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Issues: Whether receipt of remittance funds from a company or firm, for onward foreign exchange remittance on behalf of students, amounted to contravention of Section 10(5) of the Foreign Exchange Management Act, 1999 and Para 8 of Part B of RBI's Master Direction No. 07/2015-16 dated 01.01.2016.
Analysis: The expression "person" in Section 10(5) is informed by the definition in Section 2(u) of the Foreign Exchange Management Act, 1999, which includes not only an individual but also a Hindu undivided family, company, firm, association of persons and other juridical entities. On that construction, the requirement that the authorised person satisfy itself through declaration and related information is directed to the underlying remittance transaction and does not prohibit acceptance of funds merely because they are routed through a company or firm. The record also showed that declarations were obtained from the students on whose behalf the remittances were made, and the same was not effectively disputed.
Conclusion: No contravention of Section 10(5) of the Foreign Exchange Management Act, 1999 or Para 8 of Part B of RBI's Master Direction No. 07/2015-16 dated 01.01.2016 was established, and the penalty order could not be sustained.
Ratio Decidendi: The term "person" in Section 10(5) of the Foreign Exchange Management Act, 1999 must be construed in line with the statutory definition, and receipt of remittance funds through a company or firm does not by itself constitute a violation where the required declarations for the remittance transaction are obtained.
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