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2024 (3) TMI 906 - HC - Indian LawsDishonour of Cheque - vicarious liability of directors - sufficient averments to issue process against the directors, including the Petitioners or not - HELD THAT:- The liability under Section 141 of the Act, 1881 for commission of the offence punishable under Section 138 of the Act, is in the nature of a vicarious liability. It is trite that vicarious liability for an offence is required to be strictly construed. From the text of Section 141 of the Act, it becomes evident that the liability is incurred not on account of the position a person holds, but by reason of the role such person plays in the management of the affairs of the company. Liability does not depend upon the designation or status of the person sought to be roped in. Conversely, it could be shown that though a person does not hold a particular designation, yet he was in-charge of and responsible to the affairs of the company, and, therefore, liable to be prosecuted by invoking the constructive criminality under Section 141 of the Act. In the case of POOJA RAVINDER DEVIDASANI VERSUS STATE OF MAHARASHTRA & ANOTHER [2014 (12) TMI 1070 - SUPREME COURT], the Supreme Court enunciated that the law laid down by the Supreme Court is that for making a director of a company liable for the offence committed by the company under Section 141 of the Act, there must be specific averments against the director showing as to how and in what manner, such director was responsible for the conduct of the business of the company. The facts in the case of SUNITA PALITA & OTHERS VERSUS M/S PANCHAMI STONE QUARRY [2022 (8) TMI 55 - SUPREME COURT], appear to be on all four with the case at hand, as the Appellants therein were also shown to be independent and non-executive directors of the company. Non-executive directors are not involved in the day to day affairs of the company or in running of its business. The endeavour of Mr. Kumar to bank upon the information disclosed in the annual statement of account does not advance the cause of the Respondent No. 1 – complainant. The very fact that the Petitioners were made members of the audit and corporate social responsibility committee appears to be in consonance with the role of the Petitioners as independent non-executive directors of Isinox Ltd. The complaints singularly lack any averment that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, the Petitioners. In the absence of such averments, the prosecution of the Petitioners by invoking the provisions contained in Section 141(2) of the Act also, would be legally impermissible. The conspectus of aforesaid discussion is that the prosecution of the Petitioners who are the independent non-executive directors of Isinox Ltd. for an offence punishable under Section 138 read with Section 141 of the Act, 1881 would amount to abuse of the process of the court and wholly unjustifiable - Petition allowed.
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