Valid service by affixation and moderated foreign exchange penalty where active participation was not established.

Service of show cause and hearing notices by affixation at the last known address is treated as valid where the addressee continues to control the premises and no real prejudice is shown from delayed receipt of the adjudication order. In foreign exchange contravention matters, repeated deposits in joint NRE accounts may establish breach of law, but penalty may be moderated where active participation is not proved and the person is only a joint account holder. The discussion also notes that separate penalties on banks for lack of due diligence can support reduction of the individual penalty.

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Issues: (i) Whether service of the show cause notice and hearing notices by affixation at the last known address was valid and whether the appellant suffered any prejudice from the alleged delayed receipt of the adjudication order. (ii) Whether the appellant's involvement in the contravention of Section 8(1) of the Foreign Exchange Regulation Act, 1973 warranted maintenance of the original penalty or justified reduction of the penalty imposed on her.

Issue (i): Whether service of the show cause notice and hearing notices by affixation at the last known address was valid and whether the appellant suffered any prejudice from the alleged delayed receipt of the adjudication order.

Analysis: The notices were stated to have been served by affixation at the last known address in accordance with Rule 10(c) of the Adjudication and Appeal Rules, 1974 read with Section 49(3) and Section 49(4) of the Foreign Exchange Management Act, 1999. The record also indicated that the appellant continued to own the property at that address, and no convincing prejudice was shown from the late receipt of the adjudication order, especially when the delay had been condoned.

Conclusion: The service was treated as valid and no prejudice was accepted on account of delayed communication.

Issue (ii): Whether the appellant's involvement in the contravention of Section 8(1) of the Foreign Exchange Regulation Act, 1973 warranted maintenance of the original penalty or justified reduction of the penalty imposed on her.

Analysis: The repeated and frequent deposits in the joint NRE accounts over the relevant period established contravention of the foreign exchange law. At the same time, the material did not establish that the appellant was the active participant in the violation, although her status as a joint account holder and the use of the accounts for the deposits could not be ignored. The adjudication also reflected that the banks had been penalized for lack of due diligence, and the overall circumstances justified moderation of the appellant's penalty.

Conclusion: The penalty on the appellant was reduced to Rs. 3,00,000/-.

Final Conclusion: The appeal was allowed only to the extent of reduction of the appellant's penalty, while the finding of contravention was not disturbed.

Ratio Decidendi: Service effected by affixation at the last known address may be treated as valid where the recipient continues to control the premises and no real prejudice is shown, and a penalty for foreign exchange contravention may be moderated where the person is only a joint account holder and active participation is not established.

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