#company prosecution

The Himachal Pradesh High Court has ruled that directors of a company can be held liable under Section 138 of the Negotiable Instruments Act even if the company itself is not formally impleaded, provided the complaint contains specific allegations of their active control over operations and the directors participate in proceedings without challenging the omission. This clarifies that procedural technicalities cannot shield culpable individuals when the factual basis for their liability is clearly pleaded and unchallenged.

The J&K High Court quashed a cheque bounce prosecution against a director, ruling that vicarious liability under Section 141 NI Act cannot attach unless the company is first impleaded as an accused. This reaffirms the mandatory procedural safeguard protecting directors from personal liability without company involvement.