Foreign exchange contravention turns on corroboration for seized currency and on proof of lawful entitlement to possession.

Contravention under foreign exchange law was treated differently on the two sets of facts. Where foreign currency was recovered from the appellant's son, the finding could not stand because the only reliance was on retracted confessional material and there was no independent corroboration linking the appellant to the seizure. By contrast, where the appellant himself was found in possession of Saudi Riyals 5,500, his unsupported explanation was rejected and the possession was held to amount to contravention because lawful entitlement was not proved. The commentary therefore draws a clear distinction between unsupported attribution of seized currency to an appellant and unexplained personal possession of foreign currency.

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Issues: (i) Whether the finding of contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973, based on the foreign currency recovered from the appellant's son, was sustainable in the absence of corroborative evidence against the appellant. (ii) Whether the appellant's possession of Saudi Riyals 5,500 attracted contravention of section 8(1) where the explanation for possession was unsubstantiated and the lawful owner did not come forward.

Issue (i): Whether the finding of contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973, based on the foreign currency recovered from the appellant's son, was sustainable in the absence of corroborative evidence against the appellant.

Analysis: The foreign currency was recovered from the appellant's son and not from the appellant. The evidence relied upon consisted mainly of confessional statements which were later disowned, and no corroborative material linked the appellant to the seized currency. In the absence of independent evidence connecting the appellant with the recovery, the conclusion of contravention could not stand.

Conclusion: The finding of contravention in respect of the foreign currency recovered from the appellant's son was not sustainable and the appeal succeeded on this issue.

Issue (ii): Whether the appellant's possession of Saudi Riyals 5,500 attracted contravention of section 8(1) where the explanation for possession was unsubstantiated and the lawful owner did not come forward.

Analysis: The appellant did not dispute recovery of the foreign currency from him, but offered an explanation unsupported by any evidence. The explanation was found implausible, and possession of foreign currency without proof of lawful entitlement or the presence of the lawful owner in India was impermissible. The adjudicating authority's reasoning was found persuasive and the penalty was held not excessive.

Conclusion: The finding of contravention in respect of the Saudi Riyals 5,500 was upheld and the appeal failed on this issue.

Final Conclusion: One appeal was allowed and the other was dismissed, leaving the adjudication order undisturbed only in relation to the currency recovered from the appellant himself.

Ratio Decidendi: A finding of contravention based on seized foreign currency cannot be sustained without corroborative evidence when the relied-upon confessional material is retracted, but unexplained possession of foreign currency by an unauthorised person constitutes contravention under the governing foreign exchange law.

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