Proof of prohibited foreign exchange remittance failed where evidence left doubt about the lawful origin and transmission of funds.

A penalty for alleged contravention of FERA section 9(1)(b) could not be sustained because the record did not positively establish that the amounts received through drafts originating in India were transmitted in breach of the statutory prohibition. The surrounding material showed that similar amounts had on other occasions been sent through proper banking channels, and the origin of the drafts was not investigated to exclude lawful purchase of foreign exchange or lawful remittance. On this evidence, the charge was not proved, the appellant received the benefit of doubt, and the penalty order was set aside.

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Issues: Whether the penalty for alleged contravention of section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 could be sustained on the material available.

Analysis: The record did not contain positive evidence that the amounts received through drafts originating in India were sent in violation of the statutory prohibition. The surrounding circumstances showed that similar amounts had on other occasions been sent through proper banking channels, and the origin of the drafts was not investigated so as to exclude the possibility of purchase out of foreign exchange or remittance in a lawful manner. On this material, the evidence was held inadequate to affirm the alleged contravention.

Conclusion: The charge under section 9(1)(b) was not proved and the appellant was entitled to the benefit of doubt.

Final Conclusion: The penalty order could not stand and was set aside.

Ratio Decidendi: A penalty for contravention of foreign exchange law cannot be sustained where the evidence does not positively establish the prohibited remittance and the surrounding material leaves a reasonable doubt as to lawful origin or transmission of the funds.

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