Directors & Other Persons Responsible For Conduct Of Business Can’t Be Held Liable If No Offence Is Attributed To Company: Delhi High Court

[09 May 2022] The Delhi High Court has observed that if no offence is attributed to the company, it is but the natural corollary, that its Directors and other persons responsible for the conduct of its business cannot be saddled with any liability. Observing that the Company being arrayed as the accused must be found to have committed an offence, Justice Asha Menon added: “Thereafter, through the legal fiction created by Section 141 of the N.I. Act, the Directors and other persons responsible for the conduct of its business also become vicarious liable.” “Thus, it is the Company upon which the primary liability rests and a person who is sought to be made vicariously liable for an offence of which the principal accused is a company, would need to have a role to play in relation to the incriminating act. Section 141 of the N.I. Act operates only when the offence under Section 138 of the N.I. Act is committed by a company.” The Court dismissed a petition filed by the complainant for setting aside the orders dated 28th August, 2015 and 23rd October, 2017, passed by the Trial Court and the Appellate Court respectively, dismissing his complaint case.