Delhi High Court held that Non-Executive Directors of Company Not Liable without Specific Allegations - Synopsis
Parul Madaan 16 Mar 2020

In the case Sunita Patla & Ors V. M/s Kit Marketing Ltd, the Delhi High Court held that a company's Independent Non-Executive Directors are not liable for criminal proceedings under Section 138 of Negotiable Instruments Act, 1881 for dishonor of cheque. The court held that the cheques submitted by the Company where the Non-Executive Directors never participate in the company's day-to-day affairs. The titled directors have been said not to get involved in the management aspects of the company. The court held that “A perusal of the complaint filed under Section 138 read with Sections 141/142 of NI Act filed by the complainant shows that except for the general allegation stating that the petitioners were responsible for control and management and day to day affairs of the accused company, no specific role has been attributed to the petitioners. To fasten the criminal liability under The Negotiable Instruments Act, 1881, the above generalized averment without any specific details as to how and in what manner, the petitioners were responsible for the control and management of affairs of the company is not enough. The court claimed that there would be fair grounds for initiating the criminal proceedings against the Director under Section 138 of Negotiable Instrumental Act. The court thus quashed the petition under Section 482 of the Code of Criminal Procedure on the grounds of bringing some unimpeachable evidence to the record. 

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