Anand Mehta Vs Director General of Foreign Trade (Delhi High Court)
Delhi High Court held that independent non-executive director cannot be held liable for non-fulfilment of export obligations by the company. Accordingly, penalty imposed on the director is liable to be set aside.
Facts- A show cause notice dated 08.09.1992 was sent by the Respondent under Section 14 of the Foreign Trade (Development and Regulation) Act, 1992 [FTDR Act] to the Company including its Directors and the Petitioner for non-fulfilment of its export obligations under the FTDR Act.
On 12.04.2007, the Respondent issued summons u/s. 17 of the FTDR Act to the Company. The summons were only addressed to the Company with the list of Directors being mentioned therein. These summons were however never received by either the Company or its Directors. The record reflects that various summons u/s. 17 of the FTDR Act were issued and subsequently, show cause notices for personal hearing addressed to the Company, were issued on 05.05.2008, 23.06.2008, 01.07.2008, 22.07.2008, 11.08.2008. A perusal of these show cause notices shows that these notices have been addressed to the Company at its registered address.
On 08.09.2009, two adjudication orders were passed imposing a penalty of Rs. 1,23,852 and Rs. 57,75,600 on the Company and its Directors. Thereafter, on 17.09.2009, two additional adjudication orders were passed imposing a penalty of Rs. 11,60,000 and Rs. 10,80,21,664 on the Company and its Directors.
