Exchange-control contraventions require proof of specific receipt or enforceable entitlement; unsupported and hearsay-based charges cannot stand.

Exchange-control liability under the Foreign Exchange Regulation Act depended on proof of the specific receipt, handling, or legally enforceable entitlement alleged. The material was insufficient to sustain contravention for Rs. 81,000, as the evidence did not connect that amount to the appellant; the charge for Rs. 65,000 also failed because the supporting statement was hearsay and the correspondence did not establish receipt by the relevant date. By contrast, contravention was sustained for Rs. 70,000 because receipt and onward delivery were admitted and corroborated. A separate charge under section 16(1)(b) failed because the record showed only a moral expectation of payment, not a legally enforceable right to receive telephone charges.

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Issues: (i) Whether the findings of contravention under sections 9(1)(b) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973 could be sustained in respect of the amounts of Rs. 81,000 and Rs. 65,000 and only partly sustained in respect of Rs. 70,000. (ii) Whether contravention of section 16(1)(b) of the Foreign Exchange Regulation Act, 1973 was made out on the basis that the appellant had a legally enforceable right to receive Rs. 15,000 towards telephone charges.

Issue (i): Whether the findings of contravention under sections 9(1)(b) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973 could be sustained in respect of the amounts of Rs. 81,000 and Rs. 65,000 and only partly sustained in respect of Rs. 70,000.

Analysis: The evidence relied upon for the amount of Rs. 81,000 did not support the charge and, instead, showed that the amount had been collected and partly dealt with by another person, leaving no independent evidence against the appellant for that sum. For Rs. 65,000, the material was insufficient because the supporting statement was based on hearsay and the seized letter did not establish receipt of the amount by the relevant date. In contrast, the receipt and onward delivery of Rs. 70,000 were admitted by the appellant and corroborated by the other statement relied on by the department. The seized correspondence also indicated knowledge that the payment was not being made lawfully.

Conclusion: The contravention under sections 9(1)(b) and 9(1)(d) was sustained only to the extent of Rs. 70,000; the findings for Rs. 81,000 and Rs. 65,000 were set aside.

Issue (ii): Whether contravention of section 16(1)(b) of the Foreign Exchange Regulation Act, 1973 was made out on the basis that the appellant had a legally enforceable right to receive Rs. 15,000 towards telephone charges.

Analysis: The charge under section 16(1)(b) could arise only if the appellant had acquired a legally enforceable right to receive the amount. The evidence disclosed at most a moral expectation that the bill should be paid, but it did not show acceptance of liability or an enforceable claim in favour of the appellant. The record also indicated that the letter seeking payment was seized before it could be posted, and the adjudicating authority had not addressed the essential legal requirement.

Conclusion: The finding of contravention under section 16(1)(b) was unsustainable and was set aside along with the penalty.

Final Conclusion: The appeal relating to section 16(1)(b) succeeded completely, while the appeal concerning sections 9(1)(b) and 9(1)(d) succeeded in part, resulting in substantial reduction of the penalty and confinement of liability to the proved amount only.

Ratio Decidendi: A contravention under the relevant exchange-control provisions must be supported by evidence establishing the specific receipt, handling, or enforceable entitlement alleged; where the material proves only part of the charge or shows no legally enforceable right to receive payment, the adverse finding cannot stand beyond the proved extent.

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