Arun Sogani Vs Joint Director (Appellate Tribunal under SAFEMA, New Delhi)
Liquidation of Company Does Not Wipe Out Director’s Liability for Non-Realisation of Export Proceeds—₹3 Crore FERA Penalty Reduced to ₹30 Lakh
Summary: The Appellate Tribunal under SAFEMA has upheld the liability of a director for failure to realise export proceeds under the erstwhile Foreign Exchange Regulation Act, 1973. It held that the subsequent liquidation of the company and transfer of its records to the Official Liquidator would not absolve a director who was in charge of the company when the exports were made and the period for realisation expired.
However, considering the age of the proceedings, liquidation of the company and other surrounding circumstances, the Tribunal reduced the penalty imposed on the director from ₹3 crore to ₹30 lakh—the amount already deposited by him.
Facts of the case
The Reserve Bank of India informed the Enforcement Directorate that M/s Unicorp Industries Ltd. had been caution-listed for failure to realise substantial export proceeds relating to the period 1990 to 1998.
Information received from various banks showed unrealised export proceeds of approximately ₹26.36 crore and USD 9,80,000. The company and its directors had allegedly failed to realise and repatriate these amounts within the prescribed period and had not obtained the RBI’s permission for such non-realisation or delay.
