ABDUS SHUKOOR SHAIKH DAWOOD Vs. A M CHATTERJEA

JUDGEMENT

(1.) THE petitioner was formerly employed in Arabian American Oil Company at Dhahran in Saudi Arabia. Some time about September 1959 his services came to an end. The petitioner was then given two cheques , one of which he encashed in Saudi Arabia. The second cheque which has given rise to this proceeding , was drawn by the American Oil Company in Indian Currency on 29th September 1959. It was drawn on the " Nether lands Trading Society , Alkhobar through the Netherlands Trading Society , Bombay". Alkhobar is in Saudi Arabia. The cheque the bore the endorsement " Pay to the order of Abdus Shukoor ( the petitioner) Rs. 16504. 31". the petitioner brought this cheque to India and gave it to one Badshah and Co , Bombay who according to the petitioner, paid him the amount due on it. It appears that Badshah and Co then sent the cheque by post to Bhatkal Provision Stores Alkhobar. The cheque was intercepted in transmission and was sent to the Enforcement Directorate. an enquiry was started. Notice was issued to the petitioner and he was asked to show cause why adjudication proceedings as contemplated by S. 23d of the Foreign Exchange Regulation Act 1947 should not be held against him for his having contravened the provisions of S. 4 (1) of the Act. In reply the petitioner stated that he did not know that the cheque was foreign exchange or that the Act applied to it. He admitted that he had encashed the same with Badshah and Co , Bombay , but he stated that he had done so in ignorance of law. The respondent No. 1 held that the petitioner was guilty of contravening the provisions of S. 4 (1) of the Act and imposed upon him a penalty of Rs. 2,000. That order is being challenged in the present petition.

(2.) SUBSECTION 1 of section 4 of the Foreign Exchange Regulation Act, state that except with the previous general or tension permission of the Reserve Bank, no person other than an authorized dealer shall buy, sell or exchange with, any person not been an authorized dealer, any foreign exchange. It is not in dispute that Badshah and Co. were not authorized dealers. Consequently, if the cheque which the petitioner had given to Badshah and Co. was foreign exchange then the petitioner will be held to have contravened the provisions of this section. The main question to be decided in this application, therefore, is whether this cheque was foreign exchange within the meaning of the Act.

(3.) "foreign Exchange" Is defined in clause [d] of section 2 as under: "foreign exchange" means foreign currency and included all deposits, credits and balance payable in any foreign currency, and any drafts, travellers cheque, letter of credit and bills of exchange, expressed or brown in Indian currency but payable in any foreign currency". At our instance inquiry on certain points were made by the Reserve Bank from the branches of the Netherlands trading Society now called Algemene Bank Netherlands, at Alkhobar and Bombay and the replies which have been received have been filled along with the affinity of the superintendent of the enforcement Directorate. The cheque was brown on the Alkhobar branch of the Bank, evidently because the American oil Co. had an account it branch. Is the cheque had been presented at this branch, the amount would have been paid in Saudi Arabian Riyals as Indian rupees are not legal tender money in Saudi Arabian, Dole Saudi Arabian Riyals so obtained could thereafter hath been exchanged for Indian rupees. The information now made available also shows that under an agreement between the Bank and the oil Co. cheque marked "through Netherlands trading Society Bombay", is presented at the Bombay branch of the Bank are paid by that branch without reference to its Alkhobar office. The petitioner could therefore have presented the cheque for ancient Act the Netherlands trading Society Bombay and received from it the amount payable on the cheque. Although therefore the cheque was expressed and brown in favor of Indian currency it could have been paid board in Indian currency is 8 was presented for payment in Bombay as in foreign currency [saudi Arabian Riyals] is it had been presented at Alkhobar.