RBI extension for export proceeds repatriation negates contravention and requires adjudication orders to be quashed.

A valid extension granted by the Reserve Bank of India for repatriation of export proceeds prevents a contravention from arising for the extended period. Because the extension letters covered the export proceeds in question and extended time up to 28 January 2006, the statutory obligation under section 18(2) of the Foreign Exchange Regulation Act, 1973 could not be treated as breached during that period. The adjudication orders, which proceeded on an assumed violation despite the extension, lacked legal basis and were set aside. The appeals accordingly succeeded and the impugned orders were quashed.

---

---

Issues: Whether extension granted by the Reserve Bank of India for repatriation of export proceeds negated contravention under section 18(2) of the Foreign Exchange Regulation Act, 1973 and required the adjudication orders to be set aside.

Analysis: The extension letters granted by the Reserve Bank of India covered the export proceeds in question and extended the time for repatriation up to 28 January 2006. Once such permission was granted, the statutory requirement under section 18(2) could not be treated as having been breached for the period covered by the extension. The adjudication could not proceed on an assumed contravention when the controlling authority had itself extended time. The subsequent extension had to be taken into account, and no legal basis remained to sustain the orders.

Conclusion: The alleged contravention was not made out and the adjudication orders were liable to be set aside in favour of the appellant.

Final Conclusion: The appeals succeeded and the impugned adjudication orders were quashed.

Ratio Decidendi: Where the Reserve Bank of India grants valid extension of time for repatriation of export proceeds, no contravention of the time-bound repatriation obligation subsists for the extended period.

---