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10 EXCISE LAW TIMES [ Vol. 372

“42. Contravention by companies. - (1) Where a person committing a
contravention of any of the provisions of this Act or of any rule, direction or
order made thereunder is a company, every person who, at the time the
contravention was committed, was in charge of, and was responsible to, the
company for the conduct of the business of the company as well as the
company, shall be deemed to be guilty of the contravention and shall be li-
able to be proceeded against and punished accordingly :
Provided that nothing contained in this sub-section shall render any such
person liable to punishment if he proves that the contravention took place
without his knowledge or that he exercised all due diligence to prevent
such contravention.
(2) Notwithstanding anything contained in sub-section (1), where a con-
travention of any of the provisions of this Act or of any rule, direction or
order made thereunder has been committed by a company and it is proved
that the contravention has taken place with the consent or connivance of, or
is attributable to any neglect on the part of, any director, manager, secretary
or other officer of the company, such director, manager, secretary or other
officer shall also be deemed to be guilty of the contravention and shall be li-
able to be proceeded against and punished accordingly.
Explanation. - For the purposes of this section -
(i) “company” means any body corporate and includes a firm or
other association of individuals; and
(ii) “director”, in relation to a firm, means a partner in the firm.”
A fair reading of Section 10(5) envisages that the authorised person before under-
taking any transaction in foreign exchange on behalf of any person, must require
that person to make a declaration and to give such information as will reasona-
bly satisfy the authorised person that the transaction will not involve, and is not
designated for the purpose of any contravention or evasion of the provisions of
the FEMA Act or of any rule, regulation, notification, direction or order made
thereunder. If such satisfaction is not reached, the authorised person need not
proceed with the proposed transaction and must report about the same to the
Reserve Bank.
9. The real provision which needs to be reckoned for answering the
controversy brought before this Court is Section 10(6) of the FEMA Act. This
provision is a deeming provision pointing towards the specified circumstances,
which would result in having committed contravention of the provisions of the
FEMA Act or for the purpose of the stated Section. The specified circumstances
are (i) when a person acquires or purchases foreign exchange for any purpose
mentioned in the declaration made by him to authorised person does not use it
for such purpose; (ii) that person does not surrender the acquired or purchased
foreign exchange to authorised person within the specified period, and (iii) the
person uses the acquired or purchased foreign exchange for any other purpose
for which purchase or acquisition of foreign exchange is not permissible under
the provisions of the FEMA Act or the rules or regulations or direction or order
made thereunder. Each of these are standalone circumstances.
10. In the present case, the finding of fact is that the import of goods for
which the foreign exchange was procured and remitted was not completed as the
Bill of Entry remained to be submitted and the goods were kept in the bonded
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