Narrow reading of FERA's foreign-concern bar rejected where trade mark support and advertising showed no participation in profits or control.

Section 27(1) of FERA was construed in light of the Act's object and regulatory scheme, and the phrase "whether as promoter or otherwise" was read narrowly by applying ejusdem generis, with "promoter" colouring the associated words. On the facts, mere permission to use trade marks, technical assistance and foreign advertising, without any financial stake, profit sharing or participation in the foreign bottling concerns, did not amount to association with or participation in a foreign concern. The material before the Magistrate was therefore insufficient for prosecution, and refusal of discharge was held erroneous.

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Issues: Whether the petitioners' conduct in permitting use of trade marks, providing technical assistance and undertaking foreign advertising could amount to associating with or participating in a concern outside India under section 27(1) of the Foreign Exchange Regulation Act, 1973, so as to justify prosecution and refusal of discharge.

Analysis: The statutory scheme and preamble of the Foreign Exchange Regulation Act, 1973 showed that the prohibition in section 27(1) had to be read in the context of the Act's object and the controlling role of the Reserve Bank and Central Government. The expression "whether as promoter or otherwise" was construed narrowly by applying the principle of ejusdem generis, the word "promoter" supplying the colour of the associated expression. On the facts, the petitioners had no financial stake in the foreign bottling concerns, did not share in their profits, and were only pursuing a business arrangement to promote sales of their concentrates. Their conduct did not resemble that of a promoter or a participant in the foreign concern. The Court also emphasised that in regulatory offences, where the accused had disclosed the arrangement and acted on the Reserve Bank's scrutiny and release of foreign exchange, a reasonable inference arose that the conduct was not intended to fall within the statutory mischief.

Conclusion: The prosecution was not sustainable on the material before the Magistrate, and the refusal to discharge the accused was erroneous.

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