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TMI Blog1994 (1) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order. The learned Dy. Director has held the appellant guilty of the charges contained in SCNs II, III, IV and VII. This appeal is, therefore, confined to the charges in those SCNs. As the facts are not disputed, I would straightway proceed to deal with charges contained in SCNs II, III, IV and VII. 3. Under SCN II, the appellant has been charged with the contravention of section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 ('the Act') for having received payments totalling Rs. 1,76,000 in India from A.F.S. & Sons, Broadway, Ernakulam by order or on behalf of Shri Alban D'Souza of Canada. During the adjudication proceedings, the appellant denied the charge. She explained that she was one of the six persons in the firm M/s. A.F.S. & Sons until November 1969 when the partnership was reconstituted. In the reconstituted partnership firm Shri D'Souza and Smt. Eata D'Souza were the only partners, the remaining four persons including the appellant having retired and that the amounts in question totalling Rs. 1,76,000 was received by her, in her own right, as a result of settlement of accounts on the reconstitution of the partnership. Shri Maingi, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom this country, has not been established at all. Section 5(1)(c) cannot come into play merely because the Reserve Bank of India may have a suspicion that such an arrangement may exist." On behalf of the respondents, Shri Handoo contended that since the amount was still under the control of the non-resident, it could not be paid to the appellant without the order of the non-resident. Shri Handoo, therefore, submitted that the decision of the Allahabad High Court is distinguishable. 4. In my opinion there is full force in the contention made by the appellant that a payment of an amount in Indian currency to a person who is claiming the amount as a matter of his own right would not amount to payment contemplated under section 9(1)(b) which admittedly aims at prohibiting compensatory payment. There is no force in the argument that the judgment of the Allahabad High Court as relied upon by the appellant is distinguishable. Here the appellant received the amount because she was entitled to it in terms of the settlement of accounts of the firm of which she was one of the partners. The argument that Shri D'Souza, the non-resident had control of the money in the sense that unl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... too technical and of minor nature to warrant imposition of any penalty. In the course of the proceedings, Shri Maingi clarified that it was inadvertently mentioned that the Australian currency was received by the appellant by cheque from Shri Tonnemann. In fact, it was a demand draft and not a cheque or a draft in her name. Shri Maingi submitted that this also proves her bona fide that there was no attempt to receive any foreign exchange or any compensatory payment on the part of appellant. Shri Maingi also pointed out that certain discrepancy in the figure of Rs. 88,000 which has been discussed in the impugned order. In any case that discrepancy is not material. 6. It is not disputed that the amount in question was received by the appellant in foreign exchange through normal banking channel, that the bank credited an equal amount in Indian currency to the appellant's account, that the said amount in Indian currency was given back by the appellant to Shri Tonnemann through cheques. It is to be noted that the amount received by the appellant was from Shri Tonnemann, the non-resident and not from any third person. What section 9 prohibits is compensatory payment. Section 9 proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the contravention of section 8(1). 8. In the course of the proceedings, Shri Maingi submitted that even if there is a contravention on the part of the appellant, looking to the circumstances and the amount involved, the imposition of the penalty of Rs. 3,000 as well as confiscation of the amount is excessive. He contended that it is not the case of the department that the appellant was engaged in transactions in foreign exchange in contravention of the provisions of the Act and, therefore, a token penalty would have been adequate. After considering the facts and circumstances of the case, I am of the opinion that the penalty of Rs. 3,000 as imposed by the learned Dy. Director, would meet the ends of justice, but the confiscation of foreign currency which has not been received in deliberate violation of law, is not justified, particularly in absence of any evidence that it was intended to be used for any purpose prohibited by the Act. I am, therefore, inclined to set aside the confiscation of the amount of Sterling £ 550 while upholding the penalty of Rs. 3,000 in respect of this charge. 9. Under SCN VII, the appellant has been charged for contravention of section 8(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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