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IN THE HIGH COURT OF KARNATAKA AT DHARWAD BENCH
VENKATESH NAIK T.
Vinayak Yellojirao Kadolkar – Appellant
Versus
Shree Om Sai Enterpprises – Respondent
ORDER :
1. Heard Sri. Nitin R.Bolabandi, learned counsel for the petitioners and Sri. D.G.Bhat, learned counsel for respondent.
2. The petitioners have filed these petitions under Section 482 of the Code of Criminal Procedure, praying to quash the entire proceedings in C.C.No.632/2020 (arising out of P.C.No.355/2020) and C.C.No.633/2020 (arising out of P.C.No.354/2020), pending on the file of learned JMFC-VIII Court, Belagavi for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (hereinafter referred to as ‘N.I. Act’ for brevity).
3. For the sake of convenience, the parties are referred to as per their ranking before the Trial Court.
4. In both the petitions, petitioner No.1 is accused No.6 whereas, petitioner No.2 is accused No.7, who died on 02.01.2025. Hence, petitions against petitioner No.2/accused No.7, is abated.
5. The brief facts of the complainant’s case in C.C.No.632/2020 is as under; The complainant is a proprietorship concern dealing in industrial scraps and pig iron. Accused No.1 is a registered company (herein after referred to as “the company”) and accused Nos.2 to 7 are the Directors of the company. Accused Nos.2 to 7 are responsible to and
Directors of a company are vicariously liable under Section 138 of the Negotiable Instruments Act if they are responsible for the conduct of the company’s business, regardless of their claim of non-i....
Liability of directors under Section 138 of the Negotiable Instruments Act depends on their active role and responsibility for the company's business conduct, not merely their directorship.
Specific averments are necessary to establish the liability of a Director under Section 141 of the Negotiable Instruments Act; mere designation is insufficient.
A director cannot be held vicariously liable under the Negotiable Instruments Act without specific allegations demonstrating their active responsibility in the company's operations.
Directors cannot be held vicariously liable for a company's dishonoured cheque without specific allegations of their involvement in the company's operations, as required under Section 141 of the N.I.....
Specific averments regarding a director's role and responsibility are essential for vicarious liability under Section 141 of the N.I. Act; mere designation is insufficient.
A non-signatory director cannot be held liable under Section 138 of the Negotiable Instruments Act if not responsible for the company's conduct at the time of the offence.
The main legal point established in the judgment is the requirement for specific averments in the complaint to establish vicarious liability and the need for such liability to be pleaded and proved, ....
A Director who resigns before the issuance of cheques cannot be held liable under Section 141 of the Negotiable Instruments Act, requiring necessary averments in complaints for vicarious liability.
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