#Section 141 NI Act

The Punjab & Haryana High Court ruled that directors cannot be held vicariously liable under Section 141 of the NI Act unless the complaint specifically alleges their active involvement in the company’s affairs at the time of cheque issuance. This judgment reinforces the need for precise averments to sustain prosecution against directors in cheque dishonour cases.

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.

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.

Delhi High Court holds that invoking vicarious liability under Section 141 NI Act requires specific averments of control and responsibility, not mere involvement in daily operations.

Patna High Court holds that a sole proprietor of a proprietary firm can be prosecuted under Section 138 NI Act without naming the firm, clarifying misapplication of Section 141.