Export proceeds realisation liability extends to the proprietrix; penalty may be reduced where the original quantum is excessive.

Liability for non-realisation of export proceeds under the Foreign Exchange Regulation Act extended to the de jure proprietrix of the exporting concern, because the exports were made in the concern's name and the export code remained with it. A private arrangement with another person did not displace the statutory obligation or defeat responsibility for contravention. The challenge based on denial of hearing also failed, as the record showed repeated opportunities and adjournment requests. The penalty was nevertheless moderated on the facts, because the appellant's role was limited and the original quantum was found excessive, with the amount already deposited treated as sufficient.

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Issues: (i) whether the appellant, as proprietrix of the exporting concern, was liable for contravention of the obligation to realise export proceeds under section 18(2) of the Foreign Exchange Regulation Act, 1973; (ii) whether the adjudication suffered from violation of natural justice and whether the penalty required reduction.

Issue (i): whether the appellant, as proprietrix of the exporting concern, was liable for contravention of the obligation to realise export proceeds under section 18(2) of the Foreign Exchange Regulation Act, 1973.

Analysis: The export transactions were carried out in the name of the appellant's proprietary concern and the export code remained in that concern's name. The appellant continued to be the de jure proprietrix and was therefore responsible for ensuring realisation of the export proceeds. The statutory language of section 18(2) and section 18(3) is wide enough to cover not only the exporter but also any person responsible for the contravention. The plea that a private agreement with another person shifted all responsibility was not accepted as a defence to the statutory obligation.

Conclusion: The finding of contravention and liability under section 18(2) was upheld against the appellant.

Issue (ii): whether the adjudication suffered from violation of natural justice and whether the penalty required reduction.

Analysis: The record showed repeated opportunities of hearing and repeated requests for adjournment by the appellant. The claim of denial of hearing was therefore rejected. However, while sustaining liability, the Tribunal considered the totality of circumstances, including the appellant's limited role in fact and the apparent mastermind behind the transactions, and found that the penalty originally imposed was excessive. The amount already deposited was treated as sufficient to meet the ends of justice.

Conclusion: No violation of natural justice was accepted, but the penalty was reduced to Rs. 5,00,000/-.

Final Conclusion: The appeal succeeded only to the extent of reduction of penalty, while the finding of contravention was maintained.

Ratio Decidendi: Under section 18 of the Foreign Exchange Regulation Act, 1973, liability for non-realisation of export proceeds can extend to the proprietor of the exporting concern who remains responsible for the transaction, and the penalty may be moderated on the facts if the original quantum is found excessive.

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