Supreme Court: Director Not Responsible For Day-To-Day Affairs Of Company Cannot Be Held Liable For Cheque Dishonour | NI Act

The Supreme Court in the case Susela Padmavathy Amma vs. M/S. Bharti Airtel Limited observed that the Director of the company not responsible for its day-to-day affairs cannot be held liable for dishonor of cheque under the Negotiable Instruments Act, 1882.

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The bench comprising of Justice B.R. Gavai and Justice Sandeep Mehta in the case observed that making the director of the company to be liable for the offences 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 the Director was responsible for the conduct of the business of the Company.

The court in the case reserved the order of High Court which had refused to quash the pending proceedings under Section 138 N.I. Act against the accused or director of the company.

The Judgment authored by Justice B.R. Gavai stated that it could be seen that this Court had held that simply because a person is a director of the company, it does not necessarily mean that he fulfils the twin requirement as stated under Section 34(1) of the said Act so as to make him liable. Further, the court