Foreign exchange contravention must be proved by corroborated evidence linking payment to instructions from a person resident outside India.

A contravention under section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 cannot be established on vague or uncorroborated material. The department relied mainly on a statement and a loose-sheet entry, but the evidence did not identify the payer clearly, did not prove who made payment on behalf of the firm, and did not show that the payment was made under instructions of a person resident outside India. The maker of the statement was not produced for cross-examination, the appellant was not properly confronted with the documents, and no independent corroboration supported the material particulars. On that basis, the alleged contravention and resulting penalty were treated as unsustainable, and any amount already paid was refundable.

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Issues: Whether the alleged contravention of section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 was proved on the evidence relied upon by the department.

Analysis: The charge rested mainly on the statement of the person from whom the money was said to have been recovered and on a loose-sheet entry that did not clearly identify the appellant as the payer. The material did not establish who, if anyone, made the payment on behalf of the firm or that the payment was made under instructions of a person resident outside India. The appellant was not confronted with the statement and documents in a manner sufficient to fasten liability, the maker of the statement was not produced for cross-examination, and the statement was unsupported by independent corroboration on the material particulars. In these circumstances, the evidence was treated as unreliable and inadequate to establish the essential ingredients of the alleged contravention. The reliance placed on the rule relating to confession against another person was found inapposite on the facts.

Conclusion: The alleged contravention was not proved and the finding of liability was unsustainable.

Final Conclusion: The penalty imposed on the appellant could not be sustained and was liable to be set aside, with refund of any amount already paid.

Ratio Decidendi: A contravention under section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 cannot be upheld on vague or uncorroborated material that does not establish the payer, the source of instructions, and the nexus with a person resident outside India.

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