In Brief
Shrigopal Taparia, an independent non-executive director of a company, was prosecuted for dishonour of cheques issued by the company under Section 138 read with Section 141 of the Negotiable Instruments Act. The High Court had upheld the prosecution, holding that the director's role was a matter for trial. The Supreme Court allowed the appeal and quashed the criminal proceedings, holding that mere designation as director does not establish vicarious liability. Liability requires specific allegations proving active involvement in the company's financial affairs. Since Taparia was a non-executive director who neither signed nor authorised the cheques and had resigned before the alleged offence, he could not be held liable absent clear averments of responsibility.
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