Foreign exchange restriction defence to estate duty recovery requires bona fide attempts to secure remittance permission

Section 73(3) of the Estate Duty Act postpones default for duty attributable to assets outside India where remittance is prohibited or restricted, but that protection is not automatic. Mere existence of foreign exchange controls under the Ceylon Exchange Control Act was insufficient to defeat recovery from Indian assets, because permission for remittance could still be granted by the Central Bank of Ceylon. The petitioner had to show bona fide, unsuccessful efforts to secure repatriation or obtain the necessary permission, and the record did not show any effective attempt after April 1966. On that basis, resistance to recovery was not available and mandamus failed.

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Issues: Whether the petitioner could resist recovery of estate duty from Indian assets on the ground that remittance of funds from Ceylon was restricted, and whether relief was available under section 73(3) of the Estate Duty Act without proof of bona fide efforts to obtain the necessary foreign exchange permission.

Analysis: Section 73(3) of the Estate Duty Act postpones default in respect of duty attributable to assets outside India where remittance is prohibited or restricted, but the protection is not absolute. The existence of restrictions under sections 7, 8 and 22 of the Ceylon Exchange Control Act did not by itself establish inability to pay, because the Central Bank of Ceylon could still grant permission. The Court found that the petitioner had not made bona fide efforts to secure repatriation or obtain such permission, and the materials on record did not show any effective attempt after April 1966.

Conclusion: The petitioner was not entitled to restrain recovery of the estate duty, and the claim for mandamus failed.

Ratio Decidendi: A person seeking to defer or resist recovery of estate duty on the ground of foreign exchange restrictions must show bona fide and unsuccessful efforts to obtain the necessary permission for remittance; mere existence of a statutory restriction is insufficient.

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