Export proceeds non-realisation not a contravention where RBI permitted adjustment and write-off; partner penalty also failed.

Non-realisation of export proceeds was not treated as a contravention of section 18(2) of the Foreign Exchange Regulation Act, 1973, where the outstanding amount had been partly adjusted against surplus advance remittances with RBI permission and the balance had been written off by RBI. On those facts, the alleged failure to realise the full export proceeds did not sustain liability under section 18(2). As the principal exporter was found not guilty of contravention, the basis for penalty against the partner under section 68(1) for the same default also failed.

---

---

Issues: Whether non-realisation of export proceeds amounted to contravention of section 18(2) of the Foreign Exchange Regulation Act, 1973, and whether penalty could be sustained against the partner under section 68(1) for the same alleged contravention.

Analysis: The outstanding export proceeds had been partly adjusted against surplus advance remittances with the permission of the RBI, and the balance amount had been written off by the RBI. On these facts, the failure to realise the full amount could not be treated as a contravention of section 18(2). Once the principal appellant was found not guilty of contravention, the basis for proceeding against the partner under section 68(1) for the same default also disappeared.

Conclusion: No contravention of section 18(2) was made out, and the penalty on the partner under section 68(1) was also unsustainable.

---