Foreign exchange custody and retracted statements: safe keeping is not acquisition, but voluntary admissions can still prove contravention.

Mere custody of foreign exchange belonging to another person does not amount to "otherwise acquiring" it under section 8(1) of the Foreign Exchange Regulation Act, 1973, because safe keeping without proprietary interest or personal use falls outside that expression. The deeming explanation to section 8(1) was treated as extending only the concept of lending, not as converting custody into acquisition. By contrast, contraventions under section 9(1)(b) and section 9(1)(d) may be established on the basis of voluntary initial statements and corroborating witness statements, even if the statements are later retracted and one witness is unavailable for cross-examination, where the existing material remains reliable.

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Issues: (i) Whether keeping foreign exchange belonging to another person for safe custody amounted to contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973 by "otherwise acquiring" foreign exchange. (ii) Whether the contraventions alleged under section 9(1)(b) and section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 stood proved on the basis of the appellant's initial statements and the statements of other witnesses despite later retraction and non-availability of cross-examination.

Issue (i): Whether keeping foreign exchange belonging to another person for safe custody amounted to contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973 by "otherwise acquiring" foreign exchange.

Analysis: The foreign exchange in question was found to belong to another person and was kept with the appellant only for safe custody. There was no material to show that the appellant had any proprietary interest in it or had acquired it for his own use. The phrase "otherwise acquire" was held not to extend to mere custody or possession of another's foreign exchange. The deeming explanation to section 8(1) was treated as enlarging only the concept of lending and not as converting safe custody into acquisition.

Conclusion: The charge under section 8(1) was not proved and the finding on the first charge was set aside in favour of the appellant.

Issue (ii): Whether the contraventions alleged under section 9(1)(b) and section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 stood proved on the basis of the appellant's initial statements and the statements of other witnesses despite later retraction and non-availability of cross-examination.

Analysis: The evidence was found sufficient to establish receipt and payment of Indian currency on behalf of a person resident outside India. The appellant's initial statements were treated as voluntary and reliable, and the belated retraction was given no weight. The inability to cross-examine one witness, who was unavailable, did not displace the probative value of the statements already on record, which were accepted as corroborative of the admissions.

Conclusion: The contraventions under section 9(1)(b) and section 9(1)(d) were proved and the finding on the second charge was upheld against the appellant.

Final Conclusion: The appeal succeeded only in part, with the penalty and finding on the first charge being set aside and the penalty on the second charge being maintained.

Ratio Decidendi: Mere custody of foreign exchange belonging to another person does not amount to "otherwise acquiring" it under section 8(1), whereas a retracted statement may still be relied upon where it is found voluntary and supported by other reliable evidence.

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