Export proceeds default governed by FEMA when extended repatriation due date expired after repeal of FERA

Where the RBI-extended due date for repatriation of export proceeds expired after FEMA came into force, the default was treated as governed by FEMA and not barred by earlier FERA proceedings involving different GRs and a different period. The objection based on res judicata and repeal of FERA therefore failed. The Tribunal also held that a partner who personally participated in export realisation efforts and signed export documents, and a constituted attorney who signed letters and participated in the firm's affairs, were both involved in the conduct of the business and liable for the firm's contraventions under FEMA. The penalty was sustained.

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Issues: (i) Whether the proceedings for non-realisation of export proceeds were barred by the earlier FERA proceedings or by the repeal of FERA in view of the extended due date falling under the FEMA regime; (ii) Whether the individual appellants were liable under Section 42 of FEMA for the contraventions relating to export realisation and whether the penalty was sustainable.

Issue (i): Whether the proceedings for non-realisation of export proceeds were barred by the earlier FERA proceedings or by the repeal of FERA in view of the extended due date falling under the FEMA regime.

Analysis: The earlier proceedings were held not to cover the GRs involved in the present case, as the earlier notice related to different GRs and a different period. The Tribunal also accepted that the relevant default would arise only on expiry of the RBI-extended due date for repatriation, which in the present matter fell when FEMA was already in force. The plea based on res judicata and repeal of FERA was therefore rejected, and the action was treated as one correctly taken under FEMA.

Conclusion: The objection based on earlier proceedings and on the repeal of FERA failed, and the proceedings under FEMA were upheld.

Issue (ii): Whether the individual appellants were liable under Section 42 of FEMA for the contraventions relating to export realisation and whether the penalty was sustainable.

Analysis: The Tribunal found that one appellant was admittedly a partner who personally participated in efforts to realise export proceeds and signed export-related documents, while the other appellant, though described as a constituted attorney, also signed letters and participated in the affairs of the firm. On that basis, both were held to have been involved in the conduct of the firm's affairs and responsible for the defaults. The Tribunal further held that no material was shown to establish that they had taken sufficient steps to prevent the contraventions or that the penalty was unwarranted.

Conclusion: Both individual appellants were held liable under Section 42 of FEMA and the penalty was sustained.

Final Conclusion: The challenge to the impugned order failed in its entirety, and the penalty proceedings against both individual appellants were affirmed.

Ratio Decidendi: Where the extended date for repatriation of export proceeds expires after FEMA has come into force, the default is governed by FEMA; and a person who is shown to have participated in the conduct of the firm's export affairs may be held liable under Section 42 even if styled as a partner or constituted attorney.

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