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1996 Supreme(Mad) 82
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE ABDUL HADI AND THE HONOURABLE MR. JUSTICE P. SATHASIVAM
Union of India - Appellant
Versus
M. Shah Jehan - Respondents
A.A.O. No. 829 of 1985
Decided On : 22 January 1996
The Appellate Board has the discretion to set aside a confiscation order under Section 63 of the Foreign Exchange Regulation Act, 1973, and its decision will not be interfered with by the High Court under Section 54 of the Act unless it is unreasonable or arbitrary.
Headnote:
FOREIGN EXCHANGE REGULATION ACT, 1973 - SECTION 9(1)(B) - CONFISCATION OF CURRENCY - APPELLATE BOARD'S DISCRETION TO SET ASIDE CONFISCATION - INTERFERENCE BY HIGH COURT UNDER SECTION 54 OF THE ACT.
Fact of the Case:
The respondent was found in possession of Indian currency of Rs. 50,000/- which was seized on 15-2-1982 from his residential premises. He admitted to receiving the money from his father-in-law in Malaysia, but later retracted his statement. The Adjudicating Officer imposed a penalty of Rs. 5,000/- and confiscated the seized amount under Sections 50 and 63 of the Foreign Exchange Regulation Act, 1973 (the Act). The Appellate Board increased the penalty to Rs. 20,000/- but set aside the confiscation order.
Finding of the Court:
The High Court held that the Appellate Board did not err in setting aside the confiscation order, considering that the penalty imposed was substantial and that the respondent was able to identify the source from which he received the money.
Issues: Whether the Appellate Board was justified in setting aside the confiscation order passed by the Adjudicating Officer.
Ratio Decidendi: The High Court held that the Appellate Board has the discretion to set aside a confiscation order under Section 63 of the Act, and that its decision in this case was not unreasonable or arbitrary. The Court noted that the Appellate Board had increased the penalty imposed on the respondent from Rs. 5,000/- to Rs. 20,000/-, which was a substantial increase. The Court also considered the fact that the respondent was able to identify the source from which he received the money, which was a mitigating factor.
Final Decision: The High Court dismissed the appeal, holding that there was no reason to interfere with the Appellate Board's order under Section 54 of the Act.
This civil miscellaneous appeal under Section 54 of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to the as 'the Act') is against the order dated 5-11-1984 of the Appellate Board under the said Act, modifying the order dated 9-8-1982 of the first Authority viz., the Deputy Director, Enforcement Directorate Madras 6
2. There were three contraventions under the Act, one under Section 9(1)(b), another under Section 9(1)(d) and yet another under Section 9(1)(e) of the Act. But even according to learned Counsel for the appellant, in this appeal we are concerned only with the contravention under Section 9(1)(b) by the respondent. Regarding the same, the first Authority levied penalty of Rs. 5, 000/- under Section 50 of the Act and also confiscated under Section 63 of the Act, the sum of Rs. 50, 000/- involved in the contravention, which was actually seized on 15-2-1982. But, the abovesaid modification made by the Appellate Board in the appeal preferred before it by the respondent is that while it increased the abovesaid penalty from Rs. 5, 000/- to Rs. 20, 000/- adopting the procedure prescribed under Section 52(5) of the Act, it set aside the order of the abovesaid confiscation made by the first Authority. Hence this appeal
3. The only argument of learned counsel for the appellant is that the Appellate Board should not have set aside the abovesaid confiscation order of the first Authority, but should have confirmed the said order of confiscation, particularly when the Appellate Board has held, while dealing with the question relating to penalty, it observed that the penalty of Rs. 5, 000/- imposed by the first Authority was very much on the low side in view of the surreptitious manner in which a heavy amount was being brought into the country without resorting to the banking channel. "In this connection, he relies on Rangaswamy v. The Deputy Director, 1987 11 ECC 242 (Madras) and Union of India v. Vijay Chand.
4. On the other hand, learned counsel for the respondent submits that the discretion exercised by the Appellate Board in setting aside the confiscation, while increasing, the penalty to Rs. 20, 000/- does not call for interference in this appeal under Section 54 of the Act. He also submits that the abovesaid decisions will not have any bearing on the present case
5. We have considered the rival submissions According to Section 9(1)(b) on person in or resident in India shall" *
receive otherwise than through an authorised dealer, any payment by order or on behalf of any person resident outside India
". According to Section 50 of the Act, inter alia, if any person contravenes Section 9(1)(b)," *
he shall be liable to such penalty not exceeding five times the amount or value involved in any such contravention or five thousand rupees, whichever is more ..... Section 51 of the Act says that for purpose of adjudging under Section 50, the Adjudicating officer shall hold an inquiry in the prescribed manner and if on such enquiry he is satisfied that the person concerned has committed the contravention, he may impose such penalty as he thinks fit. According to Section 63 of the Act, inter alia, the Adjudicating officer first Authority herein, adjudging any contravention under Section 51, "May if he thinks fit" in addition to any penalty, direct that any currency in respect of which the contravention has taken place, shall be confiscated
6. In the present case, the above referred to seizure of Indian currency of Rs. 50, 000/- was made on 15-2-1982 from the residential premises of the respondent. On the same date, the incriminating statement was given by the respondent. According to it, as per instructions from his father-in-law at Malaysia, he received the abovesaid sum of Rs. 50, 000/-. As against this admission learned counsel for the respondent no doubt points out that the respondent retracted from the said admission within two days thereafter, that is on 17-2-1982 itself. But it must be noted, as found by t
