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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the summoning order in a complaint under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 could be sustained against a director who claimed to be an independent non-executive director and to have no role in the day-to-day affairs, financial decisions, or issuance of the cheques, in the absence of specific averments showing how he was in charge of and responsible for the conduct of the company's business.
Analysis: Section 141 creates vicarious criminal liability and therefore requires strict pleading of the role played by the person sought to be prosecuted. Mere designation as a director is not sufficient. The complaint must contain clear and unambiguous averments showing how and in what manner the director was in charge of and responsible for the conduct of the company's business at the relevant time. The principle is different for a managing director or a signatory to the cheque, but for a non-executive or independent director, liability cannot be presumed from office alone. On the facts, the petitioner was not a signatory to the dishonoured cheques, was not shown to have been involved in financial decision-making, and the complaints did not contain specific allegations connecting him with the issuance or dishonour of the cheques.
Conclusion: The petitioner could not be fastened with vicarious liability under Section 141 of the Negotiable Instruments Act, 1881, and the summoning orders were unsustainable against him.
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