Vicarious liability of managing director sustained where notice alleged responsibility and no rebuttal material was produced.

A managing director was held vicariously liable for failure to realise and repatriate export proceeds because the show cause notice specifically alleged responsibility for the company's export business and conduct of affairs. The Tribunal noted that, once such averments are made, the burden shifts to the person concerned to produce material rebutting that responsibility. As no material was produced to show who actually handled exports and repatriation, the plea of non-responsibility was rejected and the penalty order was upheld.

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Issues: Whether the appellant, being the Managing Director of the company, could avoid liability for contravention relating to failure to realise and repatriate export proceeds under the foreign exchange law.

Analysis: The appeal challenged the penalty on the ground that no material showed that the appellant was in charge of the export business or responsible for the conduct of the company's affairs. The record, however, showed that the show cause notice specifically attributed vicarious liability to the appellant and that he was the Managing Director during the relevant period. The appellant did not place any material on record to show who was actually handling exports and repatriation of proceeds. In such circumstances, the plea that he was not responsible for the company's business could not be accepted. The Tribunal relied on the settled principle that, where a director or managing director is sought to be made liable, the complaint or notice must contain the necessary averments and, once such responsibility is pleaded, the person concerned must bring material to displace that liability.

Conclusion: The appellant remained liable for the contravention and the penalty order was upheld.

Ratio Decidendi: Where a show cause notice or complaint contains the necessary averments that a managing director was responsible for the conduct of a company's business, and no material is produced to rebut that responsibility, vicarious liability for the statutory contravention can be sustained.

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