Orissa High Court Clarifies Director’s Liability In Cheque Bounce Cases Of Insolvent Companies

The Orissa High Court held that directors of insolvent companies cannot be held personally liable for cheque dishonour under Section 138 of the Negotiable Instruments Act unless they controlled the company at the time. Mere designation as director is insufficient for vicarious liability. The ruling protects individuals from wrongful prosecution in insolvency while maintaining deterrence, balancing corporate accountability and fairness.