Interpretation of "in respect of" under Foreign Exchange Regulation Act broadened by Indian Supreme Court.

The Supreme Court of India interpreted the words "in respect of" in section 23(1B) of the Foreign Exchange Regulation Act, 1947 broadly, determining that the Indian currency seized, as the sale proceeds of foreign exchange, fell within the scope of the provision. The Court held that the currency was connected with the contravention, as prohibited under section 4(1), and thus subject to confiscation under section 23(1B. Consequently, the Court allowed the appeal, upholding the validity of the confiscation order and ruling in favor of the Director of Enforcement.

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Issues: Whether, for the purposes of section 23(1B) of the Foreign Exchange Regulation Act, 1947, Indian currency representing the sale proceeds of foreign exchange was currency "in respect of which" the contravention under section 4(1) had taken place and was therefore liable to confiscation.

Analysis: The expression "in respect of" was construed as words of wide import, denoting a connection with the contravention rather than a narrow direct identity with the prohibited foreign exchange itself. The confiscation power under section 23(1B) extended beyond the very property contravened and was reinforced by the Explanation, which expressly included bank deposits into which such property had been converted. On that construction, the Indian currency obtained as sale proceeds of prohibited foreign exchange was sufficiently connected with the contravention to fall within the scope of confiscation.

Conclusion: The Indian currency seized as sale proceeds of foreign exchange was liable to confiscation under section 23(1B), and the order of confiscation was valid.

Ratio Decidendi: The words "in respect of" in section 23(1B) of the Foreign Exchange Regulation Act, 1947 are to be given a wide meaning and include property connected with the contravention, including sale proceeds of prohibited foreign exchange.

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