JUDGMENT : P.Krishna Kumar, J. Appellant is the Enforcement Directorate, the Government of India. Pursuant to the search and seizure of currency from the respondent by the officers of the appellant, an adjudication order was passed on 24.10.2002 by the Adjudicating Officer, under the Foreign Exchange Regulation Act, 1973 (“the Act”, for short). By the said order, it was found that the respondent had violated Section 9 (1)(b) of the Act, and a penalty of Rs.8,00,000/- was imposed on him. However, by the same order, the respondent was exonerated of the charge under (1)(d) read with Section 64(2) of the Act. Feeling aggrieved, the Enforcement Directorate, the petitioner in the adjudication proceedings, preferred a revision petition before the Appellate Tribunal for Foreign Exchange. By order dated 12.05.2004, the Tribunal upheld the order of the Adjudicating Officer, against which the present appeal has been filed under Section 54 of the Act. 2. The brief facts necessary for the disposal of this appeal are as follows: On 02.03.2000, officers of the appellant conducted a search at the residential and business premises of the respondent, which led to the seizure of Rs.51,00,000/- in Indian currency from his possession. The investigation that followed the search revealed that the respondent had unauthorisedly obtained Rs.50,00,000/- from outside India at the instance of one Rafi of Jeddah. On receipt of the amount, the respondent attempted to hand over Rs.25,00,000/- to a local person, in contravention of the provisions of the Act. 3. In the statement recorded on 02.03.2000 under Section 40 of the Act, the respondent stated that he was in need of Rs.25,00,000/- for expanding his jewellery business, and that he had requested his friend Rafi for financial assistance when the latter visited India. After reaching Jeddah, Rafi sent the amount through a third person. Rafi informed the respondent that he would send Rs.50,00,000/-, out of which Rs.25,00,000/- was to be paid to a person named Mahadev from Coimbatore, who would meet the respondent carrying a currency note bearing a specified number. However, owing to the interception by the enforcement officials, the respondent could not transfer the said amount to Mahadev. 4. Rafi informed the respondent that he would send Rs.50,00,000/-, out of which Rs.25,00,000/- was to be paid to a person named Mahadev from Coimbatore, who would meet the respondent carrying a currency note bearing a specified number. However, owing to the interception by the enforcement officials, the respondent could not transfer the said amount to Mahadev. 4. The Adjudicating Officer, after meticulously analysing the evidence, including the retracted statement of the respondent dated 30.03.2000, arrived at the finding that the respondent had contravened Section 9 (1)(b) of the Act by receiving Rs.50,00,000/- under the instructions of a non- resident without obtaining permission from the Reserve Bank of India. The charge under (1)(d) read with Section 64 of the Act, relating to an attempt to pay money to another person, was dropped by the Adjudicating Officer on the ground that the respondent had not made any positive efforts to effect the payment and that the offence of attempt had therefore not been completed. Accordingly, the officer limited the penalty to Rs.8,00,000/- and did not proceed to confiscate the remaining amount, taking into account the purpose for which the respondent claimed to have received the money, namely, for expanding his business. 5. In the revision petition filed before the Tribunal, the appellant contended that the entire seized currency was liable to be confiscated. It was also contended that the respondent ought not to have been exonerated of the violation under Section 9 (1)(d) read with Section 64 of the Act. The Tribunal noted that Section 31 of the Act does not require any reasoning for ordering release of the seized currency and that such an order was passed by the Adjudicating Officer in the exercise of judicial discretion, hence there is no reason to interfere. The said order of the Tribunal is challenged before this Court mainly on the ground that the statutory authorities were not justified in limiting the penalty to Rs.8,00,000/-. 6. We have heard Sri. Jaishankar V. Nair, learned Central Government Counsel, assisted by Smt. Cristy Therasa Suresh, for the appellant, and Sri. M. Ramesh Chander, learned Senior Counsel appearing for the respondent. 7. 6. We have heard Sri. Jaishankar V. Nair, learned Central Government Counsel, assisted by Smt. Cristy Therasa Suresh, for the appellant, and Sri. M. Ramesh Chander, learned Senior Counsel appearing for the respondent. 7. Though various questions of law are formulated in the appeal memorandum, as urged by the learned counsel on either side, they were heard elaborately on the following question of law: “Did not the authorities fail to consider whether an amount of Rs.25 lakhs, was liable to be confiscated under Section 63 of the Act even on the plea of the respondent regarding the purpose for which the money was received?” 