The Ghost in the Machine: How the Law Finally Deciphered the Corporate ‘Guilty Mind’

 

A corporation is a legal phantom: it has no physical body to commit a crime and no soul to harbor "guilty" intent. For decades, this metaphysical gap allowed entities to navigate a jurisdictional "no man’s land," often escaping liability because prosecutors could not identify a specific human "alter ego" to pin the blame on. However, the legal landscape has undergone a seismic shift.

The landmark case of Sanofi India Ltd. v. Central Bureau of Investigation (2026) has dismantled the traditional "Humanlike" view of corporate crime. The case involved allegations that a scientific officer at the Bhabha Atomic Research Centre (BARC), Dr. P. Anand, manipulated procurement processes to favor Sanofi India in exchange for illegal gratification. While Sanofi itself was charged, no specific employee of the company was arraigned alongside it. This set the stage for a Supreme Court of India ruling that provides a sophisticated new architecture for corporate criminal liability.

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What is basic concept of S 141 of Negotiable instruments Act?

 Section 141 of the Negotiable Instruments Act deals with vicarious liability when the drawer of the dishonoured cheque is a company or firm, not a natural person. It says that along with the company, every person who at the time of the offence was in charge of and responsible for the conduct of its business can also be prosecuted, subject to the statutory defence that the offence occurred without his knowledge or despite due diligence.

Interview answer

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Delay, Denial, and Direct Cognizance: Why the Bombay High Court Quashed the Prosecution in C.B. Healthcare v. Union of India

 

The Bombay High Court’s decision in Ms. C.B. Healthcare and Ors. v. Union of India is a significant reminder that prosecutions under the Drugs and Cosmetics Act, 1940 must satisfy not only public health objectives but also the statutory safeguards built into the Act and the Rules. In a judgment delivered on 24 March 2026, Justice N.J. Jamadar quashed the criminal prosecution against the manufacturer and its partners, holding that the cumulative procedural lapses had destroyed the accused’s valuable right to challenge the analyst’s report and had rendered the continuation of prosecution an abuse of the process of court.

Facts and procedural history

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What is basic concept of constructive liability and vicarious liability as provisions of indian penal code?

 The Indian Penal Code incorporates two important liability principles that hold individuals accountable for crimes committed by others: constructive liability and vicarious liability. While these concepts are closely related and often overlap, they operate under distinct legal frameworks.

Constructive Liability Under IPC

Constructive liability is the principle under which a person may be held liable for the consequences of another person's conduct, even if they did not actively participate in the act. This form of liability is based on the premise that their involvement in the criminal act, whether tacit or open, indirectly contributed to the outcome.

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Supreme Court: Whether the Magistrate should issue process against Managing director of company if offence is committed by Company?

 In the present case, however, this principle is applied in an exactly reverse scenario. Here, company is the accused person and the learned Special Magistrate has observed in the impugned order that since the Appellants represent the directing mind and will of each company, their state of mind is the state of mind of the company and, therefore, on this premise, acts of the company is attributed and imputed to the Appellants. It is difficult to accept it as the correct principle of law. As demonstrated hereinafter, this proposition would run contrary to the principle of vicarious liability detailing the circumstances under which a direction of a company can be held liable. {Para 36}

37. No doubt, a corporate entity is an artificial person which acts through its officers, directors, managing director, chairman etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so.

38. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision.

39. When the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneeta Hada (supra), the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Here also, the principle of "alter ego", was applied only in one direction namely where a group of persons that guide the business had criminal intent, that is to be imputed to the body corporate and not the vice versa. Otherwise, there has to be a specific act attributed to the Director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company. 

13. Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. The Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company when the accused is the Company. The learned Magistrate failed to pose unto himself the correct question viz. as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the Respondents herein were personally liable for any offence. The Bank is a body corporate. Vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability.

17. The Penal Code, 1860 save and except in some matters does not contemplate any vicarious liability on the part of a person. Commission of an offence by raising a legal fiction or by creating a vicarious liability in terms of the provisions of a statute must be expressly stated. The Managing Director or the Directors of the Company, thus, cannot be said to have committed an offence only because they are holders of offices. The learned Additional Chief Metropolitan Magistrate, therefore, in our opinion, was not correct in issuing summons without taking into consideration this aspect of the matter. The Managing Director and the Directors of the Company should not have been summoned only because some allegations were made against the Company.

 IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 34 of 2015.

Decided On: 09.01.2015

Sunil Bharti Mittal Vs. Central Bureau of Investigation

Hon'ble Judges/Coram:

H.L. Dattu, C.J.I., Madan B. Lokur and A.K. Sikri, JJ.

Author: A.K. Sikri, J.

Citation:  MANU/SC/0016/2015,2015 INSC 18.

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Supreme Court: Compensation granted on account of death of passenger can not be reduced if there was contributory negligence of driver in which deceased was travelling?

