Foreign exchange payments abroad without permission contravene the prohibition, while self-spending overseas falls outside it.

Payments made from foreign exchange sale proceeds to persons resident outside India without Reserve Bank permission fell within the prohibition in Section 5(1)(a) of the Foreign Exchange Regulation Act, 1947, so transfers to the appellant's stepmother, her children, and his advocate in Singapore constituted contravention. By contrast, expenditure incurred by the appellant on his own travel and stay abroad was not a payment to a third party and did not attract that provision. The absence of permission was not a mere technicality, and want of mens rea or a claim that permission would have been granted did not negate the breach or justify interference with the reduced penalty, which remained within the statutory limit.

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Issues: (i) whether payments made out of foreign exchange sale proceeds to persons resident abroad without Reserve Bank permission attracted contravention of Section 5(1)(a) of the Foreign Exchange Regulation Act, 1947, and whether amounts spent by the appellant on himself abroad could also fall within that provision; (ii) whether the contravention was merely technical or excusable for want of mens rea so as to justify interference with the penalty reduced by the appellate authority.

Issue (i): Whether the payments and self-expenditure attracted Section 5(1)(a) of the Foreign Exchange Regulation Act, 1947.

Analysis: The provision applied to payments made to persons resident outside India without the requisite permission. Amounts paid to the appellant's stepmother, her children, and his advocate in Singapore were made to third parties abroad without Reserve Bank permission and therefore constituted contravention. By contrast, expenditure incurred by the appellant on his own journey and stay abroad was not a payment to a third party and did not fall within the mischief of the provision.

Conclusion: The appellant was rightly held to have contravened Section 5(1)(a) in respect of the payments to third parties abroad, but not in respect of the amount spent by him on himself.

Issue (ii): Whether the violation was merely technical or excusable for want of mens rea so as to warrant reduction or interference with the penalty.

Analysis: The absence of permission under the foreign exchange law could not be treated as a mere technicality where the statutory requirement had in fact been breached. The Court rejected the plea that permission would necessarily have been granted or that ignorance of the legal requirement negatived the consequence of the breach. The penalty imposed was also well within the statutory measure authorised by Section 23(1)(a) of the Foreign Exchange Regulation Act, 1947.

Conclusion: The reduced penalty did not call for interference and the challenge to punishment failed.

Final Conclusion: The finding of contravention was sustained and the penalty as reduced by the appellate authority was left undisturbed, resulting in dismissal of the appeal.

Ratio Decidendi: Payments to third parties resident abroad without the required permission contravene the foreign exchange prohibition, while mere ignorance of the statutory requirement or absence of mens rea does not negate the breach or compel reduction of a penalty otherwise within the statutory limit.

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