An appellate tribunal must give reasons; its decision cannot rest on inferred grounds.

On 30 May 2007, the Enforcement Directorate searched the appellant’s premises and those of M/s Duggal Forex Pvt. Ltd., of which he was a director, and allegedly recovered foreign and Indian currency worth ₹11,00,000.

The Adjudicating Authority imposed penalties on the appellant and the company for alleged contraventions of the Foreign Exchange Management Act, 1999 (FEMA), and ordered confiscation of the seized amount.

On appeal, the Appellate Tribunal allowed the company’s appeal, finding that the seized currency was explained, but dismissed the appellant’s appeal.

The appellant challenged that dismissal under Section 35 of FEMA, contending that the Tribunal had given no reasons for upholding the penalty against him.

1. Whether the Tribunal’s dismissal of the appellant’s appeal was unsupported by reasons, given that it had found the company had explained the currency recovered during the search.

2. Whether the Tribunal’s order dismissing the appellant’s appeal should be set aside and the matter remanded for fresh consideration.

The appeal was brought under Section 35 of FEMA.

The Court applied the principle that the reasons supporting an order must be apparent from the order itself and cannot be inferred from the record or from a narration of facts.

The Tribunal’s order stated that the evidence showed the appellant had sold US dollars at a premium to officials of the Nigerian High Commission, but it did not explain what evidence supported that conclusion or how that evidence justified dismissing his appeal.

The Tribunal separately found that the company had accounted for the seized Indian and foreign currency and had committed no contravention.

In those circumstances, the Tribunal had to identify the further evidence it relied on against the appellant and give reasons for upholding the penalty. Because those reasons could not be inferred from the order, the dismissal was unreasoned.

It remanded the matter to the Tribunal for fresh consideration, directing it to decide the appellant’s appeal afresh, give reasons, and remain uninfluenced by observations against him in the impugned order.

The parties were directed to appear before the Tribunal on 10 December 2026; the appeal was disposed of with no order as to costs.