8. The argument of the learned Central Government Counsel is regarding the impropriety in not confiscating the sum of Rs.25,00,000/-, allegedly intended to be handed over to Mahadev of Coimbatore. The challenge against the dropping of the charge under Section 9 (1)(d) read with Section 64 of the Act was not pursued during the hearing. The contention of the learned Central Government Counsel is that when the Adjudicating Officer had unmistakably found that Rs.25,00,000/- was received by the respondent for being handed over to another person without the permission of the Reserve Bank of India, the said amount was liable to be confiscated under Section 63 of the Act. It is contended that the Adjudicating Officer has not even considered that question and has completely omitted that aspect, even while holding that the respondent had received the entire amount from abroad unauthorisedly. 9. Sri M. Ramesh Chander, learned Senior Counsel for the respondent, challenged the very maintainability of the appeal. According to him, an appeal under Section 54 of the Act to the High Court can be instituted only at the instance of the Central Government and not by the Enforcement Directorate. It is argued that this position is evident from Explanation (ii) to of the Act. The learned Senior Counsel placed considerable reliance on the decision in Director of Enforcement, Madras v. Rama Arangannal and Another (AIR 1981 Madras 80) to substantiate the contention. 10. The learned Senior Counsel further argued that it is a basic tenet of law that an Adjudicating Officer cannot challenge the order passed by a higher authority in respect of the Adjudicating Officer’s own order. 10. The learned Senior Counsel further argued that it is a basic tenet of law that an Adjudicating Officer cannot challenge the order passed by a higher authority in respect of the Adjudicating Officer’s own order. According to him, under the statute the Adjudicating Authority is the Director of Enforcement, and therefore, irrespective of who actually conducted the adjudication by virtue of delegation, the Director cannot challenge the correctness of the decision of the higher authority in appeal or revision. The decision in Admission Supervisory Committee for Medical Education in Kerala v. Karthik Dev ( 2026 (1) KLT 217 ) was relied upon in support of this contention. 11. Let us consider the above challenges in the light of the relevant provisions of the Act. As per Section 54 of the Act, an appeal lies to the High Court on a question of law from any decision or order of the Appellate Board under sub- section (3) or sub-section (4) of Section 52. Referring to , a learned Single Judge of the Madras High Court in Director of Enforcement, Madras v. Rama Arangannal and Another (supra) held as follows: “4.On the question as to the maintainability of the appeal, it is seen that the Explanation to Section 54 of the Foreign Exchange Regulation Act 1973 treats only the Central Government as an aggrieved party for the purpose of filing an appeal to the High Court in respect of orders passed by the Foreign Exchange Regulation Appellate Board under that section. Therefore, only the Central Government can file and prosecute an appeal against the order of the Appellate Board and not any other authority.” 12. In the present case, the challenge regarding the maintainability of the appeal filed by the Enforcement Directorate is raised only at the stage of final hearing. If raised at the first instance, appropriate steps could have been taken by the appellant, if it was necessary. Though the Code of Civil Procedure does not apply, the principle which underlies Order I Rule 10(1) of the Code could be imported to such situations. Nevertheless, we consider it appropriate to examine that question on its own merits, in the light of the specific provisions contained in the Act. Though the Code of Civil Procedure does not apply, the principle which underlies Order I Rule 10(1) of the Code could be imported to such situations. Nevertheless, we consider it appropriate to examine that question on its own merits, in the light of the specific provisions contained in the Act. Section 54 , which provides for an appeal to this Court, reads thus: “Appeal to High Court.—An appeal shall lie to the High Court only on questions of law from any decision or order of the Appellate Board under sub-section (3) or sub-section (4) of section 52. Provided that the High Court shall not entertain any appeal under this section if it is filed after the expiry of sixty days from the date of communication of the decision or order of the Appellate Board, unless the High Court is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time. Explanation.—In this section and in section 55, ‘High Court’ means— (i) the High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain; and (ii) where the Central Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there is more than one respondent, any of the respondents, ordinarily resides or carries on business or personally works for gain.” A plain reading of Section 54 of the Act makes it clear that the purpose of the Explanation is to determine the local jurisdiction of the High Court to which an appeal would lie under . The Explanation provides that, for the purposes of Sections 54 and 55,  “High Court” means the High Court within whose jurisdiction the aggrieved party ordinarily resides or carries on business or personally works for gain, except where the Central Government is the aggrieved party. In that case, the “High Court” means the High Court within whose jurisdiction the respondent ordinarily resides or carries on business or personally works for gain. 13. It is therefore evident that the Explanation to Section 54 provides that where the Central Government is the aggrieved party, the appeal may be filed before the High Court within whose jurisdiction