Foreign exchange contravention requires reliable proof of nexus or abetment; unsupported penalty cannot survive once the finding is quashed.

A finding of contravention under sections 8(3), 8(4) and 64(2) of the Foreign Exchange Regulation Act, 1973 was unsustainable where the record did not show that the appellant's introduction of a person to a bank amounted to abetment of prohibited remittance, any attempt to remit funds abroad, fraudulent representation, or a nexus with the alleged violations. The adverse finding was set aside. Because the penalty rested entirely on that unsupported finding, it also could not survive and was quashed. The appeal therefore succeeded, with both the contravention finding and the penalty annulled.

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Issues: (i) Whether the finding of contravention under sections 8(3), 8(4) and 64(2) of the Foreign Exchange Regulation Act, 1973 against the appellant was sustainable; (ii) whether the penalty imposed on the appellant could survive.

Issue (i): Whether the finding of contravention under sections 8(3), 8(4) and 64(2) of the Foreign Exchange Regulation Act, 1973 against the appellant was sustainable.

Analysis: The appellant was proceeded against on the basis of an alleged introduction of a person to a bank, but the record did not establish that such introduction amounted to abetment of remittance in contravention of the Act. The Tribunal found no convincing material showing any attempt by the appellant to remit funds abroad, no fraudulent representation, and no nexus between the appellant and the alleged statutory violations by the account holders.

Conclusion: The finding of contravention was unsustainable and was set aside in favour of the appellant.

Issue (ii): Whether the penalty imposed on the appellant could survive.

Analysis: Once the underlying finding of contravention was held to be without evidentiary support and was quashed, the foundation for the penalty ceased to exist. The penalty was therefore dependent entirely on the set-aside finding.

Conclusion: The penalty could not survive and was set aside in favour of the appellant.

Final Conclusion: The appeal succeeded, and both the adverse finding and the penalty were annulled.

Ratio Decidendi: A penalty for alleged contravention under the Foreign Exchange Regulation Act, 1973 cannot be sustained in the absence of reliable material establishing the appellant's nexus with the prohibited transaction or abetment of the violation.

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