Acknowledgement of debt requires a real debtor-creditor relationship; share application money alone did not establish contravention.

Receipt of share application money from non-resident investors did not, without proof of share allotment or any written or implied admission of liability, amount to an acknowledgement of debt under section 9(1)(c) of the Foreign Exchange Regulation Act, 1973. The tribunal treated acknowledgement as requiring a subsisting debtor-creditor relationship, and held that mere receipt of funds as share capital was insufficient to convert the amount into an acknowledged debt. As no material showed that the recipients admitted any liability to the non-residents, the alleged contravention was not established and the penalty order could not be sustained.

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Issues: Whether the receipt of share application money from non-resident investors, without proof of allotment of shares or any written admission of liability, amounted to an acknowledgement of debt so as to constitute contravention of section 9(1)(c) of the Foreign Exchange Regulation Act, 1973.

Analysis: The Tribunal examined the scope of the expression "acknowledge any debt" in section 9(1)(c) and treated the concept as requiring an admission of a subsisting liability creating a debtor-creditor relationship. Mere receipt of funds as share capital, by itself, did not establish that the amount had become a debt. The absence of documents showing allotment of shares did not, on that footing alone, transform the funds into an acknowledged debt. The Tribunal also found no material showing any written or implied admission by the appellants that they owed a debt to the non-residents.

Conclusion: The alleged contravention was not established and the penalty order could not be sustained.

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