Non-executive, independent directors not liable for cheque dishonor without direct involvement under Sec 141 NI Act

Non-executive, independent directors not liable for cheque dishonor without direct involvement under Sec 141 NI Act

Supreme Court reiterated that non-executive and independent directors of a company cannot be vicariously held liable for the company and its liabilities under Negotiable Instruments Act, 1881 (NI Act) unless there is evidence of personal involvement of the director(s) in the payment of debt of a company. The ruling further elaborates that the intention of the law is to punishing directors of the company for cheque dishonor under Section 141 of the NI Act, must be supported with evidence that the director had knowledge of and was directly involved in the business affairs of the company.

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