The deposit of foreign exchange in the current account of a bank does not necessarily involve a contract of loan. Whether a deposit amounts to a loan depends upon the terms of the contract whereunder the deposit is made.

Judgement

SUBBA RAO, J.: This appeal by special leave raises the short question whether the appellant contravened the provisions of sub-ss. (1) and (3) of S. 4 of the Foreign Exchange Regulation Act, 1947 (VII of 1947), hereinafter called the Act.

2. During the years 1951 to 1956 the appellant, Ram Rattan Gupta, visited the Far Eastern Countries after obtaining the necessary foreign exchange from the Government of India. During that period the appellant opened current accounts with the Chartered Bank of India, Australia and China at Singapur, Hong Kong, Osaka and Tokyo, without the general or the special permission of the Reserve Bank of India. In the different branches of the said Bank he deposited the unspent part of the foreign exchange given to him. The balance of the said deposits made at the various branches of the Bank was £ 40 (sterling). The appellant received payments from those accounts even after he returned to India. The Director, Enforcement Directorate, Foreign Exchange Regulation Act, took proceedings against the appellant under S. 19 (2) of the Act and, after making the necessary enquiries, found him guilty of contravening the provisions of sub-ss. (1) and (3) S. 4 of the Act and imposed him a penalty of Rs. 2,500 under S. 23(1)(a) of the Act. On appeal, the Foreign Exchange Regulation Appellate Board agreed with the view expressed by the Director of Enforcement that the appellant contravened the said provisions of the Act and dismissed the appeal. The appellant has preferred the present appeal, by special leave, against the judgment of the said Board.

3. Mr. A. V. Viswanatha Sastri, learned counsel for the appellant, contended that the total of the amounts kept by the appellant in the branches of the said Bank was a negligible balance of the free quota of foreign exchange given to him, that there was no relationship of creditor and debtor between the appellant and the Bank in regard to the said amounts, that the free quota of foreign exchange was given to him without any condition imposed thereon, and that on the said facts there was no scope to invoke either sub-s. (1) or sub-s. 3. of S. 4 of the Act.

4. We will read the relevant provisions of the Act in order to appreciate the said contentions.

Section 4 - Restrictions on dealing in foreign exchange:

(1) Except with the previous general or special permission of the Reserve Bank, no person other than an authorised dealer shall in India and no person resident in India other than an authorised dealer shall outside India, buy or borrow from, or sell or lend to, or exchange with, any person not being an authorised dealer, any foreign exchange.

(2) * * * *

3. Where any foreign exchange is acquired by any person other than an authorised dealer for any particular purpose, or where any person has been permitted conditionally to acquire foreign exchange, the said person shall not use the foreign exchange so acquired otherwise than for that purpose or, as the case may be, fail to comply with any condition to which the permission granted to him is subject, and where any foreign exchange so acquired cannot be so used or, as the case may be, the conditions cannot be complied with, the said person shall without delay sell the foreign exchange to an authorised dealer.

Section 4 (1) of the Act was amended in the year 1964, but we are concerned only with the said sub-section as it stood before the amendment. To attract S. 4 (1), a resident in India other than an authorised dealer shall have lent to any person, not being an authorised dealer, any foreign exchange. It is not disputed that the said Bank was not an "authorised dealer" within the meaning of the said sub-section. If so, the only question is whether the appellant, in depositing the said amounts in the current accounts of the various branches of the said Bank, lent the said amounts to the Bank.

5. What is the meaning of the expression "lend"? It means in the ordinary parlance to deliver to another a thing for use on condition