The petition challenged the criminal complaint filed against the ...

Director not liable for dishonored cheque issued before appointment, no allegations of involvement.

Case Laws     Indian Laws

September 23, 2024

The petition challenged the criminal complaint filed against the petitioner u/s 138 read with Section 141 of the Negotiable Instruments Act for dishonor of cheque. The petitioner was impleaded as an accused in the capacity of Director of the company. However, the documents revealed that the petitioner was appointed as an Additional Independent Non-Executive Director after the loan was taken and had resigned before the cheque was dishonored. The complaint lacked specific allegations regarding the petitioner's involvement in the day-to-day affairs and conduct of the company's business. The Annual Report showed the petitioner did not attend any Board Meetings or the Annual General Meeting, indicating non-involvement. The High Court, following Supreme Court precedents, held that the petitioner cannot be made vicariously liable as an Additional Independent Non-Executive Director without specific allegations of involvement. Continuing the criminal complaint against the petitioner would be an abuse of the process of law. Consequently, the High Court quashed the criminal complaint against the petitioner.

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