Quasi-criminal foreign exchange penalty failed where the department lacked reliable proof of actual contravention.

In quasi-criminal foreign exchange penalty proceedings, the department must prove the alleged contravention by reliable and cogent evidence of the actual acquisition or receipt of foreign exchange without permission. A certificate or uncorroborated document, standing alone, was held insufficient, and the record did not satisfactorily establish the charge. The penalty therefore could not be sustained, the appeals succeeded, the penalty order was set aside, and the deposited amounts were directed to be refunded.

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Issues: Whether the penalty for contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973 could be sustained on the basis of the documents relied upon by the department.

Analysis: The evidence consisted chiefly of a certificate and a letter said to show receipt of foreign exchange. The finding of contravention required proof that foreign currency had actually been acquired without permission of the Reserve Bank of India. The proceedings being quasi-criminal in nature, the burden lay on the department to establish the charge by reliable evidence. The record did not contain satisfactory proof of actual donation or receipt, the certificate by itself was insufficient, and the inquiry was found to have been conducted in a perfunctory manner.

Conclusion: The charge was not proved and the penalty could not be sustained.

Final Conclusion: The appeals succeeded, the penalty order was set aside, and the deposited penalties were directed to be refunded.

Ratio Decidendi: In quasi-criminal foreign exchange proceedings, penalty cannot be upheld unless the department proves the alleged contravention by reliable and cogent evidence of the actual transaction; a mere certificate or uncorroborated document is insufficient.

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