Director liability under SEBI law requires specific averments of control, responsibility, or consent before criminal proceedings can continue.

Liability of a company director under section 27 of the SEBI Act requires specific averments showing that the person was in charge of and responsible for the conduct of the company's business at the relevant time, or that the offence occurred with consent, connivance, or neglect. Mere designation as a director is not enough to attract vicarious criminal liability. Where the complaint contains no substantive link between the director and the alleged price manipulation, and the record shows that others handled day-to-day affairs, a summoning order cannot be sustained.

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Issues: Whether a director of a company can be proceeded against under section 27 of the Securities and Exchange Board of India Act, 1992 in the absence of specific averments showing that he was in charge of and responsible for the conduct of the company's business.

Analysis: Liability under section 27 of the Securities and Exchange Board of India Act, 1992 is not attracted merely because a person holds the designation of director. Vicarious criminal liability arises only where the complaint contains specific material showing that the person was in charge of, and responsible for, the conduct of the business at the relevant time, or that the offence was committed with his consent, connivance, or neglect. The complaint here contained no substantive averment linking the respondent to the alleged price manipulation, and the record instead indicated that other persons were handling the day-to-day affairs of the company. Mere nomenclature as a director was insufficient to sustain the summoning order.

Conclusion: The summoning order against the respondent could not be sustained and the challenge to its setting aside failed.

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