SC held that non-executive directors cannot be held vicariously ...

Non-Executive Directors Need Clear Proof of Direct Involvement for Criminal Liability Under NI Act Sections 138-141

March 6, 2025

Case Laws Indian Laws SC

SC held that non-executive directors cannot be held vicariously liable under Sections 138 and 141 of NI Act for dishonored cheques without specific evidence of their direct involvement in company operations. The Court emphasized that mere directorship does not create automatic liability - there must be clear proof of active participation in day-to-day business affairs and financial decisions at the relevant time. Finding no material evidence linking the appellant non-executive directors to the disputed cheque transactions or company's financial management, and noting their role was limited to governance oversight, the Court quashed the criminal proceedings against them. The appeal was allowed, reinforcing the principle that Section 141 liability requires demonstrated active involvement in company operations.

View Source

← Previous Next →

SC held that non-executive directors cannot be held vicariously ...

Non-Executive Directors Need Clear Proof of Direct Involvement for Criminal Liability Under NI Act Sections 138-141

March 6, 2025

Case Laws Indian Laws SC

You may also like:

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...

Non-executive director's vicarious liability in a company u/s 138 of the Negotiable Instruments Act examined. For making a non-executive director liable, there must be...

Dishonour of Cheque - existence of legally enforceable debt or liability - vicarious liability of nominee and non-executive directors - The contention does not cut much...

HC affirmed vicarious liability of company directors under Sections 138/141 of NI Act in cheque dishonor case. Directors challenged summoning orders claiming...

Dishonour of Cheque - vicarious liability of Director of the Company - The petitioner, a former non-executive additional director of the accused company, contended that...

HC ruled in favor of company directors, quashing criminal proceedings under NI Act for dishonored cheques. Court determined petitioners successfully demonstrated they...

An executive director, being a member of the board and responsible for overall management, cannot evade liability merely by claiming lack of involvement in day-to-day...

Non-executive director's vicarious liability u/s 138 of the Negotiable Instruments Act for dishonor of cheques issued by the company examined. Specific averments and...

Vicarious liability of Additional Director - Non-executive Independent Directors or not - Officer in default - non repayment of deposits by the Company to the depositors...

Dishonour of Cheque - Liability of a Director - principles of vicarious liability - petitioner had already resigned on 15.03.2014 as Director of the Company and was...

Dishonour of Cheque - Vicarious liability - petitioner is an Independent Non-Executive Director - - the petitioner was appointed as Additional Director and resigned as...

SC held that a non-executive director cannot be held vicariously liable under Section 141 of NI Act for dishonored cheques where he had resigned prior to the offense and...

Dishonour of Cheque - vicarious liability of the non-executive director - This Court is convinced that the complaint does not satisfy the requirements u/s.141 of the...

Dishonor of Cheque - vicarious liability - rebuttal of presumption - non-Executive Independent Directors - What the High Court overlooked was, the contention of these...

Dishonor of Cheque - insufficiency of funds - vicarious liability - petitioners are Non-executive Independent Directors of the Company - The phrase "non-executive...

Quick Updates: