Foreign exchange abetment requires intentional aid or knowledge; routine cheque clearance alone did not sustain penalties.

Abetment of a foreign exchange contravention was not established where cheques were cleared in the ordinary course of banking and later credited to a non-resident account. The Tribunal held that liability under the Foreign Exchange Regulation Act and the Exchange Control Manual required intentional aid, instigation, or conspiratorial participation, and that mere clearance of cheques, absent proof of knowledge that the proceeds would be remitted abroad, did not satisfy that test. The absence of Form A3 and the later movement of funds outside India, without more, showed at most negligence in banking procedure. The penalties therefore could not be sustained and the common adjudication order was set aside.

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Issues: Whether the appellants abetted contravention of the Foreign Exchange Regulation Act, 1973 and the Exchange Control Manual, 1987 by clearing cheques which were later credited to a non-resident account, and whether the penalties imposed for such alleged contravention could be sustained.

Analysis: The record showed that the cheques were presented in the normal course of clearing and were debited to the BFEA account maintained with the bank. The decisive question was whether such clearance, without proof that the bank or its officers knew that the proceeds would be remitted abroad, amounted to abetment. Abetment required a positive element of instigation, conspiracy, or intentional aid, and the absence of Form A3 and the later movement of funds outside India did not by themselves establish that the appellants had intentionally facilitated the contravention. The Tribunal treated the material as showing, at the highest, negligence in banking procedures, not active complicity in a prohibited foreign exchange transaction.

Conclusion: The charge of abetment was not made out against the appellants, and the penalties imposed on them could not stand.

Final Conclusion: The common adjudication order was set aside and the appeals succeeded because the essential ingredients of abetment under the foreign exchange law were not established.

Ratio Decidendi: For abetment of a foreign exchange contravention to be made out, there must be intentional aid, instigation, or conspiratorial participation; mere clearance of cheques in the ordinary course of banking, without proved knowledge of the prohibited remittance, amounts at most to negligence and does not attract liability.

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