Director vicarious liability requires specific averments of control and responsibility; proceedings were liable to be quashed.

Vicarious liability of a director under foreign exchange law can arise only if the complaint specifically alleges that, at the time of the contravention, the person was in charge of and responsible for the conduct of the company's business. Applying strict construction to this penal provision, the Court found that the complaint, read as a whole, did not make such a clear and specific averment against the petitioner; the material instead suggested that other persons were directly handling the business. The bank letter also did not clearly distinguish directors from guarantors, and no independent material was shown to meet the statutory threshold. The proceedings against the petitioner were therefore liable to be quashed.

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Issues: Whether the complaint disclosed the minimum foundational averments necessary to prosecute the petitioner as a director for alleged contravention under the foreign exchange , so as to justify continuance of proceedings.

Analysis: Liability of a director under the statutory scheme was held to be vicarious and could arise only where the complaint specifically averred that, at the time of the contravention, the person was in charge of and responsible for the conduct of the company's business. The Court applied the principle of strict construction to this penal provision and treated the requirement of a clear and specific averment as mandatory. Reading the complaint as a whole, the material only indicated that two persons were directly handling the business, while the petitioner was described in a way that did not establish his control over day-to-day affairs. The bank's letter also did not clearly distinguish between directors and guarantors, and no independent material was shown to satisfy the statutory threshold after notice and reply.

Conclusion: The complaint did not disclose the necessary basis to proceed against the petitioner, and the proceedings against him were liable to be quashed.

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