Foreign exchange contravention established where recovered currency had no lawful explanation, justifying penalty and confiscation.

Undisputed recovery of foreign currency from business , combined with no proof of lawful possession, supported a finding that the currency was acquired and retained in breach of the foreign exchange restrictions under sections 8(1) and 8(2) of the Foreign Exchange Regulation Act, 1973. The record showed foreign currency in different denominations and countries, indicating illegal foreign exchange dealings rather than isolated possession. On that basis, the penalty and confiscation of the seized currency were treated as proportionate and justified, and the impugned order was sustained in full.

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Issues: (i) whether the recovery and possession of foreign currency established contravention of section 8(1) and section 8(2) of the Foreign Exchange Regulation Act, 1973; (ii) whether the penalty of Rs. 50,000 and confiscation of the seized foreign currency were justified.

Issue (i): whether the recovery and possession of foreign currency established contravention of section 8(1) and section 8(2) of the Foreign Exchange Regulation Act, 1973.

Analysis: The recovery memo was not disputed, and there was no denial that the foreign currency had been recovered from the business premises. The appellant did not assert lawful possession of the seized currency. The material on record therefore supported the finding that the foreign currency had been acquired and retained in violation of the statutory restrictions on dealings in foreign exchange.

Conclusion: The finding of contravention under section 8(1) and section 8(2) was upheld.

Issue (ii): whether the penalty of Rs. 50,000 and confiscation of the seized foreign currency were justified.

Analysis: The recovery of foreign currency of different denominations and countries indicated illegal foreign exchange dealings and not a mere isolated possession. In that context, the penalty imposed was not excessive, and confiscation of the foreign currency was a proper consequence of the proved contravention.

Conclusion: The penalty and confiscation were upheld as justified.

Final Conclusion: The impugned order was sustained in full, and the appeal failed on merits.

Ratio Decidendi: Where recovery of foreign currency is undisputed and lawful possession is not shown, contravention of the foreign exchange restrictions is established and the corresponding penalty and confiscation may be sustained.

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