Photo of Sukanya Singh

Associate in the Disputes Practice at the Noida office of Cyril Amarchand Mangaldas. Sukanya advises on environmental and socio-economic disputes, and has a focus on Supreme Court practice. She is dual qualified and also admitted to the New York Bar. She can be reached at sukanya.singh@cyrilshroff.com

Legal Regime of Negotiable Instruments

Introduction

Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”), ascribes criminal liability for dishonour of a cheque. The purpose of the provision has been held by the Hon’ble Supreme Court to be the promotion of efficacy of banking operations and to ensure credibility in transacting business through cheques.[i] Since a large number of such transactions and cheque payments are done by companies, the very same intent appears to be captured in Section 141 of the NI Act, which extends vicarious criminal liability on officers associated with the company or firm. The law on Section 141 of the NI Act has been clarified and elaborated upon from time to time. However, the broad principle guiding the extent of liability remains the involvement of the director concerned in the day-to-day business affairs of the company. This is, however, not a straight-jacket formula, and the nuances determining the extent of liability need to be examined closely.

Continue Reading Directors’ Vicarious Liability under Current Legal Regime of Negotiable Instruments Act: An Analysis of Evolving Judicial Precedents