Non-realisation of export proceeds: partial recovery efforts were insufficient, and penalty applied only where responsibility was proved.

In proceedings concerning non-realisation of export proceeds, delay and laches were rejected because the enquiry depended on correspondence with the authorised dealer and the Reserve Bank, and the company's own recovery efforts meant time could not run only from the last export shipment. The outstanding export proceeds were accepted at Rs. 1.8 crores, but no write-off or settlement by the Reserve Bank was proved. The Tribunal found that partial correspondence and visits were not reasonable steps to repatriate the dues, upheld penalty only against the promoter-managing director, exonerated the legal heir and the other directors for lack of evidence of responsibility, and reduced the penalties on the company and the liable director.

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Issues: (i) Whether the show cause notice was vitiated by delay and laches; (ii) whether the outstanding export proceeds were Rs. 1.8 crores or Rs. 2.34 crores and whether any write-off or settlement was established; (iii) whether the appellants had taken reasonable steps to realise and repatriate the export proceeds and whether the directors and legal heir were liable for penalty; (iv) whether the penalties required reduction.

Issue (i): Whether the show cause notice was vitiated by delay and laches.

Analysis: The delay plea was rejected because the proceedings depended on enquiry with the authorised dealer and the Reserve Bank of India. The record also showed that the company itself was pursuing realisation, settlement, and write-off, so the period could not be counted merely from the date of the last export consignment.

Conclusion: The challenge based on delay and laches failed.

Issue (ii): Whether the outstanding export proceeds were Rs. 1.8 crores or Rs. 2.34 crores and whether any write-off or settlement was established.

Analysis: On the documents produced, the Tribunal accepted that the outstanding amount was Rs. 1.8 crores. However, there was no material to show that the Reserve Bank of India had written off that amount, and the record from the bank and the Reserve Bank did not establish that the dues had been settled or extinguished.

Conclusion: The outstanding amount was accepted as Rs. 1.8 crores, but no write-off or settlement was proved.

Issue (iii): Whether the appellants had taken reasonable steps to realise and repatriate the export proceeds and whether the directors and legal heir were liable for penalty.

Analysis: The Tribunal found that some efforts were made through correspondence and personal visits, but those steps were not sufficient to be treated as reasonable steps for recovery of export proceeds. Liability was upheld against the promoter-managing director who was aware of the affairs of the company and the recovery efforts. The legal heir of the deceased former managing director was held not liable, and the two other directors were also found not liable for want of evidence showing responsibility for the contravention.

Conclusion: Penalty was upheld only against Shri Ashok Kasliwal; the penalties on Shri Mukesh Bhansali, Shri Girish Agrawal and Shri Shailesh Jain were set aside.

Issue (iv): Whether the penalties required reduction.

Analysis: Considering the facts and circumstances, the Tribunal reduced the company's penalty and the penalty on Shri Ashok Kasliwal to lesser amounts, with adjustment of the pre-deposit already made.

Conclusion: The penalties on the company and Shri Ashok Kasliwal were reduced.

Final Conclusion: The appeals were disposed of by upholding contravention as against the company and Shri Ashok Kasliwal, while granting relief to the other appellants by setting aside their penalties and reducing the remaining penalties.

Ratio Decidendi: In proceedings for non-realisation of export proceeds under FEMA, partial recovery efforts do not suffice unless the appellant shows reasonable steps taken to realise and repatriate the dues, but penalty cannot be fastened on persons against whom no evidence of responsibility for the contravention exists.

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