A mere designation as a director does not conclusively establish liability under section 138 read with section 141 of the Negotiable Instruments Act, 1881 (NI Act) – Kamalkishor Shrigopal Taparia Vs. India Ener-Gen Pvt. Ltd. and Anr. – Supreme Court
The Hon’ble Supreme Court held that:
(i) A mere designation as a director does not conclusively establish liability under section 138 read with section 141 of the Negotiable Instruments Act, 1881 (NI Act). Liability is contingent upon specific allegations demonstrating the director’s active involvement in the company’s affairs at the relevant time.
(ii) Mere directorship does not create automatic liability under the Act.
(iii) Non-executive directors cannot be held liable under section 138 NI Act unless specific evidence proves their active involvement.