2019 (8) TMI 1675 - SC - Indian Laws

Liability of General Manager - Vicarious Liability or not - Negligence on the part of Hotel or sheer negligence of the injured who walked out to the terrace for smoking - prosecution of offences Under Sections 336 and 338 read with Section 32 of the Indian Penal Code 1860 (IPC) and Section 4 of the Cigarettes and Other Tobacco Products (Prohibition of Trade and Commerce Production Supply and Distribution) Act 2003 - HELD THAT - The liability of the Directors/the controlling authorities of company in a corporate criminal liability is elaborately considered by this Court in the case of Sunil Bharti Mittal 2015 (9) TMI 1339 - SUPREME COURT . In the aforesaid case while considering the circumstances when Director/person in charge of the affairs of the company can also be prosecuted when the company is an Accused person this Court has held 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. At the same time it is observed that it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the Statute specifically provides for. It is further held by this Court an individual who has perpetrated the commission of an offence on behalf of the company can be made an Accused along with the company if there is sufficient evidence of his active role coupled with criminal intent. Having perused the directions issued permitting the Accused to appear through an advocate such direction is within the power of the High Court in exercise of inherent powers conferred Under Section 482 Code of Criminal Procedure Having regard to nature of directions issued by the High Court as referred above we are of the view that it is not a fit case to interfere with the same in these appeals. Appeal disposed off.

Summary

Issues Involved:
1. Quashing of the chargesheet and summoning order against the accused under Sections 336, 338 read with Section 32 of IPC and Section 4 of COTPA 2003.
2. Allegations of negligence and violation of license conditions by the hotel management.
3. Applicability of vicarious liability on the Managing Director and General Manager of the hotel.
4. Directions issued by the High Court allowing the accused to appear through an advocate.

Detailed Analysis:

1. Quashing of the Chargesheet and Summoning Order:
The appellants sought quashing of the chargesheet and summoning order dated 16.05.2015, which charged them under Sections 336, 338 read with Section 32 of IPC and Section 4 of COTPA 2003. The High Court declined to quash the FIR, stating that it was not appropriate to do so. The Supreme Court, however, quashed the proceedings against Accused No. 2 (Managing Director) and partially against Accused No. 4 (General Manager) for the alleged offence under Section 4 of COTPA 2003.

2. Allegations of Negligence and Violation of License Conditions:
The prosecution alleged that the hotel management allowed guests to access a dark and unsafe terrace, leading to the grievous injury of a guest. The chargesheet highlighted lapses in safety measures and violations of license conditions. The Supreme Court noted that these allegations need to be examined during the trial, particularly against the General Manager and other staff responsible for day-to-day operations.

3. Applicability of Vicarious Liability:
The Court examined the vicarious liability of the Managing Director and General Manager. It was held that an individual in a corporate entity can be prosecuted only if there is sufficient evidence of their active role coupled with criminal intent. The Court found no direct allegations of negligence with criminal intent against the Managing Director (Accused No. 2), thus quashing the proceedings against him. However, the General Manager (Accused No. 4) was found to have a different standing, as he was responsible for the day-to-day affairs of the hotel, and the allegations against him would be examined during the trial.

4. Directions Issued by the High Court:
The High Court allowed the accused to appear through an advocate, which was challenged by the complainant. The Supreme Court upheld the High Court's directions, stating that such directions are within the High Court's power under Section 482 of the Code of Criminal Procedure.

Conclusion:
The Supreme Court allowed the appeal of Accused No. 2 (Managing Director), quashing the chargesheet and summoning order against him. The appeal of Accused No. 4 (General Manager) was partly allowed, quashing the chargesheet for the alleged offence under Section 4 of COTPA 2003 but maintaining the proceedings for other charges. The appeals filed by the complainant were dismissed, and the directions issued by the High Court allowing the accused to appear through an advocate were upheld. The Court clarified that the observations made are for the purpose of these appeals and the trial court is free to record its findings post-trial based on the merits of the case.