In the case of Union of India v. United India Insurance Co. Ltd.,   MANU/SC/1357/1997 : 1997:INSC:705 : (1997) 8 SCC 683 this Court dealt with the question whether the driver's negligence in any manner vicariously attaches to the passengers of the motor vehicle of which he was the driver, and it was held as below:

10. There is a well-known principle in the law of torts called the "doctrine of identification" or "imputation". It is to the effect that the Defendant can plead the contributory negligence of the Plaintiff or of an employee of the Plaintiff where the employee is acting in the course of employment. But, it has been also held in Mills v. Armstrong [(1888) 13 AC 1, HL] (also called The Bernina case) that that principle is not applicable to a passenger in a vehicle in the sense that the negligence of the driver of the vehicle in which the passenger is travelling, cannot be imputed to the passenger. This principle has been applied, in latter cases, to passengers travelling in a motor vehicle whose driver is found guilty of contributory negligence. In other words, the principle of contributory negligence is confined to the actual negligence of the Plaintiff or of his agents. There cannot be a fiction of the passenger sharing a "right of control" of the operation of the vehicle nor is there a fiction that the driver is an agent of the passenger. A passenger is not treated as a backseat driver. (Prosser and Keeton on Torts, 5th Ed., 1984, pp. 521-22.) It is therefore clear that even if the driver of the passenger vehicle was negligent, the Railways, if its negligence was otherwise proved - could not plead contributory negligence on the part of the passengers of the vehicle.  {Para 18}

19. It is clear from the ratio of the above judgment that the contributory negligence on the part of a driver of the vehicle involved in the accident cannot be vicariously attached to the passengers so as to reduce the compensation awarded to the passengers or their legal heirs as the case may be.

39. We are of the view that the aforesaid decision applies to the case at hand on all fours and thus, the Appellant-claimants cannot be denied their rightful compensation on the ground that the driver of the car, namely Saiprasad Karande (deceased), was jointly responsible for the accident with the person in control of the offending truck and hence, their claims should be reduced on the principle of contributory negligence.

 IN THE SUPREME COURT OF INDIA

Civil Appeal No. 10648 of 2024 

Decided On: 19.09.2024

Sushma Vs. Nitin Ganapati Rangole and Ors.

Hon'ble Judges/Coram:

Pamidighantam Sri Narasimha and Sandeep Mehta, JJ.

Author: Sandeep Mehta, J.

Citation: 2024 INSC 706,MANU/SC/1032/2024.

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Whether Magistrate can direct police to register an offence against Organizer Of Public Meeting if A Participant of said meeting has delivered a Hate Speech?

 (i) The respondent no. 1 had not levelled any allegation against the petitioner in the complaint which he had lodged with the concerned police officials.

(ii) The single line averred by respondent no. 1 against the petitioner in his complaint and application under Section 156(3) Cr.P.C. filed before the learned Magistrate, on the face of it, does not constitute any offence or make out any case against the petitioner. (iii) Even if the entire allegations made in the complaint lodged with the police or before the learned Magistrate as well as the inquiry conducted by the police in that regard are accepted in their entirety, the same do not disclose commission of any offence by the present petitioner. (iv) The records of the case reveal that the present case is not a case of lack of sufficient evidence against the petitioner, but rather a case with no incriminating material whatsoever against him. (v) Given that the allegations levelled by respondent no. 1 primarily pertain to an alleged hate speech delivered by proposed accused no. 2, and considering that there is no concept of vicarious liability in criminal law regarding such alleged offences, initiating criminal proceedings against the present petitioner would undoubtedly constitute an abuse of the legal process. (vi) The learned Magistrate overlooked the crucial distinction between the duty imposed on the police under Section 154 Cr.P.C. to register an FIR when a complaint reveals a cognizable offence, and the powers vested in Magistrates under Section 156(3) Cr.P.C. which necessitates the application of judicial mind and scrutiny of the material on record.

(vii) The impugned order passed by the learned Magistrate reflects lack of application of judicial mind, for the reasons that (a) it fails to record any reasons whatsoever for directing registration of FIR; (b) it does not record as to commission of which cognizable offences was disclosed from the perusal of complaint and application filed before it, against the proposed accused persons; and (c) it fails to acknowledge or refer to the contents of preliminary inquiry conducted by the police and submitted before the concerned Magistrate by way of Action Taken Report, even for the purposes of disagreeing with the same and ordering registration of FIR, even though the learned Magistrate had himself called for the same.

122. The recognized purpose of criminal adjudicatory process is that an accused or a proposed accused, if essentially connected to incriminating evidence in a complaint, should be brought within the ambit of law. However, an unmeritorious complaint containing no incriminating material against an accused should not result in orders of registration of FIRs as such proceedings will certainly amount to abuse of process of criminal law.

123. The duty that a Court of law owes to its citizens who approach them as litigants is protected when the material placed on record which reveals commission of a cognizable offence is acted upon. While doing so, the Courts have to be cautious in identifying cases where such material is absent and protecting an accused or proposed accused by way of a reasoned order to avoid abuse of process of law. Absence of reasons brings into question the propriety of an order being not based on judicial precedents, material on record or reasons for its conclusion. The Courts should embrace the method of passing a reasoned order based on judicial precedents and law as well as the material placed before it, which is reflected in its order or judgments. Through such reasoned orders, the Courts can order for registration of FIR against persons who cross criminal boundaries without lawful justification, or conversely, reject such applications where it seems that the accused or proposed accused can be a possible victim of abuse of process of law by initiation of criminal proceedings.

