The Delhi High Court passed a judgment on 7^th January 2020, through a Bench presided by Justice Ms. Anu Malhotra  in the case of  Har Sarup Bhasin Vs. M/S Origo Commodities India Pvt. Ltd. an Independent Director or a Key Managerial person cannot be made party under section 138 of the Negotiable Instrument Act in absence of any specific role attributed to them.

In the present case, a complaint was filed by the Respondent under section 138 of the Negotiable Instrument Act against the M/s Dinesh Oil Limited and all of its directors in response to the dishonour of the cheque which was caused due to insufficiency of funds. The petitioner is one of the accused who is an Independent director of the company .The complainant/Respondent  raised the contention that the petitioner is involved in day-to-day activities of the company and is not an Independent director or Key Managerial personnel. The petitioner counter argued this contention of the Respondent by stating that he is an Independent Director of the company and he has neither signed nor did he have the knowledge about the issuance of the cheque. The petitioner also stated that the respondent has not made any specific allegations against him to show as to how the petitioner had knowledge or was involved in the transaction alleged in the complaint and that the mere statement that the petitioner is a Director, cannot make him liable.

The Delhi High Court, after analysing all the case laws that were submitted to them by both the counsels and all the facts and circumstances of the present case, stated that, “…the petitioner being an Independent and a Non-Executive Director, in the absence of any specific role attributed against the him for his active participation in the day to day affairs of the company and of taking all decisions of the company, where the petitioner was not a signatory to the cheques in question, vicarious liability cannot be fastened on the petitioner.” Therefore, the summons order that was passed against the petitioner was quashed.

Link for the Image: http://bankersdaily.in/wp-content/uploads/2017/05/cheque_payment.jpg

Link to the Judgment: Har Sarup Bhasin v. Origo Commodities