FERA penalty upheld where alleged foreign exchange gift was treated as a sham transaction supported by consideration.

In FERA adjudication, a penalty for contravention of section 9(1)(a) may be sustained where the alleged gift is found to be a sham transaction supported by consideration. The analysis noted that the remittance was outside the protective scope of the Remittances of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunities and Exemptions) Act, 1991 because the gift predated that enactment. The remitter's statement suggested gifts were issued against a premium, and no reliable material showed that no consideration had passed. The recipient also failed to rebut the evidence or produce the co-noticee, so the penalty was upheld.

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Issues: Whether the penalty for contravention of section 9(1)(a) of the Foreign Exchange Regulation Act, 1973 was sustainable on the basis that the alleged gift was in truth a paid transaction.

Analysis: The adjudication turned on whether the remittance fell within the immunity under the Remittances of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunities and Exemptions) Act, 1991 and whether the gift was genuine. The relevant gift had been made before the commencement of that Act and was therefore outside its protective ambit. The statement of the foreign remitter indicated that gifts were issued against a premium, and there was no reliable material to show that no consideration had passed from the recipient. In quasi-judicial proceedings under the Foreign Exchange Regulation Act, 1973, the finding could validly rest on the evidence available on record, and the recipient failed to rebut that evidence or produce the co-noticee to support his version.

Conclusion: The penalty for contravention of section 9(1)(a) of the Foreign Exchange Regulation Act, 1973 was rightly sustained and the appeal failed.

Final Conclusion: The adjudication order imposing penalty was upheld, as the transaction was treated as a non-genuine gift and the appeal was found to lack merit.

Ratio Decidendi: In FERA adjudication, a contravention may be upheld on the basis of relevant evidence on record, including the statement of the remitter, where the alleged gift is shown to be a sham transaction supported by consideration and no rebuttal evidence is produced.

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