New Delhi, April 9 -- The Supreme Court of India has held that a director's involvement in the company's daily functioning is not proved by signing a Board Resolution and it cannot justify prosecution under cheque dishonour provisions.

A bench comprising Justices Sanjay Karol and Augustine George Masih allowed an appeal filed by a company director and revoked criminal proceedings initiated against her under Section 138 of the Negotiable Instruments Act.

Director Liability Requires Active Role

The Court observed that for invoking liability under Section 141 of the Act, there must be specific allegations showing that the accused was in charge of and responsible for the conduct of the company's business at the relevant time.

Mere designa...