Foreign exchange contravention: pending RBI request does not defeat liability absent bona fide recovery efforts and rebuttal of presumption.

In proceedings under foreign exchange law, the statutory presumption of contravention after expiry of the prescribed period for realisation of export proceeds was held to continue unless the person concerned proved that all reasonable steps had been taken to recover the amount. The Court found that the appellant's materials showed continuing involvement in the transaction and did not establish bona fide recovery efforts; correspondence with the Reserve Bank of India showed only requests for further information and no effective permission or resolution. The pending RBI request therefore did not by itself defeat liability, and an earlier tribunal decision was treated as inapplicable because it arose on different facts. The penalty and finding of contravention were upheld.

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Issues: Whether penalty for contravention of foreign exchange provisions was unsustainable on the ground that the exporter's application for extension of time or offset of export proceeds was pending before the Reserve Bank of India, and whether the earlier tribunal decision relied upon by the appellant required a different result.

Analysis: The appeal turned on whether the appellant had taken all reasonable steps to recover the export proceeds and whether the statutory presumption under the foreign exchange law stood rebutted. The Court found that the appellant's own materials showed close personal and business involvement with the importer and the exporting company, that his resignation from directorship was not established on the date claimed, and that the memorandum of understanding showed continuing responsibility in the management and recovery process. The correspondence with the Reserve Bank of India only showed requests for further information and did not establish that any effective permission or resolution had been obtained. On these facts, the statutory presumption of non-compliance was not rebutted. The earlier tribunal decision was held to be inapplicable because the factual matrix there involved bona fide recovery efforts, unlike the present case.

Conclusion: The penalty and finding of contravention were upheld and the appellant failed.

Final Conclusion: The Court affirmed that mere pendency of a request before the Reserve Bank of India does not, by itself, negate contravention where the person concerned has not shown genuine and reasonable steps to realise the export proceeds, and a prior decision on different facts cannot control the outcome.

Ratio Decidendi: In proceedings under the foreign exchange law, once the prescribed period for realisation of export proceeds has expired, the statutory presumption of contravention operates unless the person concerned proves that all reasonable steps were taken to recover the payment; a pending application before the Reserve Bank of India is not enough to defeat liability absent bona fide recovery efforts.

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