Foreign exchange acquisition beyond general permission amounts to contravention; mitigating factors may reduce penalty quantum.

Acquisition of foreign exchange outside the scope of the applicable general permission constituted contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973. The appellant's claim that part of the foreign exchange was won in games and horse racing did not bring the acquisition within the notification, and the later inconsistent explanation did not dislodge the finding. Mitigating factors such as limited means, absence from the foreign exchange business, and the circumstances of acquisition were relevant only to penalty quantum. The contravention was upheld, but the penalty was reduced as the original amount was considered excessive.

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Issues: (i) Whether the appellant's acquisition of foreign exchange attracted contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973. (ii) Whether the penalty imposed required reduction having regard to the surrounding circumstances.

Issue (i): Whether the appellant's acquisition of foreign exchange attracted contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973.

Analysis: The acquisition of HK $7,000, even on the appellant's own version that it was won in games and horse racing, was not covered by the general permission under the Central Government notification. The remaining HK $3,000 was also not dislodged, as the appellant's later stand conflicted with his statement recorded during investigation. The finding of contravention was therefore sustained.

Conclusion: The contravention under section 8(1) was established and upheld.

Issue (ii): Whether the penalty imposed required reduction having regard to the surrounding circumstances.

Analysis: The appellant's limited means, the fact that he was not engaged in dealing in foreign exchange, and the circumstances in which the acquisition occurred were treated as relevant only to the extent of quantum. Those considerations did not excuse the contravention, but they justified moderation of the penalty as the original amount was found to be excessive.

Conclusion: The penalty was reduced from Rs. 50,000 to Rs. 25,000.

Final Conclusion: The finding of contravention remained undisturbed, but the monetary penalty was substantially scaled down in view of the mitigating circumstances.

Ratio Decidendi: Where acquisition of foreign exchange is not covered by the applicable general permission, contravention is made out, and mitigating circumstances may be considered only for determining the appropriate quantum of penalty.

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