Export proceeds realisation and director liability under foreign exchange law require timely, demonstrable steps and specific responsibility allegations.

An exporter must make genuine, timely and demonstrable efforts to realise and repatriate export proceeds to rebut the statutory presumption of contravention under the Foreign Exchange Regulation Act; belated correspondence, an unpursued civil suit, and no steps for extension, write-off, or diplomatic assistance were held insufficient, so the default finding was sustained. Directors and officers can be fastened with vicarious liability where the notice specifically alleges that they were in charge of and responsible for the company's business, and that responsibility is not disproved; the Managing Director and Chairman were therefore not exonerated. A penalty will not be interfered with merely as excessive unless it is shown to be harsh or disproportionate; no such basis was found.

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Issues: (i) Whether the appellants had taken reasonable and sufficient steps to realize and repatriate the outstanding export proceeds so as to displace the presumption of contravention under Section 18(3) of the Foreign Exchange Regulation Act, 1973; (ii) Whether the individual appellants, being the Managing Director and Chairman, could be held liable for the company's contravention on the basis of vicarious liability; (iii) Whether the penalty imposed required interference on the ground of excessiveness.

Issue (i): Whether the appellants had taken reasonable and sufficient steps to realize and repatriate the outstanding export proceeds so as to displace the presumption of contravention under Section 18(3) of the Foreign Exchange Regulation Act, 1973.

Analysis: The legal obligation under Section 18(2) and the presumption under Section 18(3) require an exporter to make reasonable efforts for realization of export proceeds within the prescribed period. Mere correspondence made after expiry of the prescribed period, a belated civil suit without further pursuit, and the absence of steps such as approaching the RBI for extension or write-off, or the concerned diplomatic authorities, were held insufficient to rebut the statutory presumption. The claimed ECGC cover was also not supported by proof of realization from the insurer.

Conclusion: The appellants failed to displace the rebuttable presumption of contravention and the finding of default was upheld.

Issue (ii): Whether the individual appellants, being the Managing Director and Chairman, could be held liable for the company's contravention on the basis of vicarious liability.

Analysis: Liability of directors or officers depends on a clear averment and material showing that they were in charge of and responsible for the conduct of the company's business. The show cause notice specifically attributed such responsibility to the individual appellants, and their positions in the company, coupled with the absence of any showing of due diligence or lack of knowledge, justified fastening of liability. The statutory responsibility of the board and internal management arrangements did not exonerate them on the facts found.

Conclusion: The individual appellants were rightly held liable and were not entitled to exoneration.

Issue (iii): Whether the penalty imposed required interference on the ground of excessiveness.

Analysis: The penalty was assessed in relation to the amount involved in the contravention and was found not to be harsh or disproportionate. No basis for appellate interference with the quantum was made out.

Conclusion: The penalty did not warrant interference.

Final Conclusion: The adjudication order was affirmed in substance and the appeals were dismissed, with the deposited amount directed to be adjusted towards the penalty and the balance made recoverable in accordance with law.

Ratio Decidendi: An exporter must make genuine, timely, and demonstrable efforts to realize export proceeds, and failure to do so attracts the statutory presumption of contravention unless effectively rebutted; directors in charge of the company's business may be held liable where responsibility is specifically alleged and not disproved.

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