Chairman, Directors & Officers Can't Be Summoned In Criminal Complaint Against Company Without Specific Allegations About Their Individual Role : Supreme Court

The Supreme Court has reiterated that Chairman, Managing Director/Executive Director etc., of a company cannot be summoned in a criminal case if specific allegations about their particular role is not alleged in the complaint, as they cannot be vicariously held liable for the criminal acts of the company.

"Merely because they are Chairman, Managing Director/Executive Director and/or Deputy General Manager and/or Planner/Supervisor of A1 & A6, without any specific role attributed and the role played by them in their capacity, they cannot be arrayed as an accused, more particularly they cannot be held vicariously liable for the offences committed by A1 & A6",  the Supreme Court observed in the case Ravindranatha Bajpe VS Mangalore Special Economic Zone Ltd and others.

In this case, a private complaint was lodged by a person against the company Mangalore Special Economic Zone Ltd and its contractor company alleging that they had trespassed into the complainant's property and had demolished his compound wall while laying down a pipe line.

The complainant had also arrayed the directors and other functionaries of the company alleging offences punishable under Sections 406, 418, 420, 427, 447, 506 and 120B read with Section 34 of Indian Penal Code. The Magistrate issued the process against the accused. Later, the Sessions Court set aside this order, and the same was upheld by the High Court, by dismissing the revision petition filed by the complainant.

In appeal, the complainant contended that at the stage of summoning the accused, what is required to be considered is whether a prima facie case is made out on the basis of the statement of the complainant on oath and the material produced at this stage and the detailed examination on merits is not required. On behalf of the accused, it was contended that that issuing summons/process by the Court is a very serious matter and therefore unless there are specific allegations and the role attributed to each accused more than the bald statement, the Magistrate ought not to have issued the process.

The court noted that, except the bald statement that accused have conspired with common intention to lay the pipeline within the schedule properties belonging to the complainant, without any lawful authority and right whatsoever and in furtherance they have committed to trespass into the schedule properties of the complainant and demolished the compound wall, there are no other allegations that at that time they were present.

The court also noticed the observations made in judgments viz. Maksud Saiyed v. State of Gujarat, (2008) 5 SCC 668 Pepsi Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC 749 GHCL Employees Stock Option Trust v. India Infoline Limited, (2013) 4 SCC 505; and Sunil Bharti Mittal v. Central Bureau of  Investigation, (2015) 4 SCC 609.

"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. Looking to the averments and the allegations in the complaint, there are no specific allegations and/or averments with respect to role played by them in their capacity as Chairman, Managing Director, Executive Director, Deputy General Manager and Planner & Executor. Merely because they are Chairman, Managing Director/Executive Director and/or Deputy General Manager and/or Planner/Supervisor of A1 & A6, without any specific role attributed and the role played by them in their capacity, they cannot be arrayed as an accused, more particularly they cannot be held vicariously liable for the offences committed by A1 & A6.", the court said while dismissing the appeal.

Criminal Law cannot be set into motion as a matter of course and that magistrate while ordering summons has to record his satisfaction about a prima facie case against the accused, the bench of Justices MR Shah and AS Bopanna observed.

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