Revisional Authority Upholds Confiscation of Foreign Currency, Overturns Adjudicating Officer's Release Decision.

The Revisional Authority allowed the Revision Petition filed by the Government of India, Directorate of Enforcement, challenging the release of seized foreign currency. The adjudicating officer's decision to release the currency was deemed illegal and unjust, violating section 13(2) of FEMA, which mandates confiscation of currency involved in contraventions. The order for release was set aside, and the foreign currency was ordered to be confiscated after adjusting the penalty amount. The adjudicating authority's decision was found to exceed its jurisdiction, constituting a manifest error of law, and was thus modified to reflect the proper legal outcome.

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Issues:
Challenge to legality and propriety of penalty orders and release of seized foreign currency under section 3(a) of Foreign Exchange Management Act, 1999.

Analysis:
1. The Revision Petitioner, the Government of India, Directorate of Enforcement, contested the legality of penalty orders and release of seized foreign currency under section 3(a) of FEMA. The respondent was charged with unauthorized purchase of foreign currency, leading to the seizure of US $20,000. The adjudicating officer found the respondent guilty of contravening section 3(a) of FEMA and imposed a penalty of Rs. 50,000, directing adjustment from the seized amounts and realization of the balance foreign currency.

2. The Revision Petitioner argued that the penalty orders and release of seized foreign currency were illegal and constituted a manifest error of law, warranting confiscation of the seized amounts. However, upon review, the adjudicating officer's findings were deemed valid, with no apparent illegality, impropriety, or incorrectness in holding the respondent accountable for contravention of section 3(a) of FEMA by purchasing foreign exchange without proper authorization.

3. The central issue for consideration was whether there were grounds justifying intervention by the Revisional Authority in the impugned orders for the release of seized amounts and adjustment of penalty therefrom. The Proviso to section 19(6) allowed intervention in exceptional cases of miscarriage of justice or manifest errors of law. The Revisional Court could interfere if the lower authority exceeded its jurisdiction or committed glaring irregularities.

4. The adjudicating authority's decision to release the seized currency due to "great hardship" faced by the respondent was deemed illegal and manifestly unjust. The discretion exercised in not ordering confiscation of the seized amounts, despite their involvement in illegal transactions, was considered a gross injustice. The adjudicating officer's reasoning for release was found to be in clear violation of section 13(2) of FEMA, which mandates confiscation of currency involved in contraventions.

5. Ultimately, the Revision Petition was allowed, setting aside the order for release of the foreign currency and modifying the impugned orders to order confiscation of the seized currency after adjusting the penalty amount. The release of the foreign currency was deemed vitiated by a manifest error of law and was found to exceed the adjudicating authority's jurisdiction, leading to a clear illegality.

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