A.N.Sen, CJ. - (1.) This is an application for grant of certificate under Article 133 (1) of the Constitution to enable the appellant to prefer an appeal to the Supreme Court against the judgment passed by the Division Bench on the lift of Apr., 1976 and 12th April, 1976.
(2.) The facts of the case and the arguments which were advanced before the Court have been fully set out in the judgment of the Division Bench.
(3.) The Director of Enforcement held that the respondent company was guilty of contravening the provisions of Section 4 (1) of the Foreign Exchange Regulation Act, 1947 (hereinafter referred to as the said Act) read with Central Government Notification No. FI (67)-EC/57, dated 25th Sep., 1956 and imposed on the respondent company a penalty of Rs. 50,000/- and the Director by his order further directed the company to repatriate the foreign exchange which formed the subject-matter of the proceedings before the Director through authorised channels. Against the order of Director of Enforcement, the respondent company preferred an appeal to the Appellate Board. The Appellate Board for reasons recorded in its order dated 25th Nov., 1977 set aside the order of the Director of Enforcement and further ordered and directed refund of the penalty amount, if already realised. It may be noted that the Appellate Board in its order held in paras 8, 9 and 10 as follows: "8. The further question, however, arises as to whether in fact there has been any lending of money or a failure to offer foreign exchange for sale. These charges necessarily postulate that the branch is the owner of the foreign exchange or holds it. In this connection, it is necessary to consider the meaning of the term 'lending'. As observed by the Supreme Court in Ram Ratan Gupta v. Director of Enforcement. It means in the ordinary parlance to deliver to another a thing for use on condition that the thing lent shall be returned with or without compensation for the use made of it by the person to whom it was lent. The subject of lending may also be money (at p. 496)." 9. This necessarily postulates that the lender must have been entitled to the money or to dispose of it before he can lend it. While a branch can be regarded for the purposes of exchange control as an entity distinct from its head office it can still lend the money only if it has control of it or is in a position to acquire the control by its own volition. 10. In the present case, the system of allowing discounts was given up for reasons which the U. K. Company considered to be good, namely, the practice of the customs authorities. Once they ceased to allow the discounts, the branch could not be said to become entitled to the money represented by the discount so as to allow the head office the use of the discounts so as to make it a loan neither could they in such a circumstance be said to own or hold the foreign exchange represented by the discounts so as to be in a position to offer it for sale." ;