Foreign exchange remittance liability: indirect transfer arrangements can breach the law without proof of physical currency movement.

An appeal under Section 54 of the Foreign Exchange Regulation Act was held maintainable by the Special Director, as the statutory scheme contained no express bar and the Enforcement Directorate could act in discharge of its enforcement functions. For contravention of Section 9(3), the expression "remit or cause to be remitted" was construed to cover indirect or agency-based transfer arrangements from abroad to India, so literal proof of physical movement of currency was unnecessary where the evidence showed collection abroad and distribution in India through intermediaries. On that basis, the breach was established and the penalty was restored.

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Issues: (i) Whether an appeal under Section 54 of the Foreign Exchange Regulation Act, 1973 could be maintained by the Special Director, Enforcement Directorate; (ii) Whether, for contravention of Section 9(3) of the Foreign Exchange Regulation Act, 1973, actual physical movement of currency from a foreign country into India had to be proved and whether the evidence established the contravention.

Issue (i): Whether an appeal under Section 54 of the Foreign Exchange Regulation Act, 1973 could be maintained by the Special Director, Enforcement Directorate.

Analysis: Section 54 permits an appeal to the High Court on a question of law by the aggrieved party. The Enforcement Directorate, through its officers, is constituted under the Act to enforce its provisions and discharge statutory duties. The absence of an express bar against such an appeal, coupled with the statutory scheme under Sections 3 and 4, meant that the Directorate could act and appeal in discharge of its functions.

Conclusion: The preliminary objection to maintainability was rejected, and the appeal by the Special Director was held maintainable.

Issue (ii): Whether, for contravention of Section 9(3) of the Foreign Exchange Regulation Act, 1973, actual physical movement of currency from a foreign country into India had to be proved and whether the evidence established the contravention.

Analysis: Section 9(3) prohibits remitting or causing to be remitted any amount from a foreign country into India otherwise than through an authorised dealer. The expression "remit or cause to be remitted" was construed to include not only physical transmission of cash but also structured arrangements by which money is collected abroad and distributed in India through agents. The respondent's own statement and the accompanying evidence showed collection of amounts in Dubai/Abu Dabi and their distribution in India through intermediaries, which was sufficient to establish the statutory breach. The appellate board erred in insisting on proof of literal physical movement of currency and in ignoring material evidence.

Conclusion: The contravention under Section 9(3) was held established, and the order of the appellate board was set aside.

Final Conclusion: The adjudication imposing penalty was restored, and the respondent remained liable for the penalty imposed for breach of the foreign exchange restrictions.

Ratio Decidendi: Under Section 9(3) of the Foreign Exchange Regulation Act, 1973, "remit or cause to be remitted" covers indirect or agency-based transfer arrangements from abroad to India, and proof of literal physical movement of currency is not essential where the evidence otherwise establishes the remittance scheme.

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