2019 (5) TMI 1871 - HC - Indian Laws

Forging of facts for availment of certain machineries on hypothecation - specific allegation or role ascribed against present applicant or not - applicant herein was independent Director, was involved in the offence or not - HELD THAT - The Indian Penal Code does not contemplate vicarious liability on the part of a party, who is not charged directly for commission of an offence. In the present case, the applicant herein was a non-executive/independent director of the company. He had no decision making powers and was not concerned with the day-to-day working of the said company. He was not directly involved in the loan transaction with the complainant-Corporation. Therefore, the complaint in question is required to be quashed and set aside so far as present applicant is concerned. Considering the fact that the complaint is of 1998, the trial Court may decide the case as expeditiously as possible and preferably within a period of six months from today so far as other accused persons are concerned - application allowed.

Summary

Issues:
Application under Section 482 of the Code of Criminal Procedure to quash Criminal Case No. 1095/1998 and order dated 23.04.1998 for offences under Sections 418, 421, 422, 427 read with Section 114 of the Indian Penal Code.

Detailed Analysis:

Issue 1: Allegations Against the Applicant
The respondent filed a complaint against a company and six individuals, including the applicant, for fraudulent loan activities. The applicant, a solicitor and non-executive director, argued he had no involvement in the loan transaction, decision-making, or day-to-day operations of the company. He contended that no specific role or offense was attributed to him in the complaint.

Issue 2: Arguments and Counter-Arguments
The applicant's counsel argued that the applicant had no authority or direct involvement in the alleged offenses, citing lack of evidence