Conditional write-off and transitional limitation under foreign exchange law did not defeat liability for export-realisation contravention.

A limitation objection under the Foreign Exchange Management Act transitional saving provisions failed because the show-cause notice and reply were both within the permitted sunset period. On the merits, a conditional Reserve Bank of India write-off did not extinguish liability where the attached conditions, including return of export incentives already availed, were not fulfilled. The HC also noted that the appellate authority considered the record and substantially reduced the penalty, and treated the order as a reasoned speaking order. The finding of contravention of export-realisation obligations was therefore sustained, and the penalties as modified in appeal were upheld.

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Issues: (i) Whether the proceedings were vitiated on limitation in view of the transitional regime under the Foreign Exchange Management Act, 1999; (ii) Whether the alleged contravention under the Foreign Exchange Regulation Act, 1973 stood displaced by the Reserve Bank of India write-off and the appellants' claimed efforts to realise export proceeds.

Issue (i): Whether the proceedings were vitiated on limitation in view of the transitional regime under the Foreign Exchange Management Act, 1999.

Analysis: The relevant show-cause notice was issued within the period permitted by the transitional provisions. On the facts noted in the record, the initiation of proceedings and the reply thereto both fell within the statutory sunset period under the saving clause applicable after repeal of the earlier enactment. The limitation objection was therefore not available.

Conclusion: The limitation challenge failed and was rejected.

Issue (ii): Whether the alleged contravention under the Foreign Exchange Regulation Act, 1973 stood displaced by the Reserve Bank of India write-off and the appellants' claimed efforts to realise export proceeds.

Analysis: The write-off granted by the Reserve Bank of India was conditional and could not operate in isolation from the requirement to return the export incentives already availed. The appellate authority had considered the material and, while noting the absence of a clear finding on the exact incentive amount, substantially reduced the penalty. The order under challenge was a reasoned and speaking order, and the non-compliance with the condition attached to write-off supported the finding of contravention of the export-realisation obligations.

Conclusion: The plea based on write-off and reasonable steps for recovery failed, and the finding of contravention was upheld.

Final Conclusion: The penalties imposed and modified in appeal were sustained, and no ground for interference was made out.

Ratio Decidendi: A conditional write-off of export proceeds does not extinguish liability where the attached conditions are not fulfilled, and a timely show-cause notice issued within the transitional saving period defeats a limitation challenge.

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