Resident in India under foreign exchange law: liability and penalties upheld for contraventions during the relevant period.

Indian citizens who returned to India and stayed there during the relevant period were treated as persons in and resident in India, so liability under the Foreign Exchange Regulation Act, 1973 was attracted and the contraventions were established. The tribunal rejected the plea that their status was non-resident, noting that section 14 applied to persons in or resident in India. It also held that the penalties were neither excessive nor disproportionate, as the breaches were not merely technical and the amounts involved justified the sanctions. The adjudication order was sustained and the appeals failed.

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Issues: (i) Whether the appellants, having returned to India and stayed there during the relevant period, were persons resident in India so as to attract liability under sections 14 and 19(1)(e) of the Foreign Exchange Regulation Act, 1973. (ii) Whether the penalties imposed for the contraventions were excessive or disproportionate in the facts of the case.

Issue (i): Whether the appellants, having returned to India and stayed there during the relevant period, were persons resident in India so as to attract liability under sections 14 and 19(1)(e) of the Foreign Exchange Regulation Act, 1973.

Analysis: The relevant facts regarding holding of foreign securities and foreign exchange were not in dispute. The appellants were Indian citizens and had come to India from the United States for the stated programme requirement. They remained in India during the relevant period. Section 14 applies to every person in, or resident in, India. On these facts, the plea that they were not residents in India was untenable.

Conclusion: The appellants were liable under the foreign exchange law as persons in and resident in India, and the contraventions were established.

Issue (ii): Whether the penalties imposed for the contraventions were excessive or disproportionate in the facts of the case.

Analysis: The contention that the breaches were merely technical was rejected. The appellants, being Indian citizens resident in India during the relevant period, were bound to comply with the law. In the circumstances and having regard to the amounts involved, the penalties could not be treated as disproportionate.

Conclusion: The penalties were neither excessive nor disproportionate.

Final Conclusion: The adjudication order was sustained and the appeals failed.

Ratio Decidendi: A person who is in India and resident in India during the relevant period is subject to the foreign exchange restrictions applicable under section 14, and penalty for such contravention will not be interfered with unless it is shown to be disproportionate or otherwise unjustified on the facts.

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