1982 (9) TMI 207 - HC - Companies Law

Summary

Issues:
1. Violation of the Foreign Exchange Regulation Act of 1947 or 1973.
2. Liability of the appellant to pay the penalty imposed.
3. Disproportionate penalties imposed on the appellant compared to the actual offender, Syed Meer.

Detailed Analysis:

1. Violation of the Foreign Exchange Regulation Act of 1947 or 1973:
The case involved a violation of Section 5(1)(c) of the Foreign Exchange Regulation Act, 1947. The appellant, Syed Fareed, received foreign currency drafts from his son in Canada and then paid the equivalent amount in Indian currency to a money-lender, Shankarlal, without the permission of the Reserve Bank. The court held that this action contravened the FER Act as it involved the payment to or for the credit of a person resident outside India without proper authorization. The court emphasized that the legislative intent behind the Act was to keep the Reserve Bank informed about transactions with persons outside the country.

2. Liability of the appellant to pay the penalty imposed:
The appellant contended that he should not be liable to pay any penalty as he received Indian currency from Syed Meer to discharge his son's debt to Shankarlal. However, the court rejected this argument, stating that despite the appellant's bona fide intention, his actions still violated the FER Act. The court noted that although the appellant's intention was genuine, the payment made without Reserve Bank permission constituted a breach of the law. The court upheld the penalty imposed on the appellant but considered the other charges against him as extraneous.

3. Disproportionate penalties imposed on the appellant compared to the actual offender, Syed Meer:
The court observed that while Syed Fareed was penalized with a substantial amount, Syed Meer, who received the foreign currency drafts, was only fined Rs. 500. The court deemed this discrepancy unfair and decided to reduce the penalty on the appellant to align with the penalty imposed on Syed Meer. The court concluded that justice would be served by imposing a penalty of Rs. 500 on the appellant, similar to the penalty imposed on Syed Meer. Consequently, the court allowed the appeal in part, adjusting the penalty amount for the appellant to Rs. 500.

In summary, the judgment addressed the violation of the Foreign Exchange Regulation Act, the liability of the appellant for the penalty, and the disproportionate penalties imposed on the appellant compared to the actual offender. The court emphasized the importance of complying with the provisions of the FER Act and adjusted the penalty to ensure fairness in the enforcement of the law.