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Issues Involved:
1. Interpretation of sections 4(1), 5(1)(a), 5(1)(b), 5(1)(c), and 5(1)(d) of FERA 1947. 2. Whether RBI permission to execute contracts includes permission to spend money necessary for executing such contracts. 3. Entitlement to adjust, deduct, or set off amounts due without RBI permission. 4. Imposition of penalty for technical or venial breaches. 5. Authority to alter charges without providing an opportunity to meet the same. 6. Adherence to settled principles of law in adjudicating the matter and disposing of the appeal. Detailed Analysis: Re Show Cause Notice No. 29: The charge was for selling foreign exchange amounting to KD 670 to staff in Kuwait, contravening section 4(1) of FERA 1947. The Special Director found that the amounts were "lent" rather than "sold," which also contravened section 4(1). The Appellants argued that altering the charge from "selling" to "lending" without notice violated principles of natural justice. The court agreed that altering charges midstream without notice was impermissible and discharged the show-cause notice. The court also noted that the breach was technical and under a bona fide belief, thus no penalty should be imposed. Re Show Cause Notice No. 32: The charge was for receiving Rs. 2596-80 from Manipal Engg. College and placing it to the credit of M/s. Karl Kolb, contravening sections 5(1)(d) and 5(1)(a). The adjudicating authority found no loss of foreign exchange and termed it a technical breach. The court held that for technical or venial breaches, no penalty should be imposed, referencing Hindustan Steel Ltd. v. State of Orissa. Re Show Cause Notice Nos. 35 and 36: Show-cause notice No. 35 involved payments of Rs. 827-70, and No. 36 involved acknowledging a debt of Rs. 3,000 to M/s. A.B. Turitz, contravening section 5(1)(c). The court found these transactions were in the usual course of business and technical breaches. Applying the principles from Hindustan Steel Ltd., the court held no penalty should be imposed for such breaches. Re Show Cause Notice No. 37: The charge was for receiving Rs. 4500 from M/s. Flexicons Ltd. and crediting it to M/s. Mannesmann Pulvermetal Gmbh, contravening section 5(1)(d). The adjudicating authority altered the charge to section 5(1)(aa) during proceedings, which the court found impermissible without proper notice. The court reiterated that altering charges midstream without notice violated natural justice principles and discharged the show-cause notice. Re Show Cause Notice Nos. 38 and 39: Show-cause notice No. 38 involved making a payment of Rs. 28,582-83, and No. 39 involved acknowledging a debt of DM 22,719-25, contravening sections 5(1)(c) and 5(1)(b). The appellate authority found the transactions were adjustments in the usual course of business. The court held that such technical breaches should not attract penalties, referencing Hindustan Steel Ltd. The court also noted that the appellate authority selectively considered evidence and failed to consider the entire material. Conclusion: The appeal succeeded, and the impugned judgments and orders were set aside. The court emphasized the importance of adhering to principles of natural justice and the need for proper notice before altering charges. The court also highlighted that penalties should not be imposed for technical or venial breaches, especially when actions were under a bona fide belief.
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