1. The following order is delivered by Km. Vijay Laxmi, Member, Appellate Tribunal for Foreign Exchange:

2. This appeal has been filed against Adjudication Order No. ADJ/2/AD(BDB)/B/2001/3719 dt.25.02.02 passed by Assistant Director, Directorate of Enforcement, Mumbai imposing a penalty of Rs. 10,000/- (Rupees ten thousand only) against the appellant company M/s. Cox & Kings (India) Ltd. A full fledged money changer for failure on their part to comply the conditions laid down in the licence issued by the Reserve Bank of India while releasing foreign exchange totaling to U.S $12,610/- in travelers cheques and U.S $4790 in currency notes to different passengers for contravention of the provisions of Section 7 & 49 of FERA, 1973 r/w paragraph 8A 1 (ii) item XV of the Annexure 1 to Chapter 8 of ECM and paragraph 11 of the FLM r/w 73 (3) of FERA 1973.

3. I have heard elaborate arguments from Learned Senior Advocate, Shri. A.N. Haksar on behalf of the appellant and Shri. A.C. Singh, DLA, for the respondent and gone through the record, relevant law and judicial pronouncements carefully. A Show Cause Notice was issued against the appellant company, M/s. Cox & Kings (India) Ltd., a Full Fledged Money Changer alleging that the instructions laid down by the RBI subject to which licence was issued for dealing in foreign exchange were not followed by the company as FFMC. During the search of the premises of the company, the Enforcement Officers seized and recovered certain documents including Travellers Cheques totalling to US $ 12610 and US $ 4709 in cash. During investigation it emerged from the evidence that the appellant-company, M/s. Cox and Kings (India) Ltd. had release foreign exchange not only in cash but also in the form of T/Cs without without having any application from passengers and even without their identification etc. The appellant company was held guilty by the Adjudicating Officer where being aggrieved this appeal has been filed by the appellant to set aside the impugned order.

4. It is argued by Ld. Senior Advocate that the appellant company nowhere contravened either the instructions of the Reserve Bank of India or any of the provisions of the Act. The foreign exchange was booked in the customer's name in order to fix the exchange rate of the moment the customer gives the cheque for the purchase of foreign exchange. There cannot be a 'release' of the foreign exchange without handing over' the same to the passenger. The foreign currencies and T/Cs were still lying in the-custody of the appellant company and it would have been issued to the persons concerned only after obtaining the signature on the T/Cs. Had the concerned persons not turned up to collect the documents, foreign exchange or his tour get cancelled, he could not be issued T/Cs without signature. Therefore, on this basis alone the present appeal deserved to be allowed. The subject foreign exchange and T/Cs were in the custody' of the appellant where there was no question of leveling the charge for its release in favour of the passengers and the appellant was wrongly held guilty by the Adjudicating Officer. Ld. Advocate placed reliance on Hindustan Steel Ltd. v. State of Orissa [1972] ITR (SC) Vol. 83 26 and alleged that the contumacious conduct or the mala fide intention was not proved on the part of the appellant and the penalty was wrongly imposed under impugned order.

5. It will be appropriate here to mention the provisions of Condition no. (iv) of para 11 of FLM, to better appreciate the legal position, which stipulates as under:

"The sale of foreign exchange should be made only on personal application and identification of the traveller. While issuing the Travellers Cheques, the traveller should invariably be required to sign the cheques in the presence of an authorised 'official and the purchaser's acknowledgement for receipt of travelers cheque should be duly obtained in the receipt book of ' such cheques or the purchase slips as the case may be."

6. T