Export proceeds realisation obligation cannot be avoided by pleading inability to fund recovery expenses without proof of greater foreign exchange loss.

A party required to secure realisation of export proceeds under section 18(2) of the Foreign Exchange Regulation Act, 1973 cannot escape liability merely by alleging inability to remit legal fees for foreign recovery proceedings. Mere financial difficulty is insufficient; the excuse may succeed only if the recovery expense would itself cause a greater foreign exchange loss than the amount to be recovered, and reasonable efforts to arrange the funds were taken. On the stated facts, no such justification was shown, and the failure to remit lawyer's fees directly led to non-execution of the decree and non-realisation of export proceeds, so the contravention and penalty were sustained.

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Issues: Whether the appellants' failure to realise export proceeds could be excused on the ground that legal fees for pursuing foreign recovery proceedings could not be remitted, so as to avoid contravention of section 18(2) of the Foreign Exchange Regulation Act, 1973.

Analysis: The explanation that export proceeds remained unrealised because lawyer's fees could not be remitted was examined against the statutory duty to take steps for securing realisation of export proceeds. Mere financial difficulty was held not to be enough. The reasoning accepted that expenses connected with recovery may, in an appropriate case, justify inaction only where such expenses would themselves cause loss of foreign exchange exceeding the amount to be recovered. On the facts, no such case was made out. The appellants did not show that they had taken all-out efforts to arrange funds for the legal expenses, and the failure to remit lawyer's fees was found to be directly responsible for non-execution of the decree and non-realisation of the amounts.

Conclusion: The explanation was rejected and the contravention under section 18(2) was upheld.

Final Conclusion: The penalty and adjudication were sustained, and the appeal failed.

Ratio Decidendi: A party obliged to secure realisation of export proceeds cannot avoid liability merely by pleading inability to pay recovery expenses unless it is shown that such expenses would themselves cause a greater foreign exchange loss and that all reasonable steps were taken to secure remittance.

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