Vicarious liability under foreign exchange law fails once the company is exonerated and derivative prosecution loses its foundation.

Vicarious liability under Section 68 of the Foreign Exchange Regulation Act, 1973 arises only where the company's contravention is first proved. Where the adjudicating authority dropped proceedings against the company and other noticees after finding that the alleged violations were not established, the derivative criminal prosecution against an individual accused had no surviving foundation. On that footing, continuation of the complaint against the petitioner was unsustainable and liable to be quashed. The prosecution could not survive once the principal proceeding failed and the basis for corporate-linked liability disappeared.

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Issues: Whether criminal proceedings under Sections 56 and 68 of the Foreign Exchange Regulation Act, 1973 could continue against the individual accused after the company had been exonerated in the connected adjudication proceedings.

Analysis: Section 68 creates vicarious liability for individuals only when there is a proved contravention by the company. The adjudicating authority had dropped the proceedings against the company and all individual noticees on the finding that the alleged contraventions were not proved. In the earlier revision concerning the company, the complaint had been quashed on the basis of the same underlying exoneration. In these circumstances, continuation of the complaint against the petitioner, who was proceeded against only in a derivative capacity, had no surviving foundation.

Conclusion: The proceeding could not legally continue against the petitioner and was liable to be quashed.

Final Conclusion: The criminal case was terminated in respect of all accused persons, including the petitioner, because the basis for vicarious prosecution had already failed.

Ratio Decidendi: Where liability under Section 68 is purely vicarious, prosecution of individual accused cannot survive once the company's alleged contravention is found not proved and the principal proceeding is dropped.

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