Saved foreign exchange law and regulatory liability upheld for suspicious currency sales by authorised dealers and managers.
Saved repealed foreign exchange law continued to govern past contraventions, so pending adjudication and the appointment of the adjudicating officer remained valid under the saving clause, and the repeal objection failed. Authorised foreign exchange dealers were bound to exercise due care and comply with regulatory directions; selling foreign currency against fictitious sponsored persons breached the licence conditions and statutory restrictions. The contravention was treated as a regulatory offence not requiring proof of mens rea, and the managerial appellants were liable for acts done in the course of business despite not personally handling the transactions. The adjudication and penalties were upheld.
Issues: (i) whether proceedings and appointment of the adjudicating officer remained valid after repeal of the Foreign Exchange Regulation Act, 1973 and substitution by the Foreign Exchange Management Act, 1999; (ii) whether the appellants, as authorised foreign exchange dealers/money changers, contravened the regulatory provisions by selling foreign currency to fictitious sponsored persons and whether the liability extended to the managerial appellants.
Issue (i): whether proceedings and appointment of the adjudicating officer remained valid after repeal of the Foreign Exchange Regulation Act, 1973 and substitution by the Foreign Exchange Management Act, 1999.
Analysis: The saving provisions preserved the operation of the repealed enactment for past contraventions and continued adjudication of such matters under the earlier law. The transfer of pending matters to the new tribunal did not change the substantive legal regime governing the offence. The objection to the appointment of the adjudicating officer was treated as procedural and not shown to have caused prejudice. The show-cause notice and adjudication were held to be within the period permitted by the saving clause.
Conclusion: The challenge to jurisdiction and validity of the proceedings on the ground of repeal failed and was decided against the appellants.
Issue (ii): whether the appellants, as authorised foreign exchange dealers/money changers, contravened the regulatory provisions by selling foreign currency to fictitious sponsored persons and whether the liability extended to the managerial appellants.
Analysis: The licence to deal in foreign exchange carried an obligation of due care, caution and compliance with Reserve Bank directions. Sale of foreign currency against suspicious and fictitious sponsorships was inconsistent with the statutory duty under the regulatory scheme. The conduct amounted to contravention of the restrictions on dealing in foreign exchange and breach of licence conditions, and the statute was treated as creating a regulatory offence where proof of mens rea was not essential. The managerial appellants could not escape liability merely by asserting that they did not physically handle the transactions, because their supervisory role attracted responsibility for the acts done in the course of business.
Conclusion: The findings of contravention and the penalties on all appellants were upheld against the appellants.
Final Conclusion: The statutory and factual objections were rejected, the impugned adjudication was sustained, and the appeal failed in entirety.
Ratio Decidendi: Where a repealed foreign exchange statute is saved for past contraventions, pending or transferred adjudicatory proceedings continue under that statute, and authorised dealers are bound to exercise due care and comply with the regulatory conditions so that liability may follow even without proof of mens rea in a regulatory offence.
TaxTMI 
AI Drafter ✕
TaxTMI 