127. However, it is also to be kept in mind that a person against whom FIR is being ordered to be registered for no reason will have his reputation at stake. In cases as the present one, against this backdrop, this Court finds merit in the present petition since the complaint filed before the learned Magistrate did not fulfil the criteria of presence of incriminating material disclosing any connection of the petitioner with the alleged act of organising the speech delivered by one Swami ji, whose identity also remains unknown.

130. It is to be noted at the cost of repetition that the complaint qua the present petitioner was not a case of insufficient material but of no material at all. The Court also takes note of the fact that though the Magistrate mentions that from perusal of the complaint, commission of cognizable offence is revealed there is no allegation in the entire complaint itself or in the Action Taken Report about any act of commission or omission on part of the present petitioner.

131. This Court is, therefore, constrained to observe that the Magisterial power may be unlimited but it is not unfettered and should be used not only with utmost caution and vigilance, but also with circumspection after carefully going through the contents of the complaint and the Action Taken Report, if any, filed by the police.

IN THE HIGH COURT OF DELHI AT NEW DELHI 

CRL.M.C. 1463/2020 & CRL.M.A. 5732/2020

 ALOK KUMAR Vs HARSH MANDER & ANR.

 CORAM: HON'BLE MS. JUSTICE SWARANA KANTA SHARMA J

 Pronounced on: 21.07.2023 

Index to the Judgment

FACTUAL BACKDROP ...................................................................................... 3

ARGUMENTS OF THE PETITIONER ........................................................... 10

ARGUMENTS OF THE RESPONDENTS ....................................................... 13

WHEN CAN A MAGISTRATE DIRECT REGISTRATION OF FIR .......... 15

I. Law of Section 156(3) Cr.P.C. ....................................................................... 15

II. Essential Pre-conditions While Directing Registration of FIR under Section 156(3) ..................................................................................................................... 21

(i) Disclosure of Cognizable Offence .......................................................... 21

(ii) Application of Judicial Mind ................................................................... 23

(iii) Necessity to pass Speaking Order ........................................................... 28

EXAMINING THE PRESENT CASE ON THE TOUCHSTONE OF ABOVE INGREDIENTS .................................................................................................... 29

I. Preliminary Inquiry in Present Case: Examining Action Taken Report ........ 30

II. Whether commission of cognizable offences are disclosed against the petitioner? .............................................................................................................. 33

(i) Function of Pleadings .......................................................................... 39

III. Whether impugned order reflects application of judicial mind? ................... 40

(i) Importance of Reasoned Order ............................................................ 45

LAW ON VICARIOUS LIABILITY IN CRIMINAL CASES ........................ 50

UNLIMITED MAGISTERIAL POWER DOES NOT MEAN UNFETTERED POWER .................................................................................... 56

POWERS OF THE HIGH COURT UNDER SECTION 482 CR.P.C. ........... 57

I. Judicial Precedents in a Nutshell ..................................................................... 58

II. What is Abuse of Process of Law ................................................................... 63

III. Sufficiency or Insufficiency of Incriminating material viz. Abuse of Process of Law… ................................................................................................................ 64

IV. Striking balance between interest of the complainant and reputational injury to the unheard proposed accused ........................................................................... 65

THE CONCLUSION OF THE COURT ............................................................ 66

BEFORE PARTING WITH THIS CASE… ..................................................... 69

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Can a person be held liable for offence of dishonour of cheque if he was partner of firm that had taken loan or a he was guarantor for the loan?

  It is an admitted case of the respondent Bank that the appellant had not issued any of the three cheques, which had been dishonoured, in his personal capacity or otherwise as a partner. In the absence of any evidence led by the prosecution to show and establish that the appellant was in charge of and responsible for the conduct of the affairs of the firm, an expression interpreted by this Court in Girdhari Lal Gupta v. D.H. Mehta and Another11 to mean ‘a person in overall control of the day-to-day business of the company or the firm’, the conviction of the appellant has to be set aside.{ State of Karnataka v. Pratap Chand and Others, (1981) 2 SCC 335.} The appellant cannot be convicted merely because he was a partner of the firm which had taken the loan or that he stood as a guarantor for such a loan. The Partnership Act, 1932 creates civil liability. Further, the guarantor's liability under the Indian Contract Act, 1872 is a civil liability. The appellant may have civil liability and may also be liable under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. However, vicarious liability in the criminal law in terms of Section 141 of the NI Act cannot be fastened because of the civil liability. Vicarious liability under sub-section (1) to Section 141 of the NI Act can be pinned when the person is in overall control of the day to-day business of the company or firm. Vicarious liability under sub-section (2) to Section 141 of the NI Act can arise because of the director, manager, secretary, or other officer's personal conduct, functional or transactional role, notwithstanding that the person was not in overall control of the day-to-day business of the company when the offence was committed. Vicarious liability under sub-section (2) is attracted when the offence is committed with the consent, connivance, or is attributable to the neglect on the part of a director, manager, secretary, or other officer of the company. {Para 11}

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

AJAY RASTOGI; SANJIV KHANNA, JJ.

