Invalid service of show cause notice on a former director can vitiate penalties for breach of natural justice.

Statutory service of a show cause notice must comply with the governing adjudication rules, and service on a company address does not amount to valid service on a former director who had already resigned. Because the notice was not served at the person's residence, last known residence, or last place of business or work, the recipient was denied the opportunity to invoke statutory defences, including that he was not in charge of day-to-day affairs or had exercised due diligence. An adjudication founded on such defective service is contrary to the notice requirements and natural justice and cannot be sustained against that person.

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Issues: Whether the adjudication order and appellate order were sustainable when the show cause notice was not validly served on the appellant after he had ceased to be a director of the company and the relied-upon material was not supplied to him.

Analysis: The appellant had resigned as a part-time non-executive director before issuance of the show cause notice, and the notice was sent only to the company address. Rule 10 of the Foreign Exchange Regulation (Adjudication, Proceedings and Appeal) Rules, 1974 required service at the person's residence, last known residence, or last place of business or work. Since the appellant was no longer available at the company address when the notice was issued, service through the company could not amount to service on him. The appellant was therefore denied the opportunity to take the defence available under Section 68 of the Foreign Exchange Regulation Act, 1973, including showing that he was not in charge of the day-to-day affairs of the company or had exercised due diligence. The adjudication was thus contrary to the statutory service requirement and the principles of natural justice.

Conclusion: The show cause notice was not validly served on the appellant, and the adjudication order could not be sustained against him.

Ratio Decidendi: Where statutory notice is not served on a person in the manner required by the governing adjudication rules, any penalty imposed without affording that person the opportunity to answer the notice and avail statutory defences is vitiated for breach of natural justice.

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