Law: Foreign Exchange Regulation Act, 1947

Section: 4, 23(1)

Law: Code of Criminal Procedure, 1898

Section: 410, 103, 340(2), 342

 Summary The appellant challenged his conviction under Section 4 read with Section 23 of the Foreign Exchange Regulation Act, 1947 for allegedly conducting unauthorized foreign exchange (hundi/hawala) business. The prosecution relied on the recovery of 140,000 Saudi Riyals, 50 Kuwaiti Dinars, and Pakistani currency from the appellant's shop. However, the High Court held that mere possession of foreign currency does not constitute an offence under the Act unless it is proved that the accused was actually engaged in unauthorized foreign exchange transactions. The Court observed that no test purchase was conducted, no foreign exchange transaction was witnessed, no documentary or electronic evidence was produced, no independent witness was associated during recovery, and the investigation suffered from procedural irregularities. Since the prosecution failed to prove unauthorized dealing beyond reasonable doubt, the appellant was acquitted. The Court also held that confiscation of the recovered foreign currency could not survive after acquittal and ordered its return to the appellant after the expiry of the appeal/revision period. Tagline Mere possession of foreign currency is not an offence; unauthorized foreign exchange dealing must be proved beyond reasonable doubt before conviction or confiscation can be sustained. ORDER; ABDUL FAYAZ, J.- The appellant has preferred the instant appeal under Section 410 Cr.P.C. against the judgment dated 20.11.2019 passed by the learned Tribunal/Sessions Judge, Abbottabad, whereby he was convicted under Section 4 read with Section 23 of the Foreign Exchange Regulation Act, 1947 and sentenced to undergo rigorous imprisonment for two years with fine of Rs.20,000/-, and in default whereof to further undergo simple imprisonment for two months. The foreign currency allegedly recovered from the shop of the appellant was also ordered to be confiscated in favour of the State. Briefly stated, the prosecution case is that the State Bank of Pakistan, through letter dated 14.05.2018, requested the Director General, FIA, to initiate legal action against persons allegedly involved in unauthorized foreign exchange business in…