Non-Executive & Independent Directors Not Liable in Company’s NI Act Cases: Supreme Court

The Supreme Court on Tuesday quashed criminal proceedings against two Non-Executive Directors of Blue Coast Hotels & Resorts Ltd., reaffirming that Non-Executive and Independent Directors cannot be held vicariously liable for the dishonour of cheques issued by the company.

The court ruled that such Directors cannot be held liable unless specific allegations show their direct involvement in the matter. This judgement was made in the case KS Mehta v. Morgan Securities and Credits Pvt. Ltd. The decision clarifies that Non-Executive and Independent Directors cannot be automatically blamed for financial or legal actions taken by a company unless their direct role is demonstrated through proper evidence.