Export realisation and director liability under FEMA upheld where exporters failed to prove recovery steps or absence of knowledge.

Exporters were found to have contravened FEMA export realisation obligations by failing to realise and repatriate export proceeds within the prescribed period and by not showing credible recovery steps, as unsupported business hardship did not excuse the default. Non-shipment against advance remittances within one year was also treated as contravention because the regulation imposed a primary shipment obligation, and the refund proviso did not reduce that duty. Directors were liable where the company defaulted and they were in charge of its business, unless due diligence or absence of knowledge was proved; liability was not fastened on one director who showed no role in day-to-day affairs or knowledge of the non-realisation.

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Issues: (i) Whether the appellants contravened the export realisation obligations under FEMA and the Export Regulations by failing to realise export proceeds within the prescribed period and by not taking reasonable steps to recover outstanding amounts. (ii) Whether non-shipment against advance remittances within one year attracted contravention under the Export Regulations. (iii) Whether the directors were liable under the company-contravention provision, and whether one director established absence of responsibility or knowledge.

Issue (i): Whether the appellants contravened the export realisation obligations under FEMA and the Export Regulations by failing to realise export proceeds within the prescribed period and by not taking reasonable steps to recover outstanding amounts.

Analysis: The governing scheme requires exporters to realise and repatriate export value within the stipulated period and permits extension only on sufficient cause. The record showed substantial unrealised export proceeds over several invoices, with no credible material proving effective recovery action, extension of time, or concrete steps such as claims before liquidators or legal proceedings abroad. The explanation based on recession and foreign buyers' distress was not supported by sufficient documentary evidence.

Conclusion: The finding of contravention for non-realisation of export proceeds was upheld against the appellants other than the appellant who obtained relief on the separate issue of individual liability.

Issue (ii): Whether non-shipment against advance remittances within one year attracted contravention under the Export Regulations.

Analysis: The regulation placed a primary obligation on the exporter to ensure shipment within one year from receipt of advance payment. The proviso concerning refund after expiry of one year did not dilute that obligation. The record also contained an admission that exports were not made against certain advances, and no satisfactory explanation was produced for the failure to ship or adjust the advances.

Conclusion: The contravention regarding advance payments and non-shipment within the prescribed period was affirmed.

Issue (iii): Whether the directors were liable under the company-contravention provision, and whether one director established absence of responsibility or knowledge.

Analysis: A director is deemed liable where the company commits the contravention and the director was in charge of and responsible for its business, unless due diligence or absence of knowledge is proved. The materials on record showed responsibility of the directors during the relevant period, but there was no effective rebuttal of liability by the appellants generally. In contrast, the record did not show that the appellant Smt. Kalavatiben V. Surani was involved in the day-to-day affairs or had knowledge of the non-realisation of export proceeds.

Conclusion: The directors were held liable under the company-contravention provision except Smt. Kalavatiben V. Surani, whose appeal succeeded.

Final Conclusion: The impugned order was sustained for the other directors, while the appeal of Smt. Kalavatiben V. Surani was allowed, resulting in partial relief only.

Ratio Decidendi: In export-regulation contraventions by a company, directors are liable if they were in charge of and responsible for the business during the relevant period unless they prove due diligence or absence of knowledge; a director with no shown role in day-to-day affairs or knowledge of the default is not fastened with liability.

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