Foreign exchange contravention proved on documentary and circumstantial evidence; penalty reduced as disproportionate to the defaults.

Contravention under the Foreign Exchange Regulation Act, 1973 was upheld where seized documents, a corroborative statement recorded under section 40, and surrounding circumstances supported the allegation, and the appellant's explanation was not backed by customer evidence or other credible material. The tribunal applied a standard of reasonable probability rather than mathematical certainty, and the failure to seek cross-examination of the intermediary justified an adverse inference. The penalty, however, was found disproportionate to the proven defaults because the adjudicating authority had overlapped the figures attributed to the two contraventions, so the monetary penalty was reduced.

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Issues: (i) Whether contravention of section 9(1)(b) and section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 was proved against the appellant. (ii) Whether the penalty imposed was excessive and required reduction.

Issue (i): Whether contravention of section 9(1)(b) and section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 was proved against the appellant.

Analysis: The adjudication rested on the seized documents, the statement of the intermediary recorded under section 40 of the Foreign Exchange Regulation Act, 1973, and the surrounding circumstances. The appellant's explanation that the entries related to gold transactions and commission was not supported by any customer evidence or credible material. The failure to seek cross-examination of the person whose statement linked the entries to compensatory payments justified an adverse inference. The proof required in such proceedings is one of reasonable probability and not mathematical certainty.

Conclusion: The contravention was proved and the finding of guilt was sustained.

Issue (ii): Whether the penalty imposed was excessive and required reduction.

Analysis: While the contravention was upheld, the penalty was examined on the basis of the amounts attributed to the two defaults and the overlap in the figures considered by the adjudicating authority. On that assessment, the original penalty was found disproportionate to the extent warranted by the facts.

Conclusion: The penalty was reduced.

Final Conclusion: The liability for contravention was affirmed, but the monetary penalty was moderated to a lower figure in the interests of justice.

Ratio Decidendi: In foreign exchange adjudication, contravention may be established on the basis of seized documents, corroborative statements, and surrounding circumstances on a preponderance of probability, and the penalty may be interfered with where it is found disproportionate to the proven defaults.

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