Vicarious liability of independent directors under cheque dishonour law requires specific allegations of responsibility in company business.

Independent non-executive directors cannot be made vicariously liable under Section 141 of the Negotiable Instruments Act on the basis of a bare, general assertion that they led the company's affairs; the complaint must contain specific material showing that they were in charge of and responsible for the conduct of business at the relevant time. Where documentary material shows that the accused were independent non-executive directors and the complaint alleges no overt act or active role in the cheque transaction, prosecution under Section 138 read with Section 141 is not justified and the proceedings are liable to be quashed.

---

---

Issues: Whether independent non-executive directors, against whom the complaint contained only general assertions and no specific overt act, could be prosecuted for an offence under Section 138 read with Section 141 of the Negotiable Instruments Act and whether the proceedings were liable to be quashed.

Analysis: The complaint alleged dishonour of a cheque issued by the company and contained a general statement that all accused were responsible for the day-to-day affairs of the company. The applicants produced material showing that they were independent non-executive directors. The legal framework under Section 149(12) of the Companies Act recognises that an independent director or a non-executive director, not being a promoter or key managerial person, is liable only for acts of omission or commission occurring with knowledge, attributable through board processes, or where there was consent, connivance, or lack of due diligence. The governing principle under Section 141 of the Negotiable Instruments Act is that vicarious criminal liability attaches only to persons who were in charge of and responsible for the conduct of the company's business at the relevant time. In the absence of specific allegations showing active responsibility in the transaction, and in view of the documentary material indicating the applicants' status as independent non-executive directors, the complaint did not justify their prosecution.

Conclusion: The applicants could not be prosecuted under Section 138 read with Section 141 of the Negotiable Instruments Act, and the criminal proceedings against them were liable to be quashed.

Ratio Decidendi: Vicarious liability under Section 141 of the Negotiable Instruments Act cannot be fastened on an independent non-executive director unless the complaint contains specific material showing that the director was in charge of and responsible for the conduct of the company's business at the time of the offence.

---