Managerial status alone does not attract foreign exchange liability; specific consent, connivance, or neglect must be proved.

Liability under section 68(2) of the Foreign Exchange Regulation Act, 1973 requires evidence of consent, connivance, or neglect in relation to the specific contravention; mere managerial control or general supervision is insufficient. On the facts, the manager was not shown to have participated in, directed, or neglected the receipt of Indian currency from foreign customers, so liability and penalty could not be sustained. By contrast, the person who personally received the payment was properly found to have contravened the provision, but the penalty was set aside in view of the business practice, the absence of deliberate personal gain, and the fact that the company had already been penalised.

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Issues: (i) Whether the first appellant, as manager of the emporium, could be held liable under section 68(2) of the Foreign Exchange Regulation Act, 1973 for the contravention committed in accepting payment in Indian currency from foreign customers. (ii) Whether the second appellant was rightly found guilty of contravention, and if so, whether the penalty imposed on him was sustainable.

Issue (i): Whether the first appellant, as manager of the emporium, could be held liable under section 68(2) of the Foreign Exchange Regulation Act, 1973 for the contravention committed in accepting payment in Indian currency from foreign customers.

Analysis: Liability under section 68(2) is not vicarious merely because a person is in charge of business. It requires proof that the contravention occurred with the person's consent or connivance, or was attributable to his neglect. The material on record did not show that the first appellant had any role in the actual receipt of the payment, any direction controlling that act, or any proved neglect on his part. His general supervisory position and admission that he was manager of day-to-day business were insufficient to attract section 68(2) in the absence of evidence connecting him with the specific contravention.

Conclusion: The first appellant was not liable under section 68(2), and the penalty against him could not stand.

Issue (ii): Whether the second appellant was rightly found guilty of contravention, and if so, whether the penalty imposed on him was sustainable.

Analysis: The second appellant personally received the payment in Indian currency for goods sold to foreign customers, and the contravention was therefore established against him. His conduct amounted to consent to the contravening act. However, the surrounding circumstances showed that the practice had been followed as a business practice, there was no indication of deliberate personal gain, and the company had already been penalised. In those circumstances, while the finding of contravention was upheld, the penalty was considered unnecessary.

Conclusion: The finding of contravention against the second appellant was upheld, but the penalty imposed on him was set aside.

Final Conclusion: The order was sustained only to the extent that the second appellant's contravention finding remained undisturbed, but the first appellant was exonerated and the monetary penalty on the second appellant was removed.

Ratio Decidendi: For liability under section 68(2) of the Foreign Exchange Regulation Act, 1973, the prosecution must prove by evidence that the manager or officer personally consented to, connived in, or was neglectful in relation to the specific contravention; mere managerial status or overall responsibility is not enough.

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