Judicial discretion in foreign exchange penalty matters led to quashing of punishment for an isolated, non-deliberate breach.

Penalty for contravention of section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 was set aside where the appellant had admitted receipt of funds through an unauthorised channel but the breach was found to be isolated and non-deliberate. The Tribunal held that penalty in foreign exchange proceedings is a matter of judicial discretion and should not be imposed mechanically. Because the appellant showed immediate admission, no conscious disregard of law, and no contumacious or dishonest conduct, the violation was treated as venial and pardonable. The finding of contravention was left intact, but the penalty was quashed.

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Issues: Whether the penalty imposed for contravention of section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 was liable to be quashed in view of the appellant's bona fide conduct, isolated transaction, and mitigating circumstances.

Analysis: The appellant admitted receipt of funds through an unauthorised channel, so the finding of contravention was not disturbed. The appeal concerned only the quantum of penalty. The Tribunal held that penalty in such proceedings is a matter of judicial discretion and is not to be imposed mechanically. On the facts, the transaction was isolated, the appellant was not shown to have acted deliberately or in conscious disregard of law, and her immediate admission and surrounding circumstances showed absence of contumacious or dishonest conduct. The breach was treated as venial and pardonable, warranting leniency.

Conclusion: The penalty was quashed, while the finding of guilt for contravention was left intact.

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