CRIMINAL APPEAL NO. 767 OF 2022 

DILIP HARIRAMANI Vs BANK OF BARODA

Author: SANJIV KHANNA, J.

Dated: MAY 09, 2022

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Whether Magistrate can summon directors of Company along with Company if there are no specific allegations against them?

  No doubt, a corporate entity is an artificial person which acts through its officers, Directors, Managing Director, Chairman, etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so.{Para 42}

43. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made an accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision.

44. When the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661, the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the

Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Here also, the principle of “alter ego”, was applied only in one direction, namely, where a group of persons that guide the business had criminal intent, that is to be imputed to the body corporate and not the vice versa. Otherwise, there has to be a specific act attributed to the Director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company.”

8.1 In the case of Maksud Saiyed v. State of Gujarat, (2008) 5 SCC

668, in paragraph 13, it is observed and held as under:

“13. Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. The Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company when the accused is the company. The learned Magistrate failed to pose unto himself the correct question viz. as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the respondents herein were personally liable for any offence. The Bank is a body corporate. Vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability.”

8.2 As observed by this Court in the case of Pepsi Foods Ltd. v.

Special Judicial Magistrate, (1998) 5 SCC 749 and even thereafter in

catena of decisions, summoning of an accused in a criminal case is aserious matter. Criminal Law cannot be set into motion as a matter of course. In paragraph 28 in Pepsi Foods Limited (supra), it is observed  and held as under:

“28. Summoning of an accused in a criminal case is a serious matter.

Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient

for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused.”

8.3 As held by this Court in the case of India Infoline Limited (supra), in the order issuing summons, the learned Magistrate has to record his satisfaction about a prima facie case against the accused who are Managing Director, the Company Secretary and the Directors of the Company and the role played by them in their respective capacities which is sine qua non for initiating criminal proceedings against them.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS.1047-1048/2021

Ravindranatha Bajpe  Vs  Mangalore Special Economic Zone Ltd. & Others

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Can the WhatsApp group admin be held criminally liable for objectionable posts of a group member?

 A group administrator has limited power of removing a member of the group or adding other members of the group. Once the group is created, the functioning of the administrator and that of the members is at par with each other, except the power of

adding or deleting members to the group. The Administrator of a

Whatsapp group does not have power to regulate, moderate or censor the content before it is posted on the group. But, if a member of the Whatsapp group posts any content, which is actionable under law, such person can be held liable under relevant provisions of law. In the absence of specific penal provision creating vicarious liability, an administrator of a Whatsapp group cannot be held liable for objectionable content posted by a member of a group. A group administrator cannot be held vicariously liable for an act of member of the group, who posts objectionable content, unless it is shown that there was common intention or pre-arranged plan acting in concert pursuant to such plan by such member of a Whatsapp group and the administrator. Common intention cannot be established in a case of Whatsapp service user merely acting as a group administrator. When a person creates a Whatsapp group, he cannot be expected to presume or to have advance knowledge of the criminal acts of the member of the group.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

NAGPUR BENCH, NAGPUR.

CRIMINAL APPLICATION (APL) NO. 573 OF 2016

Kishor  Chintaman Tarone,  Vs The State of Maharashtra, 

CORAM : Z.A.HAQ AND AMIT B. BORKAR, JJ.

DATED : 01.03.2021.

(Per : Amit B. Borkar, J.)

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Supreme Court: No law that person accompanying principal culprit for minor offence shares common intention for the major offence committed by him

It may be that when some persons start with a pre-arranged plan to commit a minor offence, they may in the course of their committing the minor offence come to an understanding to commit the major offence as well. Such an understanding may appear from the conduct of the persons sought to be made vicariously liable for the act of the principal culprit or from some other incriminatory evidence but the conduct or other evidence must be such as not to leave any room for doubt in that behalf. 15. A criminal court fastening vicarious liability must satisfy itself as to the prior meeting of the minds of the principal culprit and his companions who are sought to be constructively made liable in respect of every act committed by the former. There is no law to our knowledge which lays down that a person accompanying the principal culprit shares his intention in respect of every act which the latter might eventually commit. The existence or otherwise of the common intention depends upon the facts and circumstances of each case. The intention of the principal offender and his companions to deal with any person who might intervene to stop the quarrel must be apparent from the conduct of the persons accompanying the principal culprit or some other clear and cogent incriminating piece of evidence. In the absence of such material, the companion or companions cannot justifiably be held guilty for every offence committed by the principal offender.” (Emphasis Supplied)

Unless a common intention is established as a matter of necessary inference from the proved circumstances the accused persons will be liable for their individual act and not for the act done by any other person. For an inference of common intention to be drawn for the purposes of Section 34, the evidence and the circumstances of the case should establish, without any room for doubt, that a meeting of minds and a fusion of ideas had taken place amongst the different accused and in prosecution of it, the overt acts of the accused persons flowed out as if in obedience to the command of a single mind. If on the evidence, there is doubt as to the involvement of a particular accused in the common intention, the benefit of doubt should be given to the said accused person. ….”