the respondent ordinarily resides or carries on business or personally works for gain. 13. It is therefore evident that the Explanation to Section 54 provides that where the Central Government is the aggrieved party, the appeal may be filed before the High Court within whose jurisdiction the respondent ordinarily resides or carries on business or personally works for gain. In other cases, the appeal may be filed before the High Court within whose jurisdiction the aggrieved party resides or carries on business or personally works for gain. Thus, the Explanation to merely defines the local jurisdiction of the High Court before which an appeal is to be filed, depending upon the contingencies mentioned therein. That apart, the appeal has been filed by the Enforcement Directorate, apparently on behalf of the Government of India, as is evident from the cause title of the memorandum of appeal itself. For the above reasons, we are unable to agree with the view taken by the Madras High Court in Director of Enforcement, Madras v. Rama Arangannal and Another (supra). 14. As regards the next contention, Section 50 of the Act is relevant. It reads thus: “50. Penalty.— If any person contravenes any of the provisions of this Act other than section 13, clause (a) of sub-section (1) of section 18, section 18-A and clause (a) of sub-section (1) of section 19 or of any rule, direction or order made thereunder, he shall be liable to such penalty not exceeding five times the amount or value involved in any such contravention or five thousand rupees, whichever is more, as may be adjudged by the Director of Enforcement or any other officer of Enforcement not below the rank of an Assistant Director of Enforcement specially empowered in this behalf by order of the Central Government (in either case hereinafter referred to as the adjudicating officer).” (Emphasis added) As per Section 50 of the Act, adjudication for contravention of certain provisions of the Act or the Rules made thereunder is to be undertaken by the Director of Enforcement, or in the alternative, by any other officer of Enforcement not below the rank of an Assistant Director, specially empowered in that behalf by order of the Central Government. In the present case, the Adjudicating Officer is the Deputy Director of Enforcement, and there is no dispute that he was specially empowered for that purpose by order of the Central Government. In the present case, the Adjudicating Officer is the Deputy Director of Enforcement, and there is no dispute that he was specially empowered for that purpose by order of the Central Government. Thus, the Director of Enforcement, even if filed an appeal to this court against the order of the Tribunal, it cannot be equated with an appeal filed by the Adjudicating Officer. In this case the appeal is at the instance of the Enforcement Directorate, and not by the Director. When an officer, who is authorised by statute, adjudicates a dispute in the manner provided by the statute, he discharges an independent statutory function. It therefore cannot be contended, in the absence of any statutory inhibition, that the department to which he is administratively attached is precluded from challenging his order in appeal, or even the appellate or revisional decision arising from the order passed by such Adjudicating Officer. 15. For the above reasons, we are not persuaded to follow the general observations made by the learned Single Judge of the Madras High Court in Director of Enforcement, Madras v. Rama Arangannal and Another (supra) that a subordinate authority cannot file an appeal against the order of the Appellate Tribunal reversing the decision of the subordinate authority. Similarly, the observations of this Court in Admission Supervisory Committee for Medical Education in Kerala v. Karthik Dev (supra) were made in the context of the provisions contained in the Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017 (Kerala), and have no relevance to the present case. 16. Section 52(4) of the Act provides that, for the purpose of examining the legality, propriety or correctness of any order made by the Adjudicating Officer under Section 50 read with Section 51, the Appellate Board may, on its own motion or otherwise, call for the records of such proceeding and make such order as it thinks fit. 16. Section 52(4) of the Act provides that, for the purpose of examining the legality, propriety or correctness of any order made by the Adjudicating Officer under Section 50 read with Section 51, the Appellate Board may, on its own motion or otherwise, call for the records of such proceeding and make such order as it thinks fit. Section 52(4) of the Act reads as follows: “(4) The Appellate Board may, for the purpose of examining the legality, propriety or correctness of any order made by the adjudicating officer under section 50 read with section 51 in relation to any proceeding, on its own motion or otherwise , call for the records of such proceeding and make such order in the case as it thinks fit.” (Emphasis added) Thus, it is open to the Enforcement Directorate, if it is aggrieved by the decision of the Adjudicating Officer, to approach the Appellate Board with a petition seeking the exercise of its revisional jurisdiction. As is evident from Section 54 of the Act, an appeal lies to the High Court on questions of law from any decision or order of the Appellate Board under sub-section (3) or sub-section (4) of Section 52. Therefore, the appeal at the instance of the Enforcement Directorate is clearly maintainable, and the contention to the contrary must be rejected. 