Personal penalty on director under foreign trade law requires specific allegations, proper notice, and fair procedure before enforcement.

An independent non-executive director could not be subjected to personal penalty under the Foreign Trade (Development and Regulation) Act, 1992 where the notice and adjudication were issued to the company, without specific allegations of his own role, abetment, or conscious participation in the export default. Proper notice under Section 14 was required before any penalty, and absence of service on the director, together with the failure to proceed after the company went into liquidation and the unexplained delay in action, rendered the proceedings inconsistent with fair procedure. The revisional and original penalty orders were therefore set aside.

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Issues: (i) whether a penalty under the Foreign Trade (Development and Regulation) Act, 1992 could be sustained against an independent non-executive director without a show-cause notice and specific allegations connecting him to the contravention; (ii) whether the proceedings and penalties were vitiated by failure to serve notice and by undue delay in taking action after the export obligation arose and after the company had gone into liquidation.

Issue (i): whether a penalty under the Foreign Trade (Development and Regulation) Act, 1992 could be sustained against an independent non-executive director without a show-cause notice and specific allegations connecting him to the contravention.

Analysis: Liability under Section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992 arises where a person makes or abets a contravention. A director cannot be fastened with personal liability merely because of office. The notices and the adjudication orders were addressed to the company and did not set out any specific role, duty, or conscious participation of the petitioner in the alleged export default. The record also did not show any independent adjudication of his personal culpability. On the settled approach governing vicarious liability of directors, specific averments and a notice under Section 14 were necessary before imposing penalty on the individual director.

Conclusion: The penalty could not be sustained against the petitioner; the finding was in favour of the petitioner.

Issue (ii): whether the proceedings and penalties were vitiated by failure to serve notice and by undue delay in taking action after the export obligation arose and after the company had gone into liquidation.

Analysis: Section 14 required notice to the person concerned stating the grounds of proposed penalty and giving an opportunity of representation and hearing. The notices on record were sent to the company at its address and were not shown to have been served on the petitioner. After the company had been ordered to be wound up, further steps ought to have been taken in relation to the Official Liquidator, which was not done. The Court also noted the long lapse of time between the alleged default, the adjudication, and the revisional order, with no satisfactory explanation for the delay. In these circumstances, the proceedings were held inconsistent with fair procedure and unsustainable.

Conclusion: The absence of proper notice and the unexplained delay rendered the impugned action unsustainable; the finding was in favour of the petitioner.

Final Conclusion: The impugned revisional order and the underlying orders-in-original were set aside, and the petitioner was relieved from personal penalty liability arising out of the company's export-obligation defaults.

Ratio Decidendi: A director cannot be personally penalised under the Foreign Trade (Development and Regulation) Act, 1992 for a company's export-default unless the authority specifically alleges and establishes the director's own role or abetment and serves the notice required by Section 14.

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