RBI permission under foreign exchange law was treated as substantive, so a procedural form lapse did not void the collaboration agreement.

Section 28(1) of the Foreign Exchange Regulation Act required Reserve Bank of India permission before a foreign company could act as technical or management adviser in India, and the Court treated the decisive question as whether such permission had in fact been granted. Reading section 28 with section 73(4) and the Exchange Control Manual procedure, the Court held that prior government approval, recordal of the collaboration, and RBI processing of remittance after verifying compliance showed substantive permission. The absence of Form FNC5 was only a procedural lapse and did not negate permission. The agreement was therefore not void under section 28(2), and the appeal failed.

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Issues: Whether the Reserve Bank of India had granted the permission contemplated by section 28(1) of the Foreign Exchange Regulation Act, 1973, so that the collaboration agreement was not void under section 28(2).

Analysis: Section 28(1) prohibits a foreign company from acting as technical or management adviser in India without the general or special permission of the Reserve Bank of India. The Court read the statutory scheme with section 73(4), which permits the Reserve Bank to specify the form of application, and with the relevant Exchange Control Manual procedure. On the facts, the collaboration was first approved by the Government, thereafter taken on record, and the Reserve Bank processed the remittance only after satisfying itself that the approved terms had been complied with. The absence of an application in Form FNC5 was treated as a procedural lapse, not as proof that permission had not been granted, because the decisive question was the factum of permission and not the form used to process it.

Conclusion: The Reserve Bank of India had in fact granted the requisite permission under section 28(1), and the agreement was not void under section 28(2). The appeal therefore failed.

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