17. Coming to the question of law involved in this appeal, namely whether the authorities were justified in not confiscating Rs.50,00,000/- under Section 63 of the Act solely for the reason that a penalty had been imposed on the respondent, we may now consider the challenge raised in this appeal. The relevant portion of the order of the Adjudicating Officer, by which he restricted the penalty to Rs.8,00,000/- and decided not to confiscate any part of the seized amount, reads as follows: “28. Considering the various facts and circumstances of the case and the evidence available on record, I find Shri Jadhav guilty of contravention in respect of the first charge namely Sec.9(1)(b) of the FERA for having received Rs.50 lakhs under instructions of a non- resident without the previous general or special exemption from the Reserve Bank of India . Considering the various facts and circumstances of the case and the evidence available on record, I find Shri Jadhav guilty of contravention in respect of the first charge namely Sec.9(1)(b) of the FERA for having received Rs.50 lakhs under instructions of a non- resident without the previous general or special exemption from the Reserve Bank of India . Taking into consideration the circumstances and the purpose for which this money was asked for and received by Shri Jadhav and pursuant to the powers given to me under Sec.50 of the , I impose on him a penalty of Rs.8,00,000/- (Rupees Eight Lakhs only) for the said contravention. Regarding the charge under Sec.9(1)(d) r/w Sec.64 of the Act, as already observed by me I am of the opinion that the charge has not been made out. Therefore, I drop further proceedings of the said charge. Regarding the seized amount of Rs.51 lakhs, the evidence discussed by me has established beyond any doubt that Rs.50 lakhs out of the same is involved in the contravention committed by Shri Jadhav under Sec.9(1)(b) of the Act. However, considering the purpose for which the money was received, namely improvement of business, I feel confiscation of the entire money would cause great hardship to Shri Jadhav , as rightly argued by the Ld. Counsel. I am of the opinion that ends of justice have been met by the imposition of penalty of Rs.8 lakhs ordered by me above.” (Emphasis added) From the discussion in the preceding paragraphs of the order, the Adjudicating Officer had clearly concluded that the respondent received Rs.25,00,000/- for the purpose of expanding his business and another Rs.25,00,000/- for payment to one Mahadev of Coimbatore. On a plain reading of the above findings, the following aspects become clear. Shri Manohar Baburao Jadhav, the respondent herein, had contravened Section 9 (1)(b) of the Act by receiving Rs.50,00,000/- under the instructions of a non-resident without the permission of the Reserve Bank of India. The Adjudicating Officer, exercising the discretion vested in him, restricted the penalty to Rs.8,00,000/- on the ground that the money had been received for the purpose of improving the respondent’s business. The officer further observed that confiscation of the entire amount would cause great hardship to the respondent in view of that purpose. 18. The Adjudicating Officer, exercising the discretion vested in him, restricted the penalty to Rs.8,00,000/- on the ground that the money had been received for the purpose of improving the respondent’s business. The officer further observed that confiscation of the entire amount would cause great hardship to the respondent in view of that purpose. 18. Although the respondent did not ultimately attempt to pay any amount to Mahadev, there is no dispute that he had received Rs.50,00,000/- in contravention of Section 9 (1) (b) of the Act. The reasoning for limiting the penalty to Rs.8,00,000/- was solely that the money had been received for the purpose of improving the business. (Under Section 50 , the penalty could extend even to five times the amount involved.) It was for this reason that the officer was persuaded not to order confiscation of any portion of the amount. 19. We have no hesitation in holding that the above finding is patently erroneous and perverse. The amount received for such a “justifiable cause” was only Rs.25,00,000/- out of the total sum of Rs.50,00,000/-. There is no doubt that a penalty cannot be imposed under Section 9 (1) (d) of the Act in respect of the alleged attempt to pay the remaining Rs.25,00,000/-, since the charge itself was not proved. At the same time, when the money received by the respondent for improving his business was only Rs.25,00,000/-, the Adjudicating Officer made a serious error in concluding that confiscation of the entire amount would cause hardship to the respondent. This clearly reveals non-application of mind while considering the question of confiscation and also indicates an erroneous exercise of the discretion vested in the Adjudicating Officer. 20. Section 63 of the Act provides that any court trying a contravention under Section 56, and the Adjudicating Officer adjudging any contravention under Section 51, may, if it or he thinks fit, confiscate any currency, security or other money or property in addition to any sentence or penalty imposed for such contravention. reads as follows: “63. 