Reasonable steps to realise export proceeds govern contravention and penalty relief under foreign exchange law.
Section 54 of the Foreign Exchange Regulation Act, 1973 confined High Court interference to a substantial question of law, and concurrent factual findings on export-realisation issues did not by themselves justify review. The exporter was required to take all reasonable steps to realise export proceeds under section 18(2), and the Court treated prolonged inaction and lack of diligence as sufficient to sustain contravention on the facts. Amounts later realised and sums waived by the Reserve Bank of India could be deducted from the penalty exposure to that extent.
Issues: (i) Whether the appeal was maintainable under section 54 of the Foreign Exchange Regulation Act, 1973 in the absence of a substantial question of law; (ii) Whether the appellant had taken all reasonable steps to realise the export proceeds so as to avoid contravention under section 18(2) of the Foreign Exchange Regulation Act, 1973; (iii) Whether the amount later realised and the amount waived could be deducted from the penalty liability.
Issue (i): Whether the appeal was maintainable under section 54 of the Foreign Exchange Regulation Act, 1973 in the absence of a substantial question of law.
Analysis: Section 54 permits an appeal to the High Court only on a question of law arising from the decision of the Appellate Board. Concurrent findings on factual matters, including whether the exporter had failed to realise the export value, do not by themselves raise a substantial question of law. Interference is justified only where the finding is unsupported by evidence, perverse, or based on a interpretation of the statute.
Conclusion: The appeal was maintainable only if a substantial question of law arose, and no such question was found.
Issue (ii): Whether the appellant had taken all reasonable steps to realise the export proceeds so as to avoid contravention under section 18(2) of the Foreign Exchange Regulation Act, 1973.
Analysis: The correspondence showed that the appellant acted only during an initial period and took no effective further steps for a substantial time before the proceedings commenced. The Court treated the statutory requirement of taking reasonable steps as one to be construed fairly but in light of the object of preserving foreign exchange. On the facts, the exporter had not acted with sufficient promptness or diligence, and the failure to recover the amounts within time attracted the statutory presumption of contravention.
Conclusion: The appellant had not taken all reasonable steps, and the finding of contravention under section 18(2) was upheld.
Issue (iii): Whether the amount later realised and the amount waived could be deducted from the penalty liability.
Analysis: Documentary material showed that part of the outstanding amount had subsequently been realised and another amount had been waived by the Reserve Bank of India, with the relevant form closed by the banks. To that extent, the penalty could not stand on the same factual footing as the unrecovered balance.
Conclusion: Deduction of the realised and waived amount from the penalty was allowed.
Final Conclusion: The statutory breach and the finding of penalty were sustained, but limited relief was granted by allowing deduction of the amount subsequently realised and the amount waived.
Ratio Decidendi: In an appeal under section 54 of the Foreign Exchange Regulation Act, 1973, the High Court will interfere only on a substantial question of law, and failure to take reasonable steps to realise export proceeds within the statutory framework amounts to contravention under section 18(2), though subsequent realisation or waiver may reduce the penalty exposure to that extent.
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AI Drafter ✕
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