Export proceeds compliance and partner liability survive dissolution, but individual penalty needs proof of actual business responsibility.

Liability for a pre-dissolution export-control contravention survives dissolution of the firm, but an individual partner can be penalised only if the record proves actual responsibility for the firm's business affairs. The text also states that compliance with the duty to take reasonable steps to realise export proceeds requires timely, specific and substantiated action, including resort to the regulatory authority within the prescribed period; general correspondence or informal follow-up is insufficient. On the facts discussed, the contravention finding under section 18(3) was upheld, while the partner's penalty was set aside for lack of proof of responsibility and the firm's penalty was reduced on equitable considerations.

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Issues: (i) Whether penalty could be sustained against the dissolved firm and against the partner said to be liable under section 68(1); (ii) whether the firm failed to take all reasonable steps for realisation of export proceeds under section 18(3) and what relief, if any, should follow.

Issue (i): Whether penalty could be sustained against the dissolved firm and against the partner said to be liable under section 68(1).

Analysis: Liability already incurred by a firm does not vanish merely because the firm is later dissolved. Under partnership principles, partners continue to remain liable for obligations and penalties incurred while the partnership was subsisting. At the same time, penalty on an individual partner under the provision corresponding to persons in charge and responsible for the business must rest on evidence that the partner actually had such responsibility. Mere survival as the remaining partner, or some involvement in business affairs, was not enough where the materials showed that the other partner was conducting the day-to-day affairs and signing the relevant export documents.

Conclusion: The penalty against the dissolved firm was not barred on the ground of dissolution, but the penalty on the partner was not sustainable for want of proof that he was the person responsible for the firm's affairs.

Issue (ii): Whether the firm failed to take all reasonable steps for realisation of export proceeds under section 18(3) and what relief, if any, should follow.

Analysis: The obligation under section 18(3) required timely and genuine efforts to realise export proceeds, including appropriate recourse to the Reserve Bank within the prescribed time. General assertions of correspondence, telephone contact, or commercial difficulty were insufficient without specific proof of steps taken in respect of each shipment. The record showed that the firm had not pursued extension or other regulatory remedies in time for all the outstanding bills, so the finding of contravention was justified. However, the circumstances of fire, financial strain, and prolonged hardship were relevant in considering the quantum of penalty, and the authority could grant a lenient view where justice so required.

Conclusion: The finding of failure to take reasonable steps was upheld, but the penalty on the firm was reduced on sympathetic and equitable considerations.

Final Conclusion: The appeal by the partner succeeded, while the firm's appeal succeeded only to the extent of reduction of penalty, leaving the contravention finding intact but moderating the punishment.

Ratio Decidendi: Liability for a pre-dissolution contravention survives dissolution of the firm, individual penalty requires proof of actual responsibility for the business, and compliance with the duty to take reasonable steps for recovery of export proceeds demands timely and substantiated action, including resort to the regulatory authority within the prescribed period.

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