#criminal liability of directors

The Supreme Court ruled that directors cannot be prosecuted under Section 141 of the Negotiable Instruments Act merely for holding directorship unless there is specific evidence of their day-to-day involvement in the company’s affairs, particularly in issuing the dishonoured cheque. This judgment reinforces the need for precise averments in complaints to establish vicarious liability, protecting directors from frivolous prosecutions.

Bombay High Court holds that prosecution under Section 138 NI Act against partners requires clear allegation of involvement and privity of contract; mere designation insufficient.