- (1.) This is appeal from the order of the Foreign Exchange Regulation Appellate Board and arise in the following circumstances :
(2.) Appellant No. 1 went to Europe and the United States of America in connection with business, and his wife, appellant No. 2. accompanied him. The first appellant is the Chairman of Sahu Jain Limited. They left India on June 30, 1958 and visited several countries in Europe including West Germany. Eventually they reached the United States of America on August 5, 1958. They left the United States on September 22, and arrived at Delhi on October 1, 1958. The first appellant had been allowed foreign exchange amounting to 337 (equal to Rs. 4500/-) and 1410 U. S. dollars (equal to Rs. 6,750/-). Further, Messrs Sahu Jain Limited had been informed that the exchange was sanctioned on condition that the visit was limited to a period of two months. The second appellant was not allowed any foreign exchange but her visit was sanctioned on the representation that a certain company in the United States would bear all the expenses of her trip to that country.
(3.) When the appellants returned to Delhi on the 1st of October the Customs authorities found traveller's cheques of the total value of 2590 U. S. dollars on the person of the first appellant. They were detained and the traveler's cheques were handed over to the Enforcement Directorate under the orders of a magistrate. Thereafter the appellants were required to furnish certain information about their trip abroad including particulars about how they came to be in possession of these cheques. It will be noticed that the amount of these cheques was more than the total dollar exchange sanctioned to the first appellant. The explanation given by the appellant was that traveller's cheques worth 1500 U. S. dollars were received as gift from Messrs Maschinenbau Schoiz and Company, West Germany, and traverler's cheques worth 1,000 U. S. dollars were received from Messr. Chemiobau, Dr. A. Zieren, West Germany, and a sum of 1,000 U. S. dollars was Received from Messrs. Hans Tobeason, Inc., New York. It was further explained that traveller's cheques worth 1990 U. S. dollars, out of the total amount seized on October 1st represented the unspent balance from the two gifts received in West Germany and the remaining traveller's cheques worth 600 U. S. dollars formed the unspent balance of the foreign exchange sanctioned when the appellant had left India. It was also stated that the entire amount of 1,000 U. S. dollars received in New York was spent in the United States. On receipt of this explanation, the Director of Enforcement issued notices to the appellants to show cause why adjudication should not be commenced against them for contravention of the provisions of S. 9 of the Foreign Exchange Regulation Act, No. VII of 1947, (hereinafter referred to as the Act) read with Notification dated March 25, 1947, issued thereunder. The notices said that the appellants had failed to sell the foreign exchange amounting to 3500 U. S. dollars referred to above acquired by them abroad within one month of their becoming owners thereof as required by S. 9 of the Act read with the said notification. The appellants showed cause which was more or less the same as the explanation they had already given earlier. The Director of Enforcement then held adjudication proceedings and came to the conclusion that the sum of 3500 U. S. dollars was received by the appellants as gift and they were owners of it, and as they had not offered to sell this foreign exchange as required by S. 9 and the notification made thereunder, they were liable to penalties for contravening S. 9. The Director ordered the forfeiture of the traveller's cheques to the extent of 1990 U. S. dollars found with the appellants. He also imposed a penalty of Rs. 18,000/- on the first appellant under S. 23 of the Act; no penalty was imposed on the second appellant.;