20. Section 63 of the Act provides that any court trying a contravention under Section 56, and the Adjudicating Officer adjudging any contravention under Section 51, may, if it or he thinks fit, confiscate any currency, security or other money or property in addition to any sentence or penalty imposed for such contravention. reads as follows: “63. Confiscation of currency, security, etc.— Any court trying a contravention under section 56 and the adjudicating officer adjudging any contravention under section 51 may, if it or he thinks fit and in addition to any sentence or penalty which it or he may impose for such contravention, direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government and further direct that the foreign exchange holdings, if any, of the person committing the contravention or any part thereof, shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf. Explanation.— For the purposes of this section, property in respect of which contravention has taken place shall include— (a) deposits in a bank, where the said property is converted into such deposits; (b) Indian currency, where the said property is converted into that currency; (c) any other property which has resulted out of the conversion of that property.” It is clear from the language of Section 63 that confiscation of currency or property may be ordered as a measure in addition to any sentence or penalty imposed for the contravention. In the present case, the charge under Section 9 (1)(d) of the Act was dropped, since it was not proved that the respondent attempted to pay Rs.25,00,000/- to Mahadev. This circumstance might have influenced the Adjudicating Officer not to order confiscation in respect of that amount, as the charge itself had been dropped. However, once the Adjudicating Officer found that the receipt of Rs.50,00,000/- was in contravention of (1)(b), he was certainly empowered to confiscate the entire amount. For the reasons stated in the order—namely that Rs.25,00,000/- had been received for expanding the respondent’s business—it was justified not to confiscate that portion. Nevertheless, he was bound to consider whether the remaining amount, or any part thereof, ought to have been confiscated, especially when he had already found that Rs.50,00,000/- had been received in contravention of (1)(b). 21. For the reasons stated in the order—namely that Rs.25,00,000/- had been received for expanding the respondent’s business—it was justified not to confiscate that portion. Nevertheless, he was bound to consider whether the remaining amount, or any part thereof, ought to have been confiscated, especially when he had already found that Rs.50,00,000/- had been received in contravention of (1)(b). 21. When the statute confers discretion upon an adjudicating authority, it is bound to exercise such discretion diligently and in consonance with the evidence on record, particularly bearing in mind the object and purpose of the legislative provision. Had the Adjudicating Officer applied his mind in the light of the relevant materials, especially having regard to the broader purposes and objects of the statute, he would not have concluded that confiscation of the remaining part of the amount would cause hardship to the respondent. It is true that the respondent later retracted his earlier statement and set up a case that the entire amount had been raised by him. However, that retraction was not accepted by the officer for the reasons stated in the order. In such circumstances, the conclusion reached by the Adjudicating Officer on a mistaken premise is liable to be interfered with. 22. For the above reasons, the Appellate Tribunal also erred in holding that the Adjudicating Officer had, in the exercise of judicial discretion, correctly decided not to confiscate the amount. The Tribunal took the view that interference was not warranted, particularly since the provisions of the Act did not compel the Adjudicating Officer to assign reasons for releasing the seized currency. However, in the present case, the Adjudicating Officer had in fact given reasons, and those reasons are clearly perverse and erroneous. The discretion vested in him was not properly exercised due to an incorrect appreciation of the facts, and therefore the Tribunal ought to have interfered with the order. In these circumstances, the impugned orders of the Tribunal as well as of the Adjudicating Officer are liable to be interfered with to the above extent. In an appeal under Section 54 of the Act, it may not be appropriate for this Court to dictate the precise order that ought to have been passed by the Adjudicating Officer while exercising his discretion. Thus, the matter is to be remitted to the adjudicating officer for fresh determination, as regards the above aspect alone. In an appeal under Section 54 of the Act, it may not be appropriate for this Court to dictate the precise order that ought to have been passed by the Adjudicating Officer while exercising his discretion. Thus, the matter is to be remitted to the adjudicating officer for fresh determination, as regards the above aspect alone. As a result, the appeal is allowed. The impugned orders of the Appellate Tribunal and the Adjudicating Officer are set aside to the extent they concluded that no further amount is liable to be confiscated. The Adjudicating Officer is directed to reconsider the question whether the sum of Rs.25,00,000/-, received by the respondent for purposes other than his own business needs, is liable to be confiscated or not. The parties shall appear before the Adjudicating Officer on 20.04.2026.