Personal penalty on a director for corporate export default requires specific allegations, proper notice, and reasonable enforcement.

Personal penalty on a company director for export-obligation default cannot be sustained without specific allegations and proof of the director's own role, duty, or conscious participation in the contravention under the Foreign Trade (Development and Regulation) Act, 1992. The proceedings were also held unsustainable because the notices did not effectively fasten liability on the individual noticee and did not properly reflect the company's liquidation status or proceed appropriately in that changed legal context. Inordinate unexplained delay in issuing and concluding the action further reinforced its arbitrariness, and the penalty orders were set aside.

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Issues: (i) Whether a director could be fastened with personal penalty for the company's export-obligation default without specific allegations showing his role or duty in the default; (ii) whether the impugned penalty proceedings were vitiated for want of proper notice and for failure to proceed against the official liquidator after the company had gone into liquidation; (iii) whether the extraordinary delay in initiating and concluding the proceedings rendered the action unsustainable.

Issue (i): Whether a director could be fastened with personal penalty for the company's export-obligation default without specific allegations showing his role or duty in the default.

Analysis: Section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992 permits penalty only where a person makes, abets, or attempts a contravention. The notices and adjudication orders were directed to the company and its directors, but they did not contain any clear averment explaining how the petitioner, as a director, was personally responsible for the alleged non-fulfilment of export obligations. The order under challenge also did not undertake an independent examination of the petitioner's individual role. In the absence of a specific factual foundation showing conscious participation, personal culpability could not be assumed merely from the petitioner's status as a director.

Conclusion: The petitioner could not be personally penalized merely because he was a director of the company.

Issue (ii): Whether the impugned penalty proceedings were vitiated for want of proper notice and for failure to proceed against the official liquidator after the company had gone into liquidation.

Analysis: The record showed that the notices were issued only in the name of the company and did not meaningfully address the petitioner as an individual noticee. The notices also did not disclose a proper basis for fastening liability on him. The company had already been ordered to be wound up, and its records had been taken over by the official liquidator. Once that legal position existed, the respondent could not disregard it and continue to proceed as though the company remained fully operative in the ordinary sense. The failure to issue effective notice in the changed legal situation undermined the fairness and legality of the proceedings.

Conclusion: The proceedings were unsustainable for want of proper notice and for failure to proceed in accordance with the company's liquidation status.

Issue (iii): Whether the extraordinary delay in initiating and concluding the proceedings rendered the action unsustainable.

Analysis: The export licences dated back to 1989-1991, the show cause notice was issued in 1992, and the adjudication orders came much later, in 2009, with the revision dismissed in 2014. No satisfactory explanation was offered for the prolonged inaction. In the absence of a prescribed limitation period, proceedings must still be initiated and pursued within a reasonable time. The delay here was not a mere procedural lapse but a factor that reinforced the arbitrariness of the action, especially when the record did not establish any fresh material justifying such belated enforcement against the petitioner.

Conclusion: The inordinate delay rendered the penalty action unsustainable.

Final Conclusion: The penalty orders could not be sustained against the petitioner in the absence of specific allegations of personal culpability, proper notice, and timely enforcement, and the impugned orders were set aside.

Ratio Decidendi: Personal penalty on a director for a company's regulatory default cannot be sustained unless the notice and order specifically allege and establish the director's own role, duty, or conscious default, and the proceedings must also conform to requirements of proper notice and reasonable dispatch.

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