FERA residence test: long stays abroad with intent to remain outside India sustained contravention findings and penalties.

Residence under FERA depends on whether a citizen staying abroad shows an intention to remain outside India for an uncertain period. On the facts, the daughters' long stays in the United States, including marriage and study or family-related reasons, supported the finding that they were persons resident outside India, not resident in India. Once that status was established, the foreign exchange restrictions applied to the transactions undertaken without prior RBI approval. The adverse inferences and presumptions drawn from the record were accepted, the contraventions were upheld, and the penalties were not interfered with because no perversity or legal infirmity was shown.

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Issues: (i) Whether the Shroff daughters were persons resident in India within the meaning of Section 2(p) of the Foreign Exchange Regulation Act, 1973, or persons resident outside India within the meaning of Section 2(q) of that Act. (ii) Whether the findings of contravention and the penalties imposed for transactions undertaken without prior Reserve Bank of India approval were liable to be interfered with, including on the basis of Section 114 of the Indian Evidence Act, 1872 and the plea of disproportionality.

Issue (i): Whether the Shroff daughters were persons resident in India within the meaning of Section 2(p) of the Foreign Exchange Regulation Act, 1973, or persons resident outside India within the meaning of Section 2(q) of that Act.

Analysis: Residence under the Act turns on whether the citizen's stay outside India was in circumstances indicating an intention to stay outside India for an uncertain period. The material showed that the daughters were in the United States for long periods, one was married to a person settled there, and the others continued to remain there for study or family-related reasons without material showing a return or intended return to India. The evidence did not establish any intention to stay in India indefinitely, and the concurrent factual findings recorded by the authorities were not shown to be perverse.

Conclusion: The Shroff daughters were rightly held to be persons resident outside India and not persons resident in India.

Issue (ii): Whether the findings of contravention and the penalties imposed for transactions undertaken without prior Reserve Bank of India approval were liable to be interfered with, including on the basis of Section 114 of the Indian Evidence Act, 1872 and the plea of disproportionality.

Analysis: Once the daughters were held to be resident outside India, the statutory restrictions governing the impugned foreign exchange transactions applied. The authorities had rightly drawn permissible presumptions and adverse inferences from the record, and the evidence established contraventions of the relevant FERA provisions governing the transactions. The plea that the penalties were excessive was not accepted in view of the nature, scale, and circumstances of the dealings, and no legal infirmity was shown in the concurrent findings.

Conclusion: The findings of contravention and the penalties imposed were upheld.

Final Conclusion: The appeals failed on all substantive grounds, and the concurrent orders of the authorities below were sustained.

Ratio Decidendi: For the purposes of FERA, a citizen of India staying abroad is treated as resident outside India where the surrounding circumstances show an intention to remain outside India for an uncertain period, and concurrent findings on such residence and resulting contravention will not be disturbed in the absence of perversity.

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