1984 (1) TMI 332 - HC - FEMA

Summary

Issues:
- Second appeal under Section 54 of the Foreign Exchange Regulation Act, W3
- Alleged contravention of provisions of Section 8(1) and Section 4(1) of the Foreign Exchange Regulation Act, 1947
- Applicability of Section 9(2)(b) of the Act
- Interpretation of Exception under Section 9(2)(b) of the Act
- Consideration of mens rea under Section 59 of the Act

Analysis:
1. The judgment pertains to a second appeal under Section 54 of the Foreign Exchange Regulation Act, W3, against the order of the Foreign Exchange Regulation Appellate Board. The appellant was charged with contravening provisions of Section 8(1) and Section 4(1) of the Foreign Exchange Regulation Act, 1947, for transferring foreign exchange without permission. The Adjudicating Officer imposed a penalty of &8377; 1,500, later reduced to &8377; 500 by the Board, which led to the appellant filing a second appeal in the High Court.

2. The appellant contended that his case fell within the Exception under Section 9(2)(b) of the Act, allowing the making of payments with foreign exchange received as salary or for services not arising from any business in India. Despite the appellant's explanation and reliance on this Exception, the authorities did not address this argument. The appellant, a retired Station Master receiving pension in foreign exchange, argued that his case was covered by this Exception. Additionally, the appellant invoked Section 59 of the Act, which provides for the defence of lack of mens rea. The Board acknowledged the bona fide conduct of the appellant but still found him in contravention due to lack of permission from the Reserve Bank of India.

3. The High Court, upon review, found that the appellant's case indeed fell within the Exception under Section 9(2)(b) of the Act, allowing the transfer of foreign exchange without permission in certain circumstances. The Court noted the appellant's bona fide conduct and the absence of mens rea, as required under Section 59 of the Act. Consequently, the Court set aside the Board's order, absolving the appellant of all charges and penalties.

4. In conclusion, the High Court allowed the appeal, overturning the Board's decision. The Court held that the appellant was not guilty of any charges and, therefore, was not liable for any penalties. The judgment emphasized the importance of considering statutory exceptions and the presence or absence of mens rea in cases involving alleged contraventions of foreign exchange regulations.