Legal principle

A director cannot be fastened with personal liability under Section 11(2) of the FTDR Act for a company's export-obligation default merely because he was (or was a whole-time) director; specific allegations of his duty and conscious failure, communicated through a Section 14 notice stating the grounds, are indispensable.

Court decision

The Court found no merit in the Respondent's contentions and set aside both the Impugned Order dated 11.03.2014 and the Four Orders-in-Original, deciding in favour of the Petitioner.

Facts

The Petitioner, who joined M/s Poysha Industrial Company Ltd. as an office assistant in 1952 and became a Working Director in 1980, faced penalties totalling about Rs. 11.5 crore levied on the Company and its Directors through four Orders-in-Original dated 08.09.2009 and 17.09.2009 for non-fulfilment of export obligations attached to Advance Licences obtained during 1989-1991 for importing tinplates. The Company had been declared sick under SICA, ordered wound up by the Bombay High Court on 09.01.1998, and its books, records and assets taken over by the Official Liquidator. A show cause notice under Section 14 of the FTDR Act, 1992 was issued as early as 08.09.1992, but adjudication orders came only 17 years later; further notices and summons were addressed only to the Company at its registered address. The Petitioner's revision petition under Section 16 of the FTDR Act was dismissed by the DGFT's order dated 11.03.2014, which he challenged by this writ petition.

Key provisions

• Section 11, The Foreign Trade (Development and Regulation) Act, 1992 — Contravention of provisions of this Act, rules, orders and foreign trade policy.
• Section 14, The Foreign Trade (Development and Regulation) Act, 1992 — Giving of opportunity to the owner of the goods (including the goods connected with services or technology), etc.
• Section 17, The Foreign Trade (Development and Regulation) Act, 1992 — Powers of Adjudicating and other Authorities.
• Section 8, The Foreign Trade (Development and Regulation) Act, 1992 — Suspension and cancellation of Importer-exporter Code Number.
• Section 16, The Foreign Trade (Development and Regulation) Act, 1992 — Review.