Del HC | No vicarious liability on ‘Non-Executive Nominee Director’ for dishonour of cheque unless he is shown to be at company’s helm of affairs

Delhi High Court: The Bench of R.K. Gauba, J. interfered with the impugned order passed by Metropolitan Magistrate and quashed the summon issued against petitioner.

Petitioner was a Non-Executive Nominee Director of Vasan Health Care (P) Ltd. A complaint was filed against certain persons including petitioner under Section 138 of the Negotiable Instruments Act, 1881 for dishonour of cheque which was issued on the account of Vasan Health Care. In regard to the same, summoning orders were issued against the petitioner.

Sushil Bajaj and Shalin Arthwan, Advocates for the petitioner contended that proceedings against him were an abuse of the process of law as his position in the company was only that of aNon-Executive Nominee Director and he had no role to play in day-to-day affairs of the company.

The High Court served notice of the petition on the respondent but they did not file any reply and nor did they appear before the Court. As such, the Court accepted as indisputable the documents filed by the petitioner confirming his position in the company as claimed by him. Relying on Pooja Ravinder Devidasini v. State of Maharashtra, (2014) 16 SCC 1, the Court held that since at the relevant time, the petitioner could not be said to be at helm of the affairs of the company, therefore no vicarious liability could be fastened on him. As such, the summoning order issued against the petitioner was quashed. [Bhardwaj Thirvenkata Venkatavaraghavan v. PVR Ltd., 2019 SCC OnLine Del 6774, dated 29-01-2019]

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