Statutory liability for export proceeds remains despite private partnership arrangements, though penalty may be reduced on mitigating facts.

A partner of an exporting firm remained liable for non-realisation of export proceeds where no material showed reasonable steps to recover the dues within the prescribed period or any request for extension or waiver to the RBI. A private arrangement between partners did not displace the statutory obligation under section 18(2) or the presumption under section 18(3) of the Foreign Exchange Regulation Act, 1973, so contravention was upheld. The penalty was nevertheless moderated because the exports were old, the appellant had retired long before, and the original quantum was considered excessive in the circumstances.

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Issues: Whether the appellant was liable for contravention of section 18(2) and section 18(3) of the Foreign Exchange Regulation Act, 1973 for non-realisation of export proceeds, and whether the penalty required reduction on the facts of the case.

Analysis: The appellant was a partner of the exporting firm when the exports were made and no material showed that reasonable steps were taken to realise the outstanding export proceeds within the prescribed period or that any extension or waiver was sought from the Reserve Bank of India. A private arrangement between partners could not absolve liability under the statute, and the obligation to realise export proceeds, along with the statutory presumption under section 18(3), remained applicable. At the same time, the exports were old, the appellant had retired long back, and the circumstances justified a reconsideration of the quantum of penalty.

Conclusion: The finding of contravention was upheld, but the penalty was reduced from Rs. 1,00,000 to Rs. 50,000.

Ratio Decidendi: A partner of an exporting firm cannot escape statutory liability for non-realisation of export proceeds on the basis of a private dissolution arrangement, though the penalty may be moderated where the circumstances make the original quantum excessive.

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