In Brief
Two non-executive directors of a company were prosecuted for criminal offence under the Negotiable Instruments Act for dishonored cheques issued by the company in relation to an inter-corporate deposit transaction. The directors neither attended the board meeting approving the transaction nor signed the cheques. The Supreme Court held that non-executive directors cannot be held vicariously liable for the company's offence under Section 141 of the Act unless the complaint contains specific, unambiguous averments demonstrating they were in charge of and responsible for the conduct of the company's business at the time of the offence. Mere directorship or board attendance is insufficient. The Court set aside the High Court's order and quashed the criminal proceedings against both directors.
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