33. In Girija Shankar v. State of U.P. 2004 (3)SCC 793, this Court made the following observations:

“9. …… In order to bring home the charge of common intention, the prosecution has to establish by evidence, whether direct or circumstantial, that there was plan or meeting of minds of all the accused persons to commit the offence for which they are charged with the aid of Section 34, be it pre-arranged or on the spur of the moment; but it must necessarily be before the commission of the crime.….” (Emphasis supplied)

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.57 OF 2013

SONU @ SUNIL  Vs  STATE OF MADHYA PRADESH 

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What are essential requirement for prosecuting director of company along with company for rash and negligent act?

 By applying the ratio laid down by this Court in the case of Sunil Bharti Mittal MANU/SC/0016/2015 : (2015) 4 SCC 609 it is clear that an individual either as a Director or a Managing Director or Chairman of the company can be made an Accused, along with the company, only if there is sufficient material to prove his active role coupled with the criminal intent. Further the criminal intent alleged must have direct nexus with the Accused. Further in the case of Maksud Saiyed v. State of Gujarat and Ors. MANU/SC/7923/2007 : (2008) 5 SCC 668 this Court has examined the vicarious liability of Directors for the charges levelled against the Company. In the aforesaid judgment this Court has held that, the Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company, when the Accused is a Company. It is held that vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the Statute. It is further held that Statutes indisputably must provide fixing such vicarious liability. It is also held that, even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability.

IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 1263 of 2019 

Decided On: 23.08.2019

Shiv Kumar Jatia  Vs. State of NCT of Delhi

Hon'ble Judges/Coram:

Abhay Manohar Sapre and R. Subhash Reddy, JJ.

Citation: AIR 2019 SC 4463

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Whether director of company can be prosecuted if company is not prosecuted?

Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the Section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted.

43. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative.

IN THE SUPREME COURT OF INDIA

Criminal Appeal Nos. 838 and 842 of 2008, 1483 and 1484 of 2009

Decided On: 27.04.2012

 Aneeta Hada Vs.  Godfather Travels and Tours Pvt. Ltd. and Ors.

Hon'ble Judges/Coram:

Dalveer Bhandari, S.J. Mukhopadhaya and Dipak Misra, JJ.

Citation: (2012) 5 SCC 661

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Supreme Court: Golden rules for framing of charge against accused

It appears from the above that no clear charges appear to have been framed. At any rate, no document is brought to our notice showing the charges framed by the Court in spite of repeated enquiry. It must be remembered that it is a case where three persons died and five persons were injured allegedly in an attack by all the Accused. Causing death to each one of the three persons or causing injury to each one of the five persons is a distinct offence. Similarly, an offence Under Section 307 is a distinct offence specific to a particular victim. The offences Under Sections 147 and 148 are distinct offences. Section 149 Indian Penal Code does not create a separate offence but only declares the vicarious liability of all the members of an unlawful assembly in certain circumstances.

14. It was held by a three-judge bench of this Court in Shambhu Nath Singh and Ors. v. State of Bihar MANU/SC/0214/1959 : AIR 1960 SC 725:

Section 149 of the Indian Penal Code is declaratory of the vicarious liability of the members of an unlawful assembly for acts done in prosecution of the common object of that assembly or for such offences as the members of the unlawful assembly knew to be likely to be committed in prosecution of that object.

However, there are benches of a lesser smaller strength2 which have observed that Section 149 creates a specific and distinct offence. In view of the fact that decision in Shambu Nath Singh was decided by a larger bench, the law declared therein must be taken to be declaring the correct legal position. With utmost respect, we may also add that the same is in accord with the settled principles of the interpretation of the statutes having regard to the language of Section 149 and its context.

15. Chapter XVII of the Code of Criminal Procedure [hereinafter referred to as "CrPC"] deals with "charges" in a criminal case. Sections 211 to 213 deal with the particulars which are required to be contained in a charge in a criminal trial. These provisions are made to ensure a fair procedure by which a person Accused of an offence should be tried-a procedure in compliance with the requirement of the mandate of Article 21 of the Constitution of India. The Accused are entitled in law to know with precision what is the charge on which they are put to trial. It was held by this Court in Esher Singh v. State of Andhra Pradesh MANU/SC/0223/2004 : (2004) 11 SCC 585, para 20:

It is the precise formulation of the specific accusation made against a person who is entitled to know its nature at the earliest stage. A charge is not an accusation made or information given in the abstract, but an accusation made against a person in respect of an act committed or omitted in violation of penal law forbidding or commanding it. In other words, it is an accusation made against a person in respect of an offence alleged to have been committed by him. A charge is formulated after inquiry as distinguished from the popular meaning of the word as implying inculpation of a person for an alleged offence as used in Section 224 of the Indian Penal Code.

IN THE SUPREME COURT OF INDIA

Criminal Appeal Nos. 1525 and 1526-1527 of 2009

Decided On: 16.05.2018

 Vinubhai Ranchhodbhai Patel Vs. Rajivbhai Dudabhai Patel and Ors.

Hon'ble Judges/Coram:

Jasti Chelameswar and Sanjay Kishan Kaul, JJ.

