2013 (2) TMI 916 - HC - Indian Laws

Dismissal of Complaint Against Directors: Specific Allegations Needed for Vicarious Liability

The Court quashed the complaint against the Petitioners, emphasizing the necessity of specific allegations to establish vicarious liability of directors ... - Issues involved: The judgment involves the interpretation of vicarious liability of directors in a case related to dishonoured cheques under Section 138 of the Negotiable Instruments Act, 1881.Details of the Judgment:Issue 1: Vicarious Liability of DirectorsThe Petitioners sought quashing of the order summoning them in a complaint case regarding dishonoured cheques. The challenge raised was that the complaint did not specify how the Petitioner was responsible for the conduct of the business of the accused company. The Petitioner argued that mere directorship was insufficient to establish vicarious liability.Issue 2: Legal PrecedentsThe Petitioner relied on legal precedents such as National Small Industries Corporation Ltd. v. Harmeet Singh Paintal, Central Bank of India v. Asian Global Limited, and Anita Malhotra v. Apparel Export Promotion Council to support their argument that specific averments were necessary to establish vicarious liability of directors.Issue 3: Interpretation of ComplaintThe Complaint alleged that the accused directors were responsible for the day-to-day affairs of the company. The Court referred to the Supreme Court's analysis in various cases to emphasize the importance of clear and unambiguous averments in establishing vicarious liability.Conclusion:The Court quashed the complaint against the Petitioners, citing insufficient averments to establish vicarious liability as per the legal precedents discussed. The judgment highlighted the necessity of specific allegations to hold directors vicariously liable under Section 138 of the Negotiable Instruments Act, 1881.