Negotiable Instruments Act, 1881 – ss.138, 141 – Appellant, an independent non-executive director was arrayed as an accused in the complaints u/s.138 alleging dishonor of cheques issued by the company – Appellant, if vicariously liable u/s.141: Held: No – A non-executive director plays a governance role and is not involved in the daily operations or financial management of the company – To attract liability u/s.141, the accused must have been actively in-charge of the company’s business at the relevant time – Mere designation as a director is not sufficient; specific role and responsibility must be established in the complaint – Only those responsible for the day-to-day conduct of business can be held accountable – Petitioner’s role in the accused company was limited to that of an independent non-executive director with no financial responsibilities or involvement in the day-to-day operations of the company – Appellant was also not a signatory to the dishonoured cheques – Complaints do not contain any specific averments detailing how the Appellant was responsible for the dishonoured cheques – Non-executive directors cannot be held liable u/s.138 unless specific evidence proves their active involvement – Moreover, the Appellant had later resigned from the post of independent non-executive director – Impugned judgment set aside – Criminal proceedings against the appellant are quashed. [Paras 15.4, 15.3, 16-19, 21]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Divya Pandey. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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