Director liability under foreign exchange law requires proof of day-to-day control and responsibility before a penalty can stand.

Penalty on a director under Section 68(1) of the Foreign Exchange Regulation Act, 1973 cannot be sustained unless there is proof that he was in charge of and responsible for the company's day-to-day business and had knowledge of the contravention. The tribunal found that the materials did not establish that the director managed the relevant transaction or the company's daily affairs, and the burden of proving such responsibility was not discharged. Applying the reasoning already adopted in connected matters involving similarly placed directors, the adjudication order was set aside and the penalty was not upheld.

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Issues: Whether the penalty imposed on a director under Section 68(1) of the Foreign Exchange Regulation Act, 1973 could be sustained without proof that he was in charge of and responsible for the company's day-to-day affairs and had knowledge of the impugned contravention.

Analysis: The Tribunal noted that the appellant's liability depended on proof that he was in charge of the affairs of the company and was responsible for its day-to-day business. It found that the respondent failed to discharge that burden. The materials relied upon did not establish that the appellant was managing the relevant transaction or the company's daily affairs. The Tribunal also treated the appellant's case as at parity with connected matters in which the High Court had already set aside the adjudication order against similarly placed directors, and applied that reasoning to the present appeal.

Conclusion: The penalty could not be sustained against the appellant and the impugned adjudication order was set aside.

Ratio Decidendi: Liability of a director for contravention by a company under Section 68(1) of the Foreign Exchange Regulation Act, 1973 requires proof that the director was in charge of and responsible for the conduct of the company's business; absent such proof, the penalty cannot be upheld.

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