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TOP OFFICERS AND EMPLOYEES CANNOT BE HELD VICARIOUSLY LIABLE FOR THE CRIMINAL ACTS OF THE COMPANY


CASE : Ravindranatha Bajpe v. Mangalore Special Economic Zone Ltd. & Ors


LEGAL PROVISIONS : Sections 427, 447, 506, and 120B r/w Section 34, IPC


BRIEF :


In the present case, it is alleged by the appellant that the accused persons (No. 1 to No. 13) having a common intention, criminally trespassed on his property on the pretext of laying pipelines beneath the scheduled properties which was next to the property of the appellant. While doing so, the appellant alleged that the accused damaged the trees and the property to an extent that will almost cost Rs 27,00,000 repairing charge.


Acting upon the appellant’s complaint, the Magistrate passed an order to summon all the accused. Here Accused No. 1 and No. 6 are Companies, and rest of the accused are top officers or employers of the company. The magistrate without recording his prima facie satisfaction issued summons to all the accused.


The order of the Magistrate was quashed by the Sessions Court, and the same decision was upheld by the High Court in the Revision Petition filed subsequently. Aggrieved by the decision, the complainant approached the Supreme Court under a Special Leave Petition.


COURT OBSERVED :


The corporate personality of a company is different from the individual personality of the members of the company. The Chairman, Managing Director, Executive Director, Deputy General Manager, Planner & Executor can be held vicariously liable for the acts of the company only if there is some specific individual role and mens rea that is brought to the light by lifting the corporate veil. The doctrine of lifting of the corporate veil allows to hold the individual accountable for the acts of the company.


In the present case, the court upheld the decision of the High Court and noted that the employees and officers just because of their position cannot be termed as accused unless and until there is sufficient proof to prove that they played a specific role in undertaking the act. A mere statement by the complainant in the present case that all the accused conspired together to demolish the property is not enough to hold the members of the company vicariously liable.

The magistrate’s role before issuing summons is to examine the nature of allegations along with the evidence, both oral and documentary. Summons are to be issued only when the Magistrate is certain that there are specific allegations and role played by each of the accused. In the present case, at the day of the demolition most of the accused were out of station.


Referring to the judgments of Sunil Bharti Mittal v. CBI [(2015) 4 SCC 609] , Maksud Saiyed v. State of Gujarat [(2008) 5 SCC 668] and GHCL Employees Stock Option Trust v. India Infoline Limited. [(2013) 4 SCC 505], the court dismissed the petition.


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