Foreign exchange sale notification upheld where section 9 covered assets acquired after the notification

Foreign exchange received outright as a gift was treated as belonging to the appellants, and their agency explanation was rejected on the concurrent findings. Section 9 was read as authorising a notification requiring persons in India who own or hold specified foreign exchange to offer it for sale, including exchange acquired after the Act or notification; the notification was therefore intra vires. On the finding that the appellants became owners and did not offer the exchange for sale within the prescribed time, the statutory requirement was breached and the penalty order remained undisturbed.

---

---

Issues: (i) whether the foreign exchange in question belonged to the appellants, (ii) whether the notification issued under section 9 was beyond the scope of the section, and (iii) whether the appellants failed to comply with the requirement to offer the foreign exchange for sale within the prescribed time.

Issue (i): whether the foreign exchange in question belonged to the appellants.

Analysis: The concurrent findings of the authorities below were that the foreign exchange had been received outright by the appellants as a gift. The explanation that the appellants were merely holding the amounts as agents for foreign companies was rejected as inconsistent with the record and with their own earlier conduct.

Conclusion: The foreign exchange belonged to the appellants.

Issue (ii): whether the notification issued under section 9 was beyond the scope of the section.

Analysis: Section 9 was held to authorise a notification requiring persons in India who own or hold specified foreign exchange to offer it for sale, and the provision was read as applying not only to foreign exchange already owned or held when the Act came into force, but also to foreign exchange acquired thereafter. The notification merely made explicit what was implicit in the section and did not enlarge the statutory power.

Conclusion: The notification was intra vires section 9.

Issue (iii): whether the appellants failed to comply with the requirement to offer the foreign exchange for sale within the prescribed time.

Analysis: The notification required an offer for sale within one month of becoming the owner of the foreign exchange, not within one month of return to India. On the concurrent finding that the appellants became owners of the foreign exchange and did not make the required offer within time, the statutory requirement was breached.

Conclusion: The appellants contravened section 9 read with the notification.

Final Conclusion: The challenge to the ownership finding and to the validity and application of the notification failed, and the penalty order was left undisturbed.

Ratio Decidendi: A notification under section 9 of the Foreign Exchange Regulation Act, 1947 may validly require sale of foreign exchange acquired after the notification, because the section authorises control of the specified class of foreign exchange whenever owned or held.

---