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
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 The 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 subss
1 and 3 of section 4 of the Foreign Exchange Regulation Act 1947 VII of 1947 hereinafter called the Act
During the years 1951 to 1956 the appellant Ram Rattan Gupta visited the Far Eastern countries after obtaining the necessary 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 Osaka and Tokyo without the general or the special permission of the Reserve Bank of India
In the different branches of the said Bank 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 Bank was pound 40 sterling
The appellant received payments from those accounts even after he returned to India
The Director Enforcement Directorate Foreign Exchange Regulation Act took proceedings against the appellant under section 192 of the Act and after making the necessary enquiries found him guilty of contravening the provisions of sub sections
1 and 3 of section 4 of the Act and imposed on him a penalty of Rs 2500 under section 23 1 a of the Act
On appeal the Foreign Exchange Regulation Appellate Board agreed with the view expressed by the Director of 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 relationship of creditor and debtor between the appellant and the Bank in regard to the said amounts that the free quota of foreign exchange was given to him without any condition imposed thereon and that on the said facts there was no scope to invoke either sub section
1 or sub section
3 of section 4 of the Act
We will read the relevant provisions of the Act in order to appreciate the said contentions
Section 4
Restrictions on dealing in foreign exchange 1 Except with the previous general or special permission of the Reserve Bank  no person other than an authorised dealer shall in India and no 653 person resident in India other than an authorised dealer shall outside India buy or borrow from or sell or lend to or exchange with any person not being an authorised dealer any foreign exchange
2     3 Where any foreign exchange is acquired by any person other than an authorised dealer for any particular purpose or where any person has been permitted conditionally to acquire foreign exchange the said person shall not use the foreign exchange so acquired otherwise than for that purpose or as the case may be fail to comply with any condition to which the permission granted to him is subject and where any foreign exchange so acquired cannot be so used or as the case may be the conditions cannot be complied with the said person shall without delay sell the foreign exchange to an authorised dealer
Section 41 of the Act was amended in the year 1964 but we are concerned only with the said sub section as it stood before the amendment
To attract section 41 a resident in India other than an authorised dealer shall have lent to any person not being an authorised dealer any foreign exchange
It is not disputed that the said Bank was not an authorised dealer within the meaning of the said sub section
If so the only question is whether the appellant in depositing the said amounts in the current account  of the various branches of the said Bank lent the said amounts to the Bank
What is the meaning of the expression lend  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 matter of lending may also be money
Though a loan contracted creates a debt there may be a debt created without contracting a loan in other words the concept of debt is more comprehensive than that of loan
It is settled law that tie relationship between a banker and a customer qua moneys deposited in the bank is that of debtor and creditor
This Court in Shanti Prasad fain vs Director of Enforcement1 restated the principle in the following words 1   324
6 54 lm15 Now the law is well settled that when moneys are deposited in a Bank the relationship that is constituted between the banker lad the customer is one of debtor and creditor and not trustee and beneficiary
The banker is entitled to use the monies without being called upon to account for such user his only liability being to return the amount in accordance with the terms agreed upon between him and the customer
 But this Court qualified that general statement with the remark that there might be special arrangement under which a Banker might be constituted a trustee but apart from such an arrangement his position qua Banker is that of a debtor and not trustee
It follows that 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
Whether a deposit amounts to a loan depends upon the terms of the contract whereunder the deposit is made
In the context of section 41 of the Act can it be said that the depositor in the present case lent money to the Bank  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 enter into a contract of loan with the bank within the meaning of section 41 of the Act
He only deposits the money for the said purpose
Should we hold that such a transaction is a loan many an honest man who deposits foreign exchange in a bank in a foreign country where he is staying for a short time to draw it for his requirements will be committing an offence
That could not have been the intention of the Legislature
If such a deposit is not a loan it follows that the appellant cannot be held to have contravened the provisions of section 41 of the Act
The next question is whether the appellant was guilty of contravening the provisions of sub section
3 of section 4 of the Act
Under the relevant part of that sub section where any foreign exchange was acquired by a person for any particular purpose and where the foreign exchange so acquired cannot be used the said person shall without delay sell the foreign exchange to an authorised dealer
Admittedly the foreign exchange was acquired by the appellant for the purpose of meeting his expenditure during his tour of the Far East countries but he had not used the entire foreign exchange for the said purpose
If so under the express provisions of sub section
3 of section 4 of the Act he should have without delay sold the same to an authorised dealer
Instead he kept the 655 said amount in the current account of the various branches of the Bank for a number of years
The tribunals were therefore right in holding that the appellant had contravened the said provision
No other point arises for consideration in this appeal
As we find the appellant guilty of an offence only under sub section 3 of section 4 of the Act we think the ends of justice will be met if a fine of Rs 1000 only is imposed on him
We therefore reduce the fine of Rs 2500 imposed on the appellant to Rs 1000 
In the result the order of the Foreign Exchange Regulation Appellate Board is modified accordingly
The parties will bear their own costs
Order modified


Summary:
The appellant visited Far Eastern countries during the years 1951 to 1956 after obtaining from the Government of India the necessary foreign exchange for the purpose of meeting his expenditure during 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 section 192 of the Act and found him guilty of contravening section 41 and 3
The order was confirmed on appeal by the Foreign Exchange Regulation Appellate Board
In the appeal to this Court
HELD  i The appellant could not be held to have contravened the provisions of section 41
654 F To attract section 41 the appellant should have lent foreign exchange 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 section 41
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 E Shanti Prasad Jain vs Director of Enforcement  followed
ii The tribunals were right in holding that the appellant had contravened section 43
655 A Under 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