Documentary proof and vicarious liability under foreign exchange law: company breach upheld, individual penalty set aside.

Documentary evidence of correspondence, invoices, remittance instructions, bank drafts and ownership records was treated as sufficient to establish that the company had acquired, transferred and borrowed foreign exchange in connection with aircraft import, amounting to contravention of Section 8(1) of the Foreign Exchange Regulation Act, 1973. The company's contravention was upheld, but the penalty was reduced to 25% of the amount originally imposed. Vicarious liability could not be fastened on the second appellant because no material showed that he was in charge of, and responsible for, the conduct of the company's business at the relevant time; the penalty against him was therefore set aside.

---

---

Issues: (i) Whether the company contravened Section 8(1) of the Foreign Exchange Regulation Act, 1973 by acquiring, transferring, and borrowing foreign exchange in connection with the import of the aircraft. (ii) Whether the penalty imposed on the second appellant was sustainable in the absence of proof that he was in charge of and responsible for the conduct of the company's business.

Issue (i): Whether the company contravened Section 8(1) of the Foreign Exchange Regulation Act, 1973 by acquiring, transferring, and borrowing foreign exchange in connection with the import of the aircraft.

Analysis: The record showed correspondence, invoices, remittance instructions, bank drafts, and ownership-related documents indicating that the aircraft transaction was arranged through the company and that foreign exchange was mobilised for its purchase and for payment of customs duty. The request for cross-examination of the relied-upon witness was entertained, but the witness did not appear; the documentary material remained available to the appellants. On the evidence, the conclusion reached was that the company had been involved in acquisition and transfer of foreign exchange and had also borrowed foreign exchange without permission.

Conclusion: The finding of contravention under Section 8(1) was upheld, but the penalty on the company was reduced to 25% of the amount imposed.

Issue (ii): Whether the penalty imposed on the second appellant was sustainable in the absence of proof that he was in charge of and responsible for the conduct of the company's business.

Analysis: No material was produced to show that the second appellant was in charge of the company or responsible for the transaction in question. Mere fastening of liability without proof of the statutory prerequisites for vicarious responsibility was insufficient.

Conclusion: The penalty imposed on the second appellant was set aside.

Final Conclusion: The company's liability for contravention survived, though the monetary penalty was substantially reduced, while the individual appellant was absolved for want of proof of statutory responsibility.

Ratio Decidendi: In adjudication under foreign exchange law, documentary evidence may suffice to establish contravention, but vicarious liability cannot be imposed unless the person concerned is shown to have been in charge of and responsible for the company's business at the relevant time.

---