Citation:(2018) 7 SCC 743

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Notes on S 34 {S 3(5) of BNS } and S149 IPC{S 190 of BNS }- Principle of constructive liability

S 34 of IPC {S 3(5) of BNS } Acts done by several persons in furtherance of common intention:-

When a criminal act is done by several persons in furtherance of common intention of all, each of such persons is liable for that act in the same manner as if it were done by him alone.

Object of the section: S 34 of IPC {S 3(5) of BNS } is enacted to meet cases in which it may be difficult to distinguish between the acts of individual members of a party, or to prove exactly what part is played by each of them. The reason why all are deemed to be guilty in such cases is that presence of accomplices gives encouragement, support and protection for the persons actually committing the act.

 S 34 {S 3(5) of BNS }is only a rule of evidence and does not create any substantive offence.

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Leading judgment on prosecution of company

Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the Section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted.

43. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh (supra) which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal (supra) does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada (supra) is overruled with the qualifier as stated in paragraph 37. The decision in Modi Distilleries (supra) has to be treated to be restricted to its own facts as has been explained by us hereinabove.

IN THE SUPREME COURT OF INDIA

Criminal Appeal Nos. 838 and 842 of 2008, 1483 and 1484 of 2009

Decided On: 27.04.2012

Aneeta Hada Vs. Godfather Travels and Tours Pvt. Ltd. and Ors.

Hon'ble Judges/Coram:

Dalveer Bhandari, S.J. Mukhopadhaya and Dipak Misra, JJ.

Citation: (2012) 5 SCC 661 : 2012 ALL SCR 1424

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Whether directors can be prosecuted in cheque dishonour case if company is not made accused?

In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. 

IN THE HIGH COURT OF BOMBAY AT GOA

Criminal Writ Petition No. 123 of 2017

Decided On: 09.08.2017

 Nurallah Veljee Vs. Thomas F.S. Machado

Hon'ble Judges/Coram:

C.V. Bhadang, J.

Citation: 2018(4) MHLJ 268

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Landmark judgment on scope and applicability of S 34 of IPC

To apply Section 34 Indian Penal Code apart from the fact that there should be two or more accused, two factors must be established: (i) common intention and (ii) participation of the accused in the commission of an offence. If a common intention is proved but no overt act is attributed to the individual accused, Section 34 will be attracted as essentially it involves vicarious liability but if participation of the accused in the crime is proved and a common intention is absent, Section 34 cannot be invoked. In every case, it is not possible to have direct evidence of a common intention. It has to be inferred from the facts and circumstances of each case.

16. He has also relied on the decision in Suresh Sakharam Nangare (supra). In the said case, the Court after referring to Section 34 Indian Penal Code opined that a reading of the above provision makes it clear that to apply Section 34, apart from the fact that there should be two or more accused, two factors must be established: (i) common intention, and (ii) participation of the accused in the commission of an offence. It further makes clear that if common intention is proved but no overt act is attributed to the individual accused, Section 34 will be attracted as essentially it involves vicarious liability but if participation of the accused in the crime is proved and common intention is absent, Section 34 cannot be invoked.

17. In the said case, the Court after analyzing the evidence opined that there is no material from the side of the prosecution to show that the Appellant therein had any common intention to eliminate the deceased because the only thing against the Appellant therein was that he used to associate himself with the accused for smoking ganja. On this factual score, the Court came to hold that the Appellant could not be convicted in aid of Section 34 Indian Penal Code.

18. In this regard, we may usefully refer to a passage from the authority in Pandurang and Ors. v. State of Hyderabad MANU/SC/0048/1954 : AIR 1955 SC 216. The three-Judge Bench in the said case adverted to the applicability and scope of Section 34 Indian Penal Code and in that context ruled that:

32. ... It requires a pre-arranged plan because before a man can be vicariously convicted for the criminal act of another, the act must have been done in furtherance of the common intention of them all: Mahbub Shah v. King Emperor MANU/PR/0013/1945 : AIR 1945 PC 118. Accordingly there must have been a prior meeting of minds. Several persons can simultaneously attack a man and each can have the same intention, namely the intention to kill, and each can individually inflict a separate fatal blow and yet none would have the common intention required by the Section because there was no prior meeting of minds to form a pre-arranged plan. In a case like that, each would be individually liable for whatever injury he caused but none could be vicariously convicted for the act of any of the others; and if the prosecution cannot prove that his separate blow was a fatal one he cannot be convicted of the murder however clearly an intention to kill could be proved in his case: Barendra Kumar Ghosh v. King Emperor MANU/PR/0064/1924 : AIR 1925 PC 1 and Mahbub Shah v. King Emperor (supra). As Their Lordships say in the latter case, "the partition which divides their bounds is often very thin: nevertheless, the distinction is real and substantial, and if overlooked will result in miscarriage of justice.

33. The plan need not be elaborate, nor is a long interval of time required. It could arise and be formed suddenly, as for example when one man calls on bystanders to help him kill a given individual and they, either by their words or their acts, indicate their assent to him and join him in the assault. There is then the necessary meeting of the minds. There is a pre-arranged plan however hastily formed and rudely conceived. But pre-arrangement there must be and premeditated concert. It is not enough, as in the latter Privy Council case, to have the same intention independently of each other, e.g., the intention to rescue another and, if necessary, to kill those who oppose.

