Reasonable steps to recover export proceeds can defeat a foreign exchange complaint where authorities ignore material correspondence.

Under the foreign exchange law, liability depended on whether the exporter had taken all reasonable steps to receive or recover export proceeds, not on complete non-realisation alone. The record showed repeated communications to enforcement authorities, recovery efforts, civil suits, decrees, partial recoveries and supporting correspondence, but the statutory notice and complaint did not adequately consider that material. The Delhi HC treated that omission as significant and held that, where genuine recovery efforts and actual recoveries were shown, continuation of the prosecution would amount to an abuse of process. The complaint was therefore liable to be quashed.

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Issues: Whether the complaint under the foreign exchange law was liable to be quashed on the ground that the petitioners had taken all reasonable steps to recover the export proceeds and the statutory notice and complaint failed to consider material correspondence and facts.

Analysis: The petitioners had placed on record repeated communications to the enforcement authorities, details of recovery efforts, civil suits, decrees, partial recoveries, and correspondence showing that the matter had been actively pursued. The relevant provisions required only that the exporter take all reasonable steps to receive or recover payment, and the liability arose from failure to take such steps, not merely from non-realisation of the entire amount. The Court held that the authority could not ignore the material replies and correspondence while issuing the statutory notice and filing the complaint, particularly where the record showed genuine recovery efforts and actual recoveries. In these circumstances, continuation of the prosecution would amount to an abuse of process.

Conclusion: The complaint was liable to be quashed and the petition was allowed in favour of the petitioners.

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