NRI deposit acceptance through power of attorney held within RBI permission, defeating alleged foreign exchange contravention.

Acceptance of NRI fixed deposits through a power of attorney holder was treated as covered by RBI's general permission under the Exchange Control Manual, because the deposits were received in the names of non-resident Indians and the appellant had sought RBI permission and registration. The Tribunal further stated that the Foreign Exchange Regulation Act did not prohibit transactions being carried out through an authorised agent or power of attorney holder, and that liability could not be fastened on the appellant merely on the conduct of the attorney holders absent proceedings against them. On that basis, the alleged contravention of Section 9(1)(e) was not sustainable and the penalty order could not stand.

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Issues: Whether acceptance of NRI fixed deposits by the appellant firm through a power of attorney holder, in the light of RBI's permission and the Exchange Control Manual, amounted to contravention of Section 9(1)(e) of the Foreign Exchange Regulation Act.

Analysis: The deposits were admittedly received in the names of non-resident Indians and the appellant had corresponded with the RBI seeking permission and registration. The RBI communication indicated that such deposits could be accepted subject to the prescribed outer limit, and the Tribunal treated this as bringing the appellant within the scope of the RBI's general permission under Part G of Chapter 15 of the Exchange Control Manual. The Tribunal also held that there was no legal bar in the Foreign Exchange Regulation Act against an act being done through an authorised agent or power of attorney holder, and the conduct of the power of attorney holders could not, by itself, fasten liability on the appellant in the absence of proceedings against them.

Conclusion: The acceptance of the NRI deposits through a power of attorney holder did not constitute a sustainable contravention of Section 9(1)(e) of the Foreign Exchange Regulation Act, and the penalty order could not stand.

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