Subba Rao, J.
1. This appeal by special leave raises the short question whether theappellant contravened the provisions of sub-sections (1) and (3) of section 4 of the Foreign Exchange Regulation Act, 1947 (VII of 1947), hereinafter calledthe Act.
2. During the years 1951 to 1956 the appellant, Ram Rattan Gupta, visitedthe Far Eastern countries after obtaining the necessary foreign exchange fromthe Government of India. During that period the appellant opened currentaccounts with the Chartered Bank of India, Australia and China, at Singapur,Hong Kong, Osaka and Tokyo, without the general or the special permission ofthe Reserve Bank of India. In the different branches of the said Bank hedeposited the unspent part of the foreign exchange given to him. The balance ofthe said deposits made at the various branches of the Bank was 40 (sterling).The appellant received payments from those accounts even after he returned toIndia. The Director, Enforcement Directorate, Foreign Exchange Regulation Act,took proceedings against the appellant under s. 19(2) of the Act and, aftermaking the necessary enquiries, found him guilty of contravening the provisionsof sub-ss. (1) and (3) of s. 4 of the Act and imposed on him a penalty of Rs.2,500/- under s. 23 (1) (a) of the Act. On appeal, the Foreign ExchangeRegulation Appellate Board agreed with the view expressed by the Director ofEnforcement that the appellant contravened the said provisions of the Act anddismissed the appeal. The appellant has preferred the present appeal, byspecial leave, against the judgment of the said Board.
3. Mr. A. V. Viswanatha Sastri, learned counsel for the appellant, contendedthat the total of the amounts kept by the appellant in the branches of the saidbank was a negligible balance of the free quota of foreign exchange given tohim, that there was no relationship of creditor and debtor between theappellant and the bank in regard to the said amounts, that the free quota offoreign exchange was given to him without any condition imposed thereon, andthat on the said facts there was no scope to invoke either sub-section (1) orsub-section (3) of section 4 of the Act.
4. We will read the relevant provisions of the Act in order to appreciatethe said contentions.
5. Section 4. Restrictions on dealing in foreign exchange :
(1) Except, with the previousgeneral or special permission of the Reserve Bank, no person other than anauthorised dealer shall in India and no person resident in India other than anauthorised dealer shall outside India, buy or borrow from, or sell or lend to,or exchange with, any person not being an authorised dealer, any foreignexchange.
(2) . . . . . .
(3) Where any foreign exchange isacquired by any person other than an authorised dealer for any particularpurpose, or where any person has been permitted conditionally to acquireforeign exchange, the said person shall not use the foreign exchange soacquired otherwise than for that purpose, or, as the case may be, fail tocomply 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 casemay be, the conditions cannot be complied with, the said person shall withoutdelay sell the foreign exchange to an authorised dealer.
6. Section 4(1) of the Act was amended in the year 1964, but we areconcerned only with the said sub-section as it stood before the amendment. Toattract section 4(1), a resident in India other than an authorised dealer shallhave 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 whetherthe appellant, in depositing the said amounts in the current accounts of thevarious branches of the said Bank, lent the said amounts to the Bank.
7. What is the meaning of the expression 'lend'? It means in theordinary parlance to deliver to another a thing for use on condition that thething lend shall be returned with or without compensation for the use made ofit by the person to whom it was lent. The subject-matter of lending may also bemoney. Though a loan contracted creates a debt, there may be a debt createdwithout contracting a loan, in other words, the concept of debt is morecomprehensive than that of loan. It is settled law that the relationshipbetween a banker and a customer qua moneys deposited in the bank is that ofdebtor and creditor. This Court in Shanti Prasad Jain v. Director ofEnforcement : 2SCR297 restated the principle in the following words:
'Now the law is well settled that when moneys aredeposited in a bank, the relationship that is constituted between the bankerand 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 accountfor such user, his only liability being to return the amount in accordance withthe terms agreed upon between him and the customer.'
8. But this Court qualified that general statement with the remark that'there might be special arrangement under which a Banker might beconstituted a trustee, but apart from such an arrangement, his position quaBanker is that of a debtor, and not trustee'. It follows that ordinarily adeposit of an amount in the current account of a bank creates a debt; but itneed not necessarily involve a contract of loan. Whether a deposit amounts to aloan depends upon the terms of the contract whereunder the deposit is made. Inthe context of s. 4 (1) of the Act, can it be said that the depositor in thepresent case lent money to the Bank When a person deposits free currency inthe current account of a bank in order to draw it whenever necessary for thepurpose for which it was given, it is not possible to hold that he enters intoa contract of loan with the bank within the meaning of s. 4(1) of the Act. Heonly deposits the money for the said purpose. Should we hold that such atransaction is a loan, many an honest man who deposits foreign exchange in abank in a foreign country where he is staying for a short time to draw it forhis requirements will be committing an offence. That could not have been theintention of the Legislature. If such a deposit is not a loan, it follows thatthe appellant cannot be held to have contravened the provisions of s. 4(1) ofthe Act.
9. The next question is whether the appellant was guilty of contravening theprovisions of sub-section (3) of section 4 of the Act. Under the relevant partof that sub-section, where any foreign exchange was acquired by a person for anyparticular purpose and where the foreign exchange so acquired cannot be used,the said person shall without delay sell the foreign exchange to an authoriseddealer. Admittedly, the foreign exchange was acquired by the appellant for thepurpose 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, heshould have without delay sold the same to an authorised dealer. Instead hekept the said amount in the current account of the various branches of the bankfor a number of years. The Tribunal were, therefore, right in holding that theappellant had contravened the said provision.
10. No other point arises for consideration in this appeal.
11. 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 ofRs. 1,000 only is imposed on him. We, therefore, reduce the fine of Rs. 2,500/-imposed on the appellant to Rs. 1,000/-. In the result, the order of theForeign Exchange Regulation Appellant Board is modified accordingly. Theparties will bear their own costs.
12. Order modified.