Legal principle

A director cannot be held personally liable for a company's non-fulfilment of export obligations under the FTDR Act unless a Section 14 notice specifically alleges the duty or obligation cast on him and his conscious failure to fulfil it — such liability cannot be assumed merely because he is a director.

Court decision

The Court found no merit in the Respondent's contentions, set aside the Impugned Order dated 11.03.2014 and the four Orders-in-Original, disposed of the petition in the Petitioner's favour, and closed pending applications.

Facts

The Petitioner, an independent non-executive director of M/s Poysha Industrial Company Ltd. from 1985 (resigned 04.07.1997), was penalised over Advance Licences the Company obtained in 1989-1991 to import tinplates against export obligations (C.T.S. cans and container lid/bottom components). The Company was declared sick under SICA and wound up by the Bombay High Court on 09.01.1998, with the Official Liquidator taking over all books and records. DGFT issued a show cause notice dated 08.09.1992 under Section 14 FTDR Act and later notices and summons (2007-2008) addressed only to the Company, then passed four Orders-in-Original on 08.09.2009 and 17.09.2009 imposing penalties totalling about Rs. 11.50 crore on the Company and its Directors. The Petitioner's revision under Section 16 FTDR Act was dismissed on 11.03.2014, and he challenged that dismissal by writ petition.

Key provisions

• 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 11, The Foreign Trade (Development and Regulation) Act, 1992 — Contravention of provisions of this Act, rules, orders and foreign trade policy.
• Section 16, The Foreign Trade (Development and Regulation) Act, 1992 — Review.
• 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.