RAM RATTAN GUPTA versus DIRECTOR OF ENFORCEMENT, FOREIGN EXCHANGE REGULATION, AND ANOTHER

Citation: [1966] 1 S.C.R. 651 · Decided: 30-08-1965 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Order modified

Judgment (excerpt)

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6 51 
RAM RATIAN GUPTA 
v. 
DIRECTOR OF ENFORCEMENT, FOREIGN EXCHANGE 
REGULATION, AND ANOTHER 
August 30, 1965 
[K. SUBBA RAo, J. R. MUDHOLKAR AND R. S. BACHAWAT, JJ.J 
Foreign Exchange Regulation Act (7 of 
1947), s. 4(1) and (3)-
Scope of. 
The appellant visited Far Eastern countries during the years 1951 to 
1956 after obtaining from the Government of India the necessa:ry foreign 
exchange for the purpose of meeting his expenditure dnring his tour. He 
deposited the unspent part of the foreign exchange in different branches 
of the Chartered Bank in those countries. 
The Director, Enforcement 
Directorate, Foreign Exchange Regulation Act, took proceedings under 
s. 19(2) of the Act and found him guilty of contravening s. 4(1) and 
(3). The order was confirmed on appeal by the Foreign Exchange Re-
gulation Appellate Board. 
In the appeal to this Court. 
HELD : (i) The appellant could not be held to 
have contravened 
the provi•ions of s. 4(1). [654 F] 
To attract s. 4(1), the appellant should have lent foreign &change 
to a person who was not an authorised 
dealer. 
The Bank, no doubt, 
was not an authorised dealer, but, when a person deposits free currency 
in the current account of a bank in order to draw it whenever necessary 
for the purpose for which it was given, it is not possible to hold that he 
enters into a contract of loan 
with the bank, 
within the meaning of 
s. 4(1). Ordinarily a deposit of an amount in the current account of a 
bank creates a debt, but it need not necessarily involve a contract 
of 
loan. [653 E; 654 C, D-EJ 
Shanti Prasad Jain v. Director of Enforcement, [1963] 2 S.C.R. 294, 
followed. 
(ii) The tribunals were right in holding that the appellant had con-
travened s. 4(3). [655 A] 
Unde·r this sub-section, the appellant should have sold the unspent 
foreign exchange to an authorised dealer without delay. 
Since he had 
kept the amount in the current account of various branches of the Bank 
for a number of years, he was guilty of contravening the provision. [654 H; 
655 A] 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 890 of 
1964. 
Appeal by special leave from the order dated February 19, 
1963 of the Foreign Exchange Regulation Appellate Board, New 
Delhi, in Appeal No. 52 of 1959. 
H 
A. V. Viswanatha Sastri and J. P. Goyal, for the appellant . 
Bishan Narain, R. N. Sachthey and B. R. G. K. Achar, for the 
respondents. 
652 
SUPREME COURT REPORTS 
(1966] l S.C.R. 
111e Judgment of the Court was delivered by 
Subba Rao, J. 
This appeal by special leave raises the short 
question whether the appellant contravened the provisions of sul>-
ss. (I ) and ( 3) of s. 4 of the Foreign Exchange Regulation Act, 
1947 (VII of 1947), hereinafter called the Act. 
A 
During the years 1951 to 1956 the appellant, Ram Rattan 
B 
Gupta, visited the Far Eastern countries after obtaining the neces-
sary 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, Osa-
ka and Tokyo, without the general or the special permission of the 
Reserve Bank of India. In the different branches of the said Bank 
C 
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 Bani.:. was £ 40 (sterling). The appellant received pay-
ments from those accounts even after he returned to India. The 
Director, Enforcement Directorate, Foreign Exchange Regulation 
I> 
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. (I) and (3) of s. 4 of 
the Act and imposed on him a penalty of Rs. 2,500/- under s. 23 
(l)(a) of the Act. On appeal, the Foreign Exchange Regulation 
Appellate Board agreed with the view expressed by the Director of 
E 
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. 
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 relation-
ship of creditor and debtor between the appellant and the Bank in 
reg

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