Vicarious liability of special directors under cheque dishonour law requires proof of business control or specific consent, connivance, or neglect.

Vicarious criminal liability under Section 141 of the Negotiable Instruments Act can be imposed only where the complaint and material show that the person was in charge of and responsible for the company's business, or that the offence occurred with consent, connivance or neglect. A Special Director appointed under Section 16(4) of the Sick Industrial Companies (Special Provisions) Act, 1985 was held to fall outside the ordinary regime of company management, and mere status as a nominated or non-executive director was insufficient. As there was no cogent material showing day-to-day control or role in issuance or dishonour of the cheques, the proceedings against the applicant were quashed.

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Issues: Whether a Special Director appointed by the Board for Industrial and Financial Reconstruction can be fastened with vicarious liability for an offence under Section 138 read with Section 141 of the Negotiable Instruments Act.

Analysis: The appointment order showed that the applicant was inducted as a Special Director under Section 16(4) of the Sick Industrial Companies (Special Provisions) Act, 1985 and that the appointment was outside the ordinary regime applicable to company directors. The Court applied the settled principles governing Section 141 of the Negotiable Instruments Act, namely that criminal liability of persons other than the company arises only where the complaint and material disclose that such person was in charge of and responsible for the conduct of the business of the company, or that the offence was committed with consent, connivance or neglect. The Court relied on the distinction between executive control and mere association with the board, and held that non-executive or nominated directors are not automatically liable. On the record, there was no cogent material to show that the applicant had day-to-day control of the business or had played any role in the issuance or dishonour of the cheques.

Conclusion: No vicarious liability could be fastened on the applicant, and the criminal complaints were liable to be quashed so far as he was concerned.

Final Conclusion: The writ applications were allowed and the proceedings against the applicant, in his capacity as Special Director, were quashed.

Ratio Decidendi: Vicarious criminal liability under Section 141 of the Negotiable Instruments Act can be imposed only on persons who are shown to be in charge of and responsible for the conduct of the company's business, or whose consent, connivance or neglect is specifically disclosed; mere status as a special or non-executive director is insufficient.

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