Composite penalty and foreign exchange contravention requirements: liability must be proved charge-wise, and proprietary concerns are not companies.

Separate foreign exchange contraventions could not support a single composite penalty unless the liability was apportioned to each charge; a penalty order that failed to identify the quantum attributable to each alleged breach was legally unsustainable. The alleged contraventions under sections 8(1), 9(1)(a), 14 and 16(1)(a) of the Foreign Exchange Regulation Act, 1973 also depended on proof of the specific statutory ingredients: actual payment or transfer, ownership or holder status in foreign exchange, and a legally established due date or direction for receipt. On the facts described, those ingredients were not proved. A sole proprietary concern was not a company or association of persons for section 68, so penalty against it on that basis could not stand.

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Issues: (i) whether a cumulative penalty could be sustained when separate charges of contravention had been framed; (ii) whether contraventions of sections 8(1), 9(1)(a), 14 and 16(1)(a) of the Foreign Exchange Regulation Act, 1973 were made out on the facts; and (iii) whether a sole proprietary concern could be treated as a company so as to sustain penalty against it under section 68.

Issue (i): whether a cumulative penalty could be sustained when separate charges of contravention had been framed.

Analysis: Separate charges were set out in the show-cause notice and were dealt with individually in the adjudication order. In such a situation, the penalty had to indicate the quantum attributable to each contravention. A single composite penalty without segregation of liability for each charge was held to be legally unsustainable.

Conclusion: The cumulative penalty could not be sustained and was liable to be set aside.

Issue (ii): whether contraventions of sections 8(1), 9(1)(a), 14 and 16(1)(a) of the Foreign Exchange Regulation Act, 1973 were made out on the facts.

Analysis: The evidence showed that the entire commission had in substance been remitted through banking channels, with only a minor excess explained by exchange fluctuation. The alleged payment or transfer of the disputed amount rested only on a credit note, which did not establish that the appellant had actually paid or transferred the amount. For the charge under section 14, the appellant was not shown to be the owner or holder of foreign exchange, because the credit note merely adjusted an earlier debit and did not create ownership of foreign exchange in his hands. The charge under section 16(1)(a) also failed, because no direction under section 16(2) had been shown and no definite due date for receipt of the foreign exchange had been proved, so delay could not be established.

Conclusion: The findings of contravention under sections 8(1), 9(1)(a), 14 and 16(1)(a) were unsustainable.

Issue (iii): whether a sole proprietary concern could be treated as a company so as to sustain penalty against it under section 68.

Analysis: A sole proprietary concern is only the business name of its proprietor and is not a company or an association of persons for the purpose of the statutory explanation. The penalty imposed on the proprietary concern proceeded on an erroneous legal assumption and could not stand.

Conclusion: The penalty on the proprietary concern was not sustainable.

Final Conclusion: The adjudication order could not survive in law, and the appellant and the proprietary concern were entitled to relief.

Ratio Decidendi: Where separate contraventions are alleged, a composite penalty without apportionment is unsustainable, and liability for foreign exchange contraventions must rest on proof of the specific statutory ingredient, including ownership or holder status, a legally established due date for receipt, and any requisite direction under the Act.

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