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Issues: (i) whether the penalty already imposed could be enhanced in the proceedings initiated under the Board's notice; (ii) whether the penalty required reduction after the finding of contravention was sustained only in part and whether the seized amount had to be refunded.
Issue (i): whether the penalty already imposed could be enhanced in the proceedings initiated under the Board's notice.
Analysis: The notice was issued to hear the appellant before any modification prejudicial to him. Enhancement of penalty would clearly operate to his prejudice, and the hearing could not be confined only to the quantum of enhancement without first deciding whether enhancement was justified at all. The hearing requirement under section 52(5) of the Foreign Exchange Regulation Act, 1973 had to be read consistently with the protection against prejudicial modification under section 52(2) of the Foreign Exchange Regulation Act, 1973.
Conclusion: The penalty was not liable to be enhanced.
Issue (ii): whether the penalty required reduction after the finding of contravention was sustained only in part and whether the seized amount had to be refunded.
Analysis: The original penalty had been influenced by the confiscation of the seized amount and by the finding on both contraventions. Since one finding of contravention was not sustained and the amount involved stood reduced, there was no adequate justification for increasing the penalty. At the same time, the circumstances did not warrant a proportionate reduction of the penalty already imposed. The retained seized amount could not continue to be withheld after the final disposal of the matter.
Conclusion: The existing penalty of Rs. 35,000 was maintained and the seized amount of Rs. 2,10,000 was directed to be refunded.
Final Conclusion: The appellant succeeded in resisting enhancement of penalty and obtained refund of the seized amount, while the penalty already deposited was treated as full satisfaction of the final penalty liability.
Ratio Decidendi: Where a proposed modification would adversely affect a party, the party must be heard on the question whether such modification is warranted, and not merely on the extent of the proposed enhancement; absent justification, penalty cannot be enhanced.
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