Non-executive director liability for export proceeds penalty fails where no involvement in the relevant transactions is shown.

Penalty for non-realisation of export proceeds under foreign exchange law could not be sustained against a director who joined only after the export transactions, was confined to an advisory and non-executive role, and had no involvement in day-to-day management or compliance. The record showed the relevant proceeds issue arose largely before his directorship, and the authority itself accepted that he was not part of the management handling the affairs in question. On those facts, no basis remained to fasten liability on him, and the impugned penalty was liable to be set aside.

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Issues: Whether penalty for non-realisation of export proceeds under the foreign exchange law could be sustained against a director who was inducted only in an advisory capacity, had no role in the export transactions, and resigned after a short tenure.

Analysis: The Appellant joined the company after the export transactions had already taken place and the show-cause notice related to export proceeds for a period largely anterior to his directorship. The correspondence showed that he was confined to an advisory role and was excluded from day-to-day management. The Adjudicating Authority itself accepted that the Appellant was not part of the management handling the affairs of the group, yet imposed penalty. In the same proceedings, another similarly placed director was exonerated because his short tenure and limited role made responsibility for non-realisation negligible. On these facts, no basis remained to fasten liability on the Appellant for the alleged contravention.

Conclusion: The penalty was not sustainable against the Appellant and the impugned order was liable to be set aside in his favour.

Ratio Decidendi: Liability for non-realisation of export proceeds cannot be imposed on a person who was neither concerned with the relevant transactions nor shown to have participated in or led the management responsible for compliance, especially where the record establishes only an advisory and non-executive role.

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