Residence outside India and foreign-exchange contravention established through account entries, drafts and loan transaction evidence.

A person who stayed mostly in Malaysia for business and visited India only occasionally was treated as a person resident outside India under the statutory definition. On that basis, account entries in his name, drafts received from Malaysia, and management of affairs through a power of attorney supported the finding that the payments, credits and related transactions were made by, on behalf of, or to the credit of a person resident outside India. In relation to the loan transaction, the appellants failed to prove that the advance was made personally to A. Abdul Khader rather than to the proprietorship concern, and an adverse inference was drawn from facts within their special knowledge. Contravention under the Foreign Exchange Regulation Act was established.

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Issues: Whether K. Abdul Majeed was a person resident outside India, and whether the payments, credits and loan transactions in relation to him constituted contravention of the Foreign Exchange Regulation Act, 1973.

Analysis: The record showed that K. Abdul Majeed stayed mostly in Malaysia in connection with his business interests and came to India only occasionally. On those facts, he fell within the statutory concept of a person resident outside India under the relevant definition. The account entries in his name, the drafts received from Malaysia, and the admitted conduct of A. Abdul Khader in managing the affairs under power of attorney supported the finding that the transactions were made by, on behalf of, or to the credit of a person resident outside India. In the appeal relating to the loan transaction, the appellant failed to establish that the advance was in fact made to A. Abdul Khader personally rather than to the proprietorship concern of K. Abdul Majeed. The facts within the special knowledge of the appellants were not satisfactorily proved, warranting adverse inference.

Conclusion: The contravention under sections 9(1)(a), 9(1)(c) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973 was established, and the appeals were liable to fail.

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