Specific averments of direct involvement are mandatory to fasten vicarious liability on Independent Directors under the NI Act.

The petitioner was appointed as an Additional Director of M/S Piyush Colonisers Limited on 19.02.2015, with his designation changing to Independent Director (Non-Executive) on 30.09.2015

The company entered into lease agreements in 2016 and 2017, issuing several cheques for rent which were subsequently dishonoured upon presentation

The respondents filed complaints under Section 138 read with Section 141 of the Negotiable Instruments (NI) Act, 1881

The Magistrate’s Court at Rohini, Delhi, issued summoning orders on 22.05.2017 and 01.07.2017

The petitioner approached the High Court seeking to quash these orders, contending that as an Independent Director, he was not involved in the day-to-day affairs of the company and was not a signatory to the cheques

Whether an Independent Director, who is not a signatory to the cheques and not involved in the day-to-day management of a company, can be held vicariously liable under Section 141 of the NI Act for the dishonour of cheques issued by the company

Section 141 of the Negotiable Instruments Act, 1881, which stipulates that vicarious liability for an offence by a company extends only to persons who, at the time of the offence, were in charge of and responsible for the conduct of the business of the company

Supreme Court’s decision in K.S. Mehta v. Morgan Securities and Credits Pvt. Ltd., which held that non-executive and independent directors cannot be held liable unless specific allegations demonstrate direct involvement in the company's affairs

National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, stating that a complaint must spell out the specific role of a director rather than making "bald cursory statements"

Pooja Ravinder Devidasani v. State of Maharashtra, which clarified that mere directorship does not create automatic liability

The court examined the specific averments in the complaints and found they consisted of "general and vague assertions" that the petitioner was "personally responsible for the day-to-day management"

the court noted that Form DIR-12 established the petitioner was a non-executive Independent Director at the relevant time

It was also an admitted position that the petitioner was not a signatory to the dishonoured cheques

the court reasoned that under Section 141, criminal liability cannot be fastened on all directors; it requires a specific nexus between the director’s role and the financial transaction in question

Since the complaints failed to provide specific allegations establishing the petitioner's direct involvement in the company's daily operations or financial decision-making, the court concluded that the foundational requirements for vicarious liability were not satisfied

the High Court set aside the summoning orders dated 22.05.2017 and 01.07.2017 qua the petitioner and quashed all emanating criminal proceedings

The petitions were disposed of in favor of the petitioner