Delhi HC: Directors Not Personally Liable for Company’s Export Defaults Without Specific Allegations

The Delhi High Court set aside penalty orders against a non-executive director of M/s Poysha Industrial Ltd, ruling that directors cannot be held personally liable for a company’s export obligation defaults unless specific allegations of their involvement are made.

The Court noted that the company was liquidated in 1998, and the Petitioner had no control over the records. The Directorate General of Foreign Trade had imposed penalties exceeding ₹11.5 crore in 2009 without issuing a show-cause notice to the petitioner, violating Section 14 of the FTDR Act.

The Court emphasized that Section 11(2) requires specific allegations of contravention or abetment for individual liability. Accordingly, the penalty orders were quashed.