19. And, again:

34. ... But to say this is no more than to reproduce the ordinary Rule about circumstantial evidence, for there is no special Rule of evidence for this class of case. At bottom, it is a question of fact in every case and however similar the circumstances, facts in one case cannot be used as a precedent to determine the conclusion on the facts in another. All that is necessary is either to have direct proof of prior concert, or proof of circumstances which necessarily lead to that inference, or, as we prefer to put it in the time-honoured way, "the incriminating facts must be incompatible with the innocence of the accused and incapable of explanation on any other reasonable hypothesis". (Sarkar's Evidence, 8th Edn., p. 30).

20. In this context, we may refer with profit to the statement of law as expounded by the Constitution Bench in Mohan Singh (supra). In the said case, the Constitution Bench has held that Section 34 that deals with cases of constructive criminal liability provides that if a criminal act is done by several persons in furtherance of the common intention of all, each of such person is liable for the act in the same manner as if it were done by him alone. It has been further observed that the essential constituent of the vicarious criminal liability prescribed by Section 34 is the existence of common intention. The common intention in question animates the accused persons and if the said common intention leads to commission of the criminal offence charged, each of the person sharing the common intention is constructively liable for the criminal act done by one of them. The larger Bench dealing with the concept of constructive criminal liability Under Sections 149 and 34 Indian Penal Code, expressed that just as the combination of persons sharing the same common object is one of the features of an unlawful assembly, so the existence of a combination of persons sharing the same common intention is one of the features of Section 34. In some ways the two Sections are similar and in some cases they may overlap. The common intention which is the basis of Section 34 is different from the common object which is the basis of the composition of an unlawful assembly. Common intention denotes action-in-concert and necessarily postulates the existence of a prearranged plan and that must mean a prior meeting of minds. It would be noticed that cases to which Section 34 can be applied disclose an element of participation in action on the part of all the accused persons. The acts may be different; may vary in their character, but they are all actuated by the same common intention. Thereafter, the Court held:

It is now well-settled that the common intention required by Section 34 is different from the same intention or similar intention. As has been observed by the Privy Council in Mahbub Shah v. King-Emperor (supra) common intention within the meaning of Section 34 implies a pre-arranged plan, and to convict the accused of an offence applying the Section it should be proved that the criminal act was done in concert pursuant to the pre-arranged plan and that the inference of common intention should never be reached unless it is a necessary inference deducible from the circumstances of the case.

21. In Harshadsingh Pahelvansingh Thakore (supra), a three-Judge Bench, while dealing with constructive liability Under Section 34 Indian Penal Code has ruled thus:

Section 34 Indian Penal Code fixing constructive liability conclusively silences such a refined plea of extrication. (See Amir Hussain v. State of U.P. MANU/SC/0078/1975 : (1975) 4 SCC 247; Maina Singh v. State of Rajasthan MANU/SC/0138/1976 : (1976) 2 SCC 827) Lord Sumner's classic legal shorthand for constructive criminal liability, expressed in the Miltonic verse "They also serve who only stand and wait" a fortiori embraces cases of common intent instantly formed, triggering a plurality of persons into an adventure in criminality, some hitting, some missing, some splitting hostile heads, some spilling drops of blood. Guilt goes with community of intent coupled with participatory presence or operation. No finer juristic niceties can be pressed into service to nullify or jettison the plain punitive purpose of the Penal Code.

22. In Lallan Rai and Ors. v. State of Bihar MANU/SC/0998/2002 : (2003) 1 SCC 268 the Court relying upon the principle laid down in Barendra Kumar Ghosh (supra) has ruled that the essence of Section 34 is simultaneous consensus of the mind of persons participating in the criminal action to bring about a particular result.

23. In Goudappa and Ors. v. State of Karnataka MANU/SC/0222/2013 : (2013) 3 SCC 675 the Court has reiterated the principle by opining that Section 34 Indian Penal Code lays down a principle of joint liability in doing a criminal act and the essence of that liability is to be found in the existence of common intention. The Court posed the question how to gather the common intention and answering the same held that the common intention is gathered from the manner in which the crime has been committed, the conduct of the accused soon before and after the occurrence, the determination and concern with which the crime was committed, the weapon carried by the accused and from the nature of the injury caused by one or some of them and for arriving at a conclusion whether the accused had the common intention to commit an offence of which they could be convicted, the totality of circumstances must be taken into consideration.

