Foreign exchange contravention penalty reduced where mitigating circumstances showed the original quantum was disproportionate.

Contravention of foreign exchange law by receipt of funds outside proper banking channels was sustained, but the penalty was reduced because the surrounding circumstances showed lower culpability. The amount had been received for the benefit of the Society, acknowledged on the appellant's letterhead, and entered in the Society's books, which were relevant mitigating factors when fixing penalty. The plea of complete absence of mens rea and ignorance of law was rejected, yet the original penalty was found disproportionate. Adverse material about an alleged havala source was not treated as decisive for assessing the appellant's own penalty.

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Issues: Whether the penalty imposed for contravention of section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 was excessive and required reduction having regard to the surrounding circumstances.

Analysis: The appellant admitted receipt of the amount through a channel other than proper banking channels, so the contravention itself was not denied. However, the circumstances showed that the amount was received for the benefit of the Society, was acknowledged on the appellant's letterhead, and was accounted for in the Society's books. These facts were relevant to the degree of culpability and the proper quantum of penalty. The plea of complete absence of mens rea and ignorance of law was not accepted, but the mitigating circumstances were sufficient to show that the original penalty was disproportionate. The adverse material relating to the alleged havala source could not be treated as decisive against the appellant for fixing his own penalty.

Conclusion: The contravention was sustained, but the penalty was reduced as the original amount was found excessive.

Final Conclusion: The appeal succeeded only to the extent of reduction of penalty, while the finding of contravention remained undisturbed.

Ratio Decidendi: In fixing penalty for contravention of foreign exchange law, the authority must assess the offender's own culpability and consider mitigating circumstances, and a proven contravention may still attract reduction of penalty where the original quantum is excessive.

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