SC Clarifies Distinction Between Director "In Charge" & Director "Responsible to Co." u/s 141 NI Act
- Case Name: Hitesh Verma V M/s Health Care at home India Pvt. Ltd.
- Judge(s): Justices Abhay S. Oka and Ujjal Bhuyan
The Supreme Court recently clarified the distinction between two key terms under Section 141 of the Negotiable Instruments Act, 1881. It ruled that for a director to be vicariously liable for offences under Section 138 (dishonor of cheques), two conditions must be proven:
Director in charge of the company: The director must have actual involvement in the company’s operations or management, not just a title.
Director responsible to the company: The director must have specific legal or operational responsibility for overseeing the company’s financial matters, indicating direct accountability.
Both conditions must be satisfied for prosecution under Section 141.
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