{"id":375445,"date":"2026-02-11T15:30:48","date_gmt":"2026-02-11T10:00:48","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=375445"},"modified":"2026-02-11T15:42:45","modified_gmt":"2026-02-11T10:12:45","slug":"del-hc-non-executive-director-liability-section-141-ni-act","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2026\/02\/11\/del-hc-non-executive-director-liability-section-141-ni-act\/","title":{"rendered":"Whether a Non-Executive Director can be held vicariously liable under Section 141 NI Act? Delhi HC answers"},"content":{"rendered":"
\n

Disclaimer: This has been reported after the availability of the order of the Court and not on media reports so as to give an accurate report to our readers.<\/p>\n

Delhi High Court:<\/span> In a petition was filed under Section 482<\/a> CrPC<\/a> seeking quashing of criminal complaint under Sections 138<\/a> and 141<\/a> of the Negotiable Instruments Act, 1881<\/a> (NI Act), and the Summoning Order dated 04-10-2018 whereby the petitioner was summoned as Director of the accused company, a Single-Juge Bench of Neena Bansal Krishna,* J.<\/span>, set aside the summoning order against the petitioner and held that mere designation as Non-Executive Director without specific averments cannot attract vicarious liability under Section 141<\/a> NI Act<\/a>.<\/p>\n

In the instant matter, the respondent (complainant company), sanctioned a loan of Rs. 35,00,00,000\/- to the accused company vide Sanction Letter dated 23-03-2016. The loan was repayable in 24 months with quarterly interest payments. It was alleged in the complaint that Accused 2 and 3 were Directors and Accused 4 and 5 were authorised signatories.<\/p>\n

The accused company executed a Facility Agreement dated 23-03-2016 and other documents. Towards repayment of principal and interest, three cheques were issued. These cheques were signed by the authorised signatories of the company and were allegedly issued “with the consent connivance and knowledge of the other Accused persons.” Upon presentation, all cheques were dishonoured on account of “Account Closed.”<\/p>\n

A legal notice dated 09-08-2018 demanding Rs. 36,27,50,000\/- was issued and served. No payment was made, leading to the filing of the complaint under Section 138<\/a> NI Act<\/a>. The petitioner, arrayed as Accused 3, was summoned as a Director. She contended that she was a Non-Executive Director and had no role in day-to-day affairs of the company.<\/p>\n

The core issue before the Court was whether a Non-Executive Director, against whom only general averments were made, could be fastened with vicarious liability under Section 141<\/a> of the NI Act<\/a>.<\/p>\n

The Court stated that Section 141<\/a> NI Act<\/a> is a penal provision which creates vicarious liability where the offence is committed by a company and must be strictly construed. The Court relied on S.M.S. Pharmaceuticals Ltd.<\/span> v. Neeta Bhalla<\/span>, (2005) 8 SCC 89<\/a>, where the Supreme Court held that “mere designation as a Director is not sufficient; specific role and responsibility must be established in the Complaint”<\/span> and N.K. Wahi<\/span> v. Shekhar Singh<\/span>, (2007) 9 SCC 481<\/a>, where it was observed that “there must be a specific allegation in the Complaint as to the part played by the alleged Directors in the transaction.”<\/span><\/p>\n

Further, with respect to Non-Executive Directors, the Court relied upon Pooja Ravinder Devidasani<\/span> v. State of Maharashtra<\/span>, (2014) 16 SCC 1<\/a>, where it was held that “to attract liability under section 141<\/a> of the NI Act<\/a>, the accused must have been actively in-charge of the company’s business at the relevant time. Mere directorship does not create automatic liability under the Act. The law has consistently held that only those who are responsible for the day-to-day conduct of business can be held accountable.”<\/span><\/p>\n

The Court examined the complaint and found that no specific role was attributed to the petitioner beyond general statements that the petitioner looked after day-to-day affairs, the cheques were signed by authorised signatories, not by the petitioner and the complaint did not disclose any act, communication, or document linking her to operational management. The Court noted that “mere bald assertion that the Petitioners were responsible for day to day affairs, is not enough to attract provisions of N.I. Act unless it is explained as to how and in what manner Petitioners are in charge of and responsible for conduct of the business of the Company.”<\/span><\/p>\n

The Court further noted that the DIR-12 form reflected that the petitioner was categorised as a “Non-Executive Director.” The Court held that Non-Executive Directors, including Independent Directors, are typically not involved in the day-to-day operations of the Company, which further limits the scope of their potential liability.<\/p>\n

The Court further held that in view of Section 149(12)<\/a> of the Companies Act, 2013<\/a>, liability of Non-Executive Directors arises only where acts are attributable to them through knowledge, consent, connivance, or lack of due diligence and in the present case no such material existed in the complaint.<\/p>\n

The Court held that the complaint failed to disclose specific averments demonstrating that the petitioner was in charge of and responsible for the conduct of business at the time of commission of offence. The petitioner, being a Non-Executive Director with no specific role attributed, could not be held vicariously liable under Section 141<\/a> NI Act<\/a>.<\/p>\n

The Court allowed the petition and set aside the Summoning Order dated 04-10-2018 qua the petitioner.<\/p>\n

[Praveen Singh v. Religare Finvest (P) Ltd., 2025 SCC OnLine Del 10832<\/a>, Decided on 21-11-2025<\/span>]<\/p>\n

*Judgment by Justice Neena Bansal Krishna<\/span><\/strong><\/p>\n\n

Advocates who appeared in this case:<\/p>\n

Mr. Akshay Bhandari, Mr. Anmol Sachdeva, Mr. Kushal Kumar and Ms. Megha Saroa, Counsel for the Petitioner<\/p>\n

Mr. Sanjeev Kumar Sharma, Ms. Sanya Sud and Mr. Raahul Sharma, Counsel for the Respondent 1<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

“Mere bald cursory statement in a Complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the Company without anything more as to the role of the Director, is not sufficient.”<\/p>\n","protected":false},"author":67514,"featured_media":375454,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,10],"tags":[2543,98649,2862,69162,98648,98650,23584,36936,20481],"class_list":["post-375445","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-highcourts","tag-Delhi_High_Court","tag-director-liability-in-ni-cases","tag-dishonour_of_cheque","tag-justice-neena-bansal-krishna","tag-non-executive-director","tag-non-executive-director-liability","tag-section-138-ni-act","tag-section-141-ni-act","tag-vicarious-liability"],"yoast_head":"\nDel HC on Non-Executive Director Liability under Section 141 NI Act | SCC Times<\/title>\n<meta name=\"description\" content=\"Delhi High Court held that mere designation without specific averments against Non-Executive Director cannot attract vicarious liability under Section 141 NI Act.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.scconline.com\/blog\/post\/2026\/02\/11\/del-hc-non-executive-director-liability-section-141-ni-act\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Whether a Non-Executive Director can be held vicariously liable under Section 141 NI Act? 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Court’s interpretation in light of S. 141 NI Act","author":"Bhumika Indulia","date":"November 12, 2020","format":false,"excerpt":"Madras High Court:\u00a0G.K. Ilathiraiyan, J., while addressing the instant matter, observed that, a person who is inducted as the Non-Executive Director of an accused company and not responsible for the day-to-day affairs of the company, he\/she cannot be vicariously liable for the offence committed by the company. 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Maheshwari has\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/Supreme-Court-1.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/Supreme-Court-1.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/Supreme-Court-1.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/Supreme-Court-1.png?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/Supreme-Court-1.png?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":266662,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/05\/10\/when-no-offence-is-attributable-to-company-it-is-not-possible-to-attach-liability-on-managing-director-section-138-ni-act-dishonour-of-cheque-liability\/","url_meta":{"origin":375445,"position":2},"title":"When no offence is attributable to Company, it is not possible to attach liability on Managing Director by deeming provisions of S. 141 of the NI Act: Del HC","author":"Bhumika Indulia","date":"May 10, 2022","format":false,"excerpt":"Delhi High Court: Asha Menon, J., held that if no offence is attributed to the company, its Directors and other persons responsible for the conduct of its business cannot be saddled with any liability. The petitioner had filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 against\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":255760,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/10\/18\/explained-section-138-read-with-section-141-of-the-ni-act-vicarious-liability-of-directors-of-a-company-for-dishonour-of-cheques\/","url_meta":{"origin":375445,"position":3},"title":"Explained| Sections 138 and 141 of NI Act: Vicarious liability of directors of a company for dishonour of cheques","author":"Prachi Bhardwaj","date":"October 18, 2021","format":false,"excerpt":"Supreme Court: Explaining the law relating to vicarious liability of the Directors of a company under Sections 138 and 141 of the Negotiable Instruments Act, 1881, the bench of Ajay Rastogi* and Abhay S. Oka, JJ has held that if, at the time the offence was committed, the person accused\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/07\/MicrosoftTeams-image-7-1.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/07\/MicrosoftTeams-image-7-1.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/07\/MicrosoftTeams-image-7-1.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/07\/MicrosoftTeams-image-7-1.png?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/07\/MicrosoftTeams-image-7-1.png?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":231311,"url":"https:\/\/www.scconline.com\/blog\/post\/2020\/06\/24\/dishonour-of-cheque-mp-hc-director-managing-director-joint-director-other-officers-and-employees-of-a-company-can-not-be-prosecuted-under-s-138-of-ni-act-unless-the-company-is-impleaded-as-an-acc\/","url_meta":{"origin":375445,"position":4},"title":"[Dishonour of Cheque] MP HC | Director\/MD\/JD\/other officers and employees of a company can not be prosecuted under S. 138 of NI Act unless the company is impleaded as an accused","author":"Bhumika Indulia","date":"June 24, 2020","format":false,"excerpt":"Madhya Pradesh High Court:\u00a0Rajendra Kumar Srivastava, J., while addressing a matter with regard to dishonour of cheque held that, Director\/Managing Director\/Joint Director\/other officers and employees of company can not be prosecuted under Section 138 of NI Act unless the company is impleaded as an accused Petitioner is aggrieved with the\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":182884,"url":"https:\/\/www.scconline.com\/blog\/post\/2018\/01\/20\/liability-s-141-negotiable-instruments-act-cannot-fastened-person-ground-director-defaulting-company\/","url_meta":{"origin":375445,"position":5},"title":"Liability under S. 141, Negotiable Instruments Act cannot be fastened to a person only on the ground that he was a director in defaulting company","author":"Saba","date":"January 20, 2018","format":false,"excerpt":"Delhi High Court: A Single Judge Bench comprising of Sanjeev Sachdeva, J, allowed a petition wherein the petitioner had challenged the order whereby he was summoned in a complaint filed under Section 138 of the NI Act. The petitioner had been a director of the accused company. The cheque in\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/375445","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/67514"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=375445"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/375445\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/375454"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=375445"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=375445"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=375445"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}