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Issues Involved:
1. Alleged contravention of sections 9(1)(a) and 9(1)(c) of the Foreign Exchange Regulation Act, 1973. 2. Alleged contravention of section 16(1) of the Foreign Exchange Regulation Act, 1973. 3. Application of section 68(1) concerning liability of individuals in charge of the company. 4. Evidentiary value of unsigned documents and statements in establishing contraventions. 5. Applicability of corporate veil and liability of corporate entities. Detailed Analysis: 1. Alleged Contravention of Sections 9(1)(a) and 9(1)(c): The primary allegation was that the appellant companies made unauthorized payments and acknowledged debts to a non-resident entity, B&P, in contravention of sections 9(1)(a) and 9(1)(c) of the Foreign Exchange Regulation Act, 1973. The adjudicating authority relied on a seized unsigned letter, which purportedly contained the real terms of the collaboration agreement with B&P. The letter was not on any letterhead, unsigned, and undated, and its contents were disputed by the appellants. The Board found that the unsigned letter could not be treated as a binding agreement, as it was not enforceable in law and did not create any debt. The Board also noted that the evidence did not establish that the payment of DM 57,500 was made by the appellant companies. Furthermore, the Board highlighted that the provisions of section 9(1)(a) are penal in nature and must be strictly construed. The absence of the expression "caused to be" in section 9(1)(a) indicated that the legislature did not intend to cover payments made indirectly through another party. Consequently, the findings of contravention of sections 9(1)(a) and 9(1)(c) were not sustained. 2. Alleged Contravention of Section 16(1): The allegation under section 16(1) involved the non-receipt of commission payable to the appellant firm by its principals, Becker and Piscanter. The evidence relied upon was a loose sheet of paper and a statement by J.J. Dalai. The Board found that the loose sheet did not provide a complete statement of the commission earned and received, and the statement by J.J. Dalai did not indicate any outstanding commission. The Board noted that the evidence did not establish a prima facie case of contravention, and the charge under section 16(1) was not maintainable. 3. Application of Section 68(1): Section 68(1) was invoked to hold J.J. Dalai personally liable for the alleged contraventions by the appellant companies. However, since the findings of contraventions under sections 9(1)(a), 9(1)(c), and 16(1) were not sustained, the application of section 68(1) was also not warranted, and the penalties imposed on J.J. Dalai were set aside. 4. Evidentiary Value of Unsigned Documents and Statements: The Board scrutinized the evidentiary value of the unsigned letter and statements made by J.J. Dalai. It was determined that the unsigned letter, being a mere draft without signatures, lacked legal enforceability and could not be used to establish a contravention. The Board emphasized that for an unsigned document to be considered as evidence, it must be corroborated by other substantial evidence, which was absent in this case. 5. Applicability of Corporate Veil and Liability of Corporate Entities: The adjudicating officer attempted to pierce the corporate veil to hold the appellant companies liable for the actions of their promoters. However, the Board clarified that lifting the corporate veil is permissible only in cases of fraud or deception, which was not applicable in this scenario. The Board reiterated that a company is not liable for pre-incorporation contracts unless it adopts or accepts the obligations post-incorporation, which was not evidenced here. Conclusion: The appeals were allowed, and the impugned order was set aside against all appellants. The Board directed the respondents to refund the penalty amounts deposited by the appellants within 45 days. The judgment underscored the importance of strict adherence to legal provisions and evidentiary standards in adjudication proceedings under the Foreign Exchange Regulation Act.
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