Sunset clause and export realisation duties: unexplained non-recovery of proceeds can sustain liability and penalty.

The sunset clause under the Foreign Exchange Management Act, 1999 was applied to proceedings initiated within two years of commencement, so the limitation objection failed. The note also explains that unrealised export proceeds can trigger a rebuttable presumption of contravention under the export realisation regime, and the exporter must show genuine, reasonable efforts to recover the dues. On the stated facts, no sufficient material showed such efforts, and the director's participation in the export declarations supported liability for the default. The penalty was treated as proportionate to the contravention and sustained.

---

---

Issues: (i) whether the proceedings were barred by limitation under the sunset clause in the Foreign Exchange Management Act, 1999; (ii) whether the appellant had failed to take reasonable steps to realise the export proceeds and thereby contravened the export realisation obligations under the Foreign Exchange Regulation Act, 1973.

Issue (i): whether the proceedings were barred by limitation under the sunset clause in the Foreign Exchange Management Act, 1999.

Analysis: The notice was issued within two years from the commencement of the Foreign Exchange Management Act, 1999. The sunset provision only restricted cognizance of contraventions under the repealed regime after expiry of that period. On the facts, initiation of proceedings was within time and the bar of limitation did not apply.

Conclusion: The limitation objection was rejected and the proceedings were held to be in time.

Issue (ii): whether the appellant had failed to take reasonable steps to realise the export proceeds and thereby contravened the export realisation obligations under the Foreign Exchange Regulation Act, 1973.

Analysis: Export proceeds remained unrealised despite the statutory obligation to secure payment within the prescribed period. The presumption arising from non-realisation was rebuttable, but no sufficient material showed genuine or reasonable recovery efforts. The appellant's status as a director during the relevant period, his participation in the export declarations, and the absence of proof of fraud or lack of responsibility established liability for the default. The penalty was found commensurate with the gravity of the contravention.

Conclusion: The contravention was proved and the penalty was upheld against the appellant.

Final Conclusion: The appeal failed on both limitation and merits, and the penalty order was sustained.

Ratio Decidendi: Where export proceeds remain unrealised, the statutory presumption of contravention stands unless the exporter proves reasonable efforts to recover the dues, and a director who participated in the transaction cannot avoid responsibility absent proof that the statutory obligations were duly discharged.

---