24. The aforesaid authorities make it absolutely clear that each case has to rest on its own facts. Whether the crime is committed in furtherance of common intention or not, will depend upon the material brought on record and the appreciation thereof in proper perspective. Facts of two cases cannot be regarded as similar. Common intention can be gathered from the circumstances that are brought on record by the prosecution. Common intention can be conceived immediately or at the time of offence. Thus, the applicability of Section 34 Indian Penal Code is a question of fact and is to be ascertained from the evidence brought on record. The common intention to bring about a particular result may well develop on the spot as between a number of persons, with reference to the fact of the case and circumstances of the situation. Whether in a proved situation all the individuals concerned therein have developed only simultaneous and independent intentions or whether a simultaneous consensus of their minds to bring about a particular result can be said to have been developed and thereby intended by all of them, is a question that has to be determined on the facts. (See: Kirpal and Bhopal v. State of U.P. MANU/SC/0176/1954 : AIR 1954 SC 706). In Bharwad Mepa Dana and Anr. v. The State of Bombay MANU/SC/0040/1959 : AIR 1960 SC 289, it has been held that Section 34 Indian Penal Code is intended to meet a case in which it may be difficult to distinguish the acts of individual members of a party who act in furtherance of the common intention of all or to prove exactly what part was taken by each of them. The principle which the Section embodies is participation in some action with the common intention of committing a crime; once such participation is established, Section 34 is at once attracted.

IN THE SUPREME COURT OF INDIA

Criminal Appeal Nos. 1448 and 1452 of 2010

Decided On: 04.01.2017

Vijendra Singh and Ors. Vs. State of Uttar Pradesh

Hon'ble Judges/Coram:

Dipak Misra and Rohinton Fali Nariman, JJ.

Citation:(2017) 11 SCC129.

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When directors of company can be prosecuted if company is accused in the case?

Learned counsel for the appellants further relied upon
few more judgments wherein it was well settled that
the test to be applied for quashing is, whether
uncontroverted allegations made, prima facie
establish the offence. This is because the Court
cannot be utilized for any oblique purpose and where,
in the opinion of the Court, the chances of an
ultimate conviction are bleak, no useful purpose will
be served by allowing the criminal prosecution to
continue. He relied upon the decisions of this Court in
Madhavrao Jiwanrao Scindia & Ors. Vs.
Sambhajirao Chandrajirao Angre & Ors., (1998) 1
SCC 692 (para 7-8); State of Haryana Vs. Bhajanlal,
1992 Supp (1) SCC 335 (para 102); Rajiv Thapar &
Ors Vs. Madan Lal Kapoor, (2013) 3 SCC 330 at para
30; Rishi Pal Singh Vs. State of Uttar Pradesh &
Anr. (2014) 7 SCC 215, at para 12-13.
18. Learned counsel for the respondents have not
rebutted this issue in any of his arguments. With the
meticulous understanding of the orders of the Courts
below in the instant case, we can see that general and
bald allegations are made in the context of appellant
No.1 who is a juristic person and not a natural
person. The Indian Penal Code, 1860, does not
provide for vicarious liability for any offence alleged to
be committed by a company. If and when a statue
contemplates creation of such a legal fiction, it
provides specifically therefor, e.g. Negotiable
Instruments Act, 1881. Further, reliance was made
on S.K. Alagh Vs. State of Uttar Pradesh & Ors.,
reported in (2008) 5 SCC 662, where at paragraph 16,
this Court observed that “Indian Penal Code, save and
except some provisions specifically providing therefor,
does not contemplate any vicarious liability on the part
of a party who is not charged directly for commission ofan offence.” Further in Maksud Saiyed Vs. State of
Gujrat & Ors., reported in (2008) 5 SCC 668, at
paragraph 13, this Court observed that where a
jurisdiction is exercised on a complaint petition filed
in terms of Section 156(3) or Section 200 of the Code
of Criminal Procedure, the Magistrate is required to
apply his mind. Indian Penal Code does not contain
any provision for attaching vicarious liability on the
part of the Managing Director or the Directors of the
Company when the accused is the Company. The
Learned Magistrate failed to pose unto himself the
correct question viz. as to whether the complaint
petition, even if given face value and taken to be
correct in its entirety, would lead to the conclusion
that the respondents herein were personally liable for
any offence. The Bank is a body corporate. Vicarious
liability of the Managing Director and Director would
arise provided any provision exists in that behalf in
the statute. Statutes indisputably must contain
provision fixing such vicarious liability. Even for the
said purpose, it is obligatory on the part of the
complainant to make requisite allegations which
would attract the provisions constituting vicarious
liability. 
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1213 OF 2016

HDFC Securities Ltd. & Ors V State of Maharashtra & Anr.
Dated:December 9, 2016.
Citation: 2017 CRLJ 1033 SC

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Whether retail seller of food product can be made accused in case of misbranding of food article?

Consequently, with contra distintivity occurring in the relevant
Food Adulteration Rules vis. a vis. the nature of misbranding
indulged by accused respondent No.3 wherefrom respondent
No.1 purchased the misbranded food item/food product without
his concerting to discover the factum of misbranding renders, all
the accused from whom the relevant food item stood transmitted
in an unbroken chain upto accused respondent No.1 wherefrom
the Food Inspector purchased the relevant food product, to be
vicariously liable for infringement of the relevant penal provisions.
IN THE HIGH COURT OF HIMACHAL PRADESH,
 SHIMLA

Cr. Appeal No. 113 of 2007
 Decided on : 26.10.2016
State of H.P
 V
Chaman Lal and another 
Coram
 Mr. Justice Sureshwar Thakur, Judge.
Citation: 2017 CRLJ 69

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