Export proceeds non-repatriation liability upheld for the firm, but partner penalties fell without proof of business responsibility.

Failure by an exporter to realise and repatriate foreign sale proceeds attracts liability where the statutory presumption under Section 18(3) of the Foreign Exchange Regulation Act, 1973 is not rebutted by proof of all reasonable recovery steps. Mere correspondence with the foreign buyer was treated as insufficient, and the firm's penalty was sustained. Personal liability of individual partners, however, depends on a specific finding that the partner was in charge of and responsible for the conduct of the firm's business at the relevant time. In the absence of such a finding, the separate penalties on the partners could not stand and were set aside.

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Issues: (i) whether the exporter-firm incurred liability for failure to realise and repatriate the sale proceeds of goods exported to a foreign buyer; and (ii) whether the individual partners could be held personally liable for the same contravention in the absence of a specific finding that they were in charge of and responsible for the firm's business.

Issue (i): whether the exporter-firm incurred liability for failure to realise and repatriate the sale proceeds of goods exported to a foreign buyer.

Analysis: The statutory scheme of Section 18(3) of the Foreign Exchange Regulation Act, 1973 creates a presumption that where the prescribed period expires without payment being received, the person who sold the goods, or was entitled to sell them or procure the sale proceeds, has not taken all reasonable steps to recover payment, unless the contrary is proved. The obligation is to bring the foreign exchange into India, and it is immaterial whether the exporter made a profit or suffered loss, or whether the foreign buyer ultimately took delivery. Mere correspondence with the buyer was held insufficient to establish bona fide efforts to realise the sale proceeds.

Conclusion: The firm was held liable and the penalty against the firm was sustained.

Issue (ii): whether the individual partners could be held personally liable for the same contravention in the absence of a specific finding that they were in charge of and responsible for the firm's business.

Analysis: By virtue of the deeming provision in Section 68 of the Foreign Exchange Regulation Act, 1973, the firm could be treated on the same footing as a company for the purpose of fastening liability on persons responsible for its business. However, personal liability of partners depended on a specific basis showing that the concerned partner was in charge of and responsible for the conduct of the business at the relevant time. On the facts, no such sufficient finding existed against the individual partners, and the record also indicated a serious question regarding the capacity of the female partner to be treated as responsible for the firm's affairs.

Conclusion: The penalties against the individual partners were set aside.

Final Conclusion: The firm's liability for contravention and penalty was upheld, but the separate personal penalties imposed on the partners could not stand for want of the requisite finding of responsibility.

Ratio Decidendi: In export-realisation cases, liability arises when the exporter fails to prove reasonable steps taken to recover the foreign sale proceeds, but personal penalty on partners can be imposed only where their responsibility for the conduct of the firm's business at the relevant time is specifically established.

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