No Vicarious Liability Of Company Managers When Their Role Not Disclosed In Complaint Petition: Jharkhand High Court

The Jharkhand High Court has recently held that vicarious liability cannot be imposed against an accused-Manager of the company when his role has not been mentioned in the complaint petition, and it has not been disclosed during the solemn affirmation or by the enquiry witnesses.

A bench comprising Justice Sanjay Kumar Dwivedi made the observation while allowing a criminal writ petition praying for quashing of the entire criminal proceeding including the order taking cognizance passed by the Chief Judicial Magistrate, Jamshedpur under sections 406, 420 and 120B of the Indian Penal Code, 1860.

Background

A complaint was filed against two accused persons, alleging that they approached the complainant in January 2010 with an offer to be their sales distributor for newly launched herbal personal care products in Jamshedpur region. The complainant was promised promotional commission, timely payment, and reimbursement for damaged or unsold stock. Based on these assurances, the complainant agreed to become the sales distributor.

However, the accused persons failed to make timely payment of commission and did not take back damaged goods as promised. When the complainant raised the issue with the company's Area Sales Manager, no response was given. One of the accused persons requested the complainant's cooperation for sales of new products, but the complainant refused unless his previous claims were settled.

Thereafter, an email was sent by the accused persons seeking details of the complainant's claim, with a promise to adjust it against future orders subject to a minimum order value condition. The complainant submitted the claim via email but expressed inability to place a risky order.

The accused persons informed the complainant about a new billing slab, claiming that all pending dues were cleared. The complainant requested for settling the pending claim, but no response was given by the accused. A legal notice was served but returned due to change in address. Thus, a criminal complaint was filed against all the accused persons.

Verdict

Justice Dwivedi was of the opinion that the criminal case was put into motion for a commercial transaction.

Justice Dwivedi initially pointed out that the complainant had admitted in his solemn affirmation that a certain amount had already been paid. The bench then held "the ingredient of cheating being the intention of cheating from the very beginning is not made out in view of the definition of cheating under section 415 IPC."

While quashing the entire criminal proceeding including the cognizance order, Justice Dwivedi held, "The role of these petitioners was not stated in the complaint petition and neither was it disclosed in the solemn affirmation as well as by enquiry witnesses and in that view of the matter vicarious liability cannot be fastened on these two petitioners.”

Case Title: Aseem Sood @ Asim Sud vs. State of Jharkhand W.P.(Cr.) No.425 of 2015

Citation: 2023 LiveLaw (Jha) 13

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