Export realisation contravention is premature while extension and write-off requests remain pending before the RBI
Adjudication for alleged contravention of export realisation requirements was premature where the prescribed realisation period had not expired and applications for extension of time and write-off were still pending before the RBI. The exporter had taken steps to secure payment, and in that situation default could not be presumed or treated as complete. Once the underlying contravention against the company could not be sustained, the derivative penalties imposed on the directors also lacked an independent basis. The commentary states that proceedings initiated before the RBI decided the pending applications were not maintainable in law.
Issues: (i) Whether the penalty for alleged contravention of the export realisation provisions could be sustained when the time for realisation had not expired and applications for extension of time and write-off were pending before the RBI; (ii) whether the penalty on the directors could survive once the finding of contravention against the company failed.
Issue (i): Whether the penalty for alleged contravention of the export realisation provisions could be sustained when the time for realisation had not expired and applications for extension of time and write-off were pending before the RBI.
Analysis: An exporter is required to realise the full export value within the prescribed period, but the RBI may extend that period. On the record, the exporter had taken prompt steps to secure payment, had sought extension of time, and had also applied for write-off. Those requests were still under consideration when the adjudication was initiated and even when the impugned order was passed. In that situation, the period for realisation had not expired for the purpose of fastening contravention, and the presumption of default could not properly be invoked. Proceedings launched before the RBI's decision on extension or write-off were therefore premature.
Conclusion: The finding of contravention against the company could not be sustained and the penalty imposed on it was liable to be set aside.
Issue (ii): Whether the penalty on the directors could survive once the finding of contravention against the company failed.
Analysis: The directors' liability was wholly dependent on the company's alleged contravention. Once the core finding of default against the company was unsustainable, there remained no independent basis for penal action against the directors.
Conclusion: The penalties on the directors also could not stand.
Final Conclusion: The adjudication order was unsustainable in law because the proceedings were initiated before expiry of the realisation period and while the RBI applications remained undecided, and the penalties against all appellants failed.
Ratio Decidendi: Where the statutory period for realisation of export proceeds has not expired, and an application for extension of time or write-off is pending before the RBI, adjudication for contravention is premature and cannot be sustained.
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