Vicarious liability for cheque dishonour requires specific pleadings against non-executive and independent directors.

Vicarious liability for cheque dishonour cannot be imposed on non-executive or independent directors merely because they hold the office of director. Criminal process under Section 138 read with Section 141 of the Negotiable Instruments Act requires specific averments showing how and in what manner the accused was in charge of and responsible for the company's business at the relevant time; bald or general allegations are insufficient, especially where the record shows the directors were neither managing directors nor cheque signatories. Section 149(12) of the Companies Act, 2013 similarly limits liability of independent and non-executive directors unless the act or omission occurred with knowledge, consent, connivance, or lack of diligence. On the pleaded material, the summoning order could not be sustained.

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Issues: Whether the summoning order under Section 138 of the Negotiable Instruments Act, 1881 could be sustained against non-executive independent directors in the absence of specific averments showing that they were in charge of and responsible for the conduct of the company's business.

Analysis: Vicarious liability under Section 141 of the Negotiable Instruments Act, 1881 is not attracted merely because a person holds the designation of director. Criminal process against a director requires clear and specific pleadings showing how and in what manner the director was in charge of and responsible for the conduct of the business of the company at the relevant time. General or bald allegations are insufficient, particularly where the accused are non-executive or independent directors and the record shows that they were neither managing directors nor signatories to the cheques. Section 149(12) of the Companies Act, 2013 also reflects that an independent director or a non-executive director is not liable except in relation to acts or omissions occurring with knowledge, consent, connivance, or lack of diligence. The material placed on record showed only general assertions of responsibility, without the necessary factual particulars.

Conclusion: The summoning order could not be sustained against the petitioners and was liable to be quashed.

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