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KEY TAKEAWAYS

  • Chairman, Directors can't be held vicariously liable for criminal acts of a company without stating specific individual roles.
  • The Court held that the Magistrate has to record the role played by directors in their respective capacities which is sine qua non for initiating criminal proceedings against them.

CASE BACKGROUND

  • A complaint was filed by a man who alleged that the accused conspired to lay the pipeline under the schedule properties of the complainant without their lawful authority and right.
  • In addition, they also demolished the compound wall and cut down the trees along the properties they aimed to occupy. Accused in the present case was a company and its top officers- Director, Chairman, Deputy General Manager, Site Supervisor, etc.
  • The victim had prayed to the trial court to issue a process against the accused. The court did so on the basis of the various charges under the IPC.
  • Sessions court set aside this order and the same was held by the High Court. The dissatisfied complainant then approached the Supreme Court.

COURT’S OBSERVATION

  • The Court noted that a prima facie case has to be made out against the accused persons who are managing directors and the company secretary and directors of the company only after the magistrate has recorded his satisfaction.
  • There are no specific allegations or averments made against the accused regarding their role in the company or in their capacity as the Chairman, Managing Director, etc.
  • Even if they are the Chairman, the Managing Director, the Deputy General Manager, they cannot be accused of any wrongdoings without any specific role played by them in their capacity.
  • Concluding with the above observations, the Court upheld the decision of the High Court and dismissed the appeal.

Hope you enjoyed reading this. Here are a few questions for you-

  • Can Chairman, Directors be held liable for any criminal acts committed by the company without clearly stating their individual role in those acts?
  • What do you understand by the term Prima facie?
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