FERA penalties and confiscation require reasoned discretion, with mitigating factors reducing penalties and defeating automatic confiscation.

FERA penalties must be assessed with regard to mitigating circumstances, including absence of personal gain, health, and social background, rather than imposed mechanically at the upper end of the range; the Tribunal accordingly reduced the penalties to 15% of the amounts originally imposed. Confiscation of seized foreign exchange is not automatic under section 63 and requires a reasoned exercise of discretion based on application of mind; because the order did not show adequate reasons and the facts did not justify such drastic action, the confiscation was set aside and release of the seized amount was directed. The finding of contravention remained undisturbed.

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Issues: (i) whether the penalties imposed for contraventions of the Foreign Exchange Regulation Act, 1973 required reduction in view of the mitigating circumstances and absence of personal gain; (ii) whether confiscation of the seized amount was sustainable in the facts of the case.

Issue (i): whether the penalties imposed for contraventions of the Foreign Exchange Regulation Act, 1973 required reduction in view of the mitigating circumstances and absence of personal gain.

Analysis: The admitted transactions were undertaken to help a close relative or family friend and not for any personal advantage. The Tribunal treated the surrounding circumstances, the appellants' health and social background, and the absence of any undue benefit as relevant in determining the quantum of penalty. It held that although the contraventions were not disputed, the penalties had to be judicially assessed having regard to the facts and circumstances and could not be imposed mechanically at the higher end of the permissible range.

Conclusion: The penalties were reduced to 15% of the amounts originally imposed, in favour of the appellants.

Issue (ii): whether confiscation of the seized amount was sustainable in the facts of the case.

Analysis: The Tribunal held that confiscation under section 63 was not automatic and required a conscious, reasoned exercise of discretion. Since the impugned order did not disclose adequate application of mind or reasons showing why confiscation was warranted, and the facts did not justify such drastic action, the confiscation could not be sustained.

Conclusion: The confiscation of the seized amount was set aside and its release was directed, in favour of the appellants.

Final Conclusion: The order was modified by reducing the penalties and directing release of the seized amount, while leaving the finding of contravention undisturbed.

Ratio Decidendi: Penalty under FERA must be determined on judicially relevant mitigating factors, and confiscation of seized property is a discretionary power that requires reasoned application of mind before it can be sustained.

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