FERA export realisation penalties moderated where recovery efforts were shown, but partner penalties failed without individual culpability.
An exporter who did not fully rebut the presumption under FERA section 18(3) nevertheless showed some recovery efforts, including pursuit of claims in foreign insolvency proceedings, correspondence with the RBI, and partial realisation of dues. On those facts, the penalty on the firm was moderated and reduced to 35% of the original amount, with the amount already deposited treated as full satisfaction. Separate penalties on the partners were unsustainable because no material showed individual lapse, negligence, lack of due diligence, or knowledge of the contravention, so those penalties were set aside.
Issues: (i) Whether the exporter had taken reasonable steps to realize and repatriate the export proceeds so as to rebut the presumption under section 18(3) of FERA and whether the penalty on the firm called for interference; (ii) Whether separate penalties on the partners were sustainable.
Issue (i): Whether the exporter had taken reasonable steps to realize and repatriate the export proceeds so as to rebut the presumption under section 18(3) of FERA and whether the penalty on the firm called for interference.
Analysis: The exporter had continued business with the foreign buyer despite defaults, and the Tribunal's finding that reasonable steps were not fully established was supported by facts. At the same time, the record showed some efforts to recover the dues, including pursuit of claims before the foreign insolvency process, correspondence with the Reserve Bank of India, and part realization of the amount. The application for extension and write-off had also remained pending. In these circumstances, the presumption under section 18(3) was not wholly displaced, but the facts justified moderation of the penalty.
Conclusion: The penalty on the firm was reduced to 35% of the original amount, and the amount already deposited was treated as full satisfaction of the firm's liability.
Issue (ii): Whether separate penalties on the partners were sustainable.
Analysis: The firm is only a collective name for its partners, but separate penalty on each partner required material showing individual lapse, negligence, lack of due diligence, or knowledge of the contravention. No such material was established, and once the firm had been penalized, further penalty on the partners was unwarranted on the facts of the case.
Conclusion: The penalties imposed on the partners were set aside.
Final Conclusion: The common order was modified by reducing the firm's penalty and setting aside the partners' penalties, resulting in partial relief to the appellants.
Ratio Decidendi: Where an exporter fails to fully rebut the statutory presumption under FERA but shows some recovery efforts and pending regulatory consideration, the penalty may be moderated; separate penalties on partners are unsustainable without proof of individual culpability or lack of due diligence.