foreign Exchange Regulation Act, 1973 to confirm, modify or set aside the order under appeal and to make such order as it thought fit after examining legality, propriety and correctness. It was entitled to examine the evidence already on record and to correct findings that did not logically follow from the material before the adjudicating authority. No impermissible fresh evidence was relied upon without notice.

Conclusion: The appellate authority acted within jurisdiction in reassessing the evidence and modifying the findings, and the challenge failed.

Issue (iii): Whether the adjudicating authority was disqualified for bias or violation of natural justice on the ground of its involvement in the investigation.

Analysis: The principle that no person can be a judge in his own cause was acknowledged, but the record did not show that the adjudicating officer had issued summons, recorded statements, participated in searches, or had any vested interest in the outcome. The finding of guilt was based on documentary evidence, and the appellant had been given a fair opportunity. The appellate authority had also independently examined the matter afresh, which further diluted the allegation of bias.

Conclusion: No bias or denial of natural justice was established, and the issue was decided against the appellant.

Issue (iv): Whether the separate legal personality of the company barred fastening liability on the director and whether the corporate veil could be lifted on the facts of the case.

Analysis: The protection of incorporation is not absolute where the facts show that the company name was used as a device to carry out transactions not attributable to the company's own business. The appellate authority found that the drafts, bank account, transfers and related acts were undertaken in the appellant's individual capacity and that the company was merely a shell used as a vehicle for the transactions. On those facts, the corporate form could be disregarded to identify the real actor.

Conclusion: The corporate veil could be lifted and the director's liability was sustained; the issue was decided against the appellant.

Final Conclusion: All the substantial questions were answered against the appellant, the findings of contravention under the foreign exchange law were substantially sustained, and the challenge to the appellate order failed in entirety.

Ratio Decidendi: In an appeal under the foreign exchange law, the appellate authority may reassess the existing evidence and modify findings within its statutory powers, and the corporate veil may be lifted where the company form is shown to have been used merely as a device to carry out the impugned transactions.

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