Sec 148 NI Act | Joint Liability To Pay a Debt Is Not Sufficient To Make a Person Vicariously Liable: Delhi HC

07 May 2024 8:19 AM

By: Admin

D.D-8^th August, 2022

High Court held in recent case that A common obligation to pay a debt will not be enough to subject a person to vicariously liability under Section 148 N.I. Act. Without specific charges in the complaint that show the role of the accused, the Justice Asha Menon bench ruled that "the persons identified cannot be summoned in a case under Section 138 read with 141 N.I Act."

In this matter, Pantel Technologies Pvt. Limited and its directors, the petitioners Javahar Lal and Vivek Prakash, were the targets of complaints made by the respondents under Sections 138 and 141 of the N.I. Act. After reviewing the evidence on file, the learned Trial Court took the case under consideration and issued summonses. The petitions have been submitted to have the proceedings before the learned MM involving the petitioner, who is listed as accused No. 2 in the accusations, dismissed.

High Court reaffirmed that it is required to clearly allege in a complaint under Section 141 that the accused was in charge of and accountable for the operation of the business at the time the offence was committed.

The High Court stated that careful adherence to legislative criteria was required since Section 141 of the N.I. Act produces a legal fiction that creates vicarious liability. A person will not be held vicariously accountable under Section 148 N.I. Act just because they share responsibility for paying a debt.

The court's ruling noted that even if all of the complaints' allegations were true, the records attached to them "ex facie establish that the petitioner, despite being a director of the accused company, was not in charge of or accountable for the management of its operations." As a result, Section 141 N.I. Act lacks a necessary component upon which vicarious liability could be imposed on the petitioner.

Javahar Lal

Ovt India Pvt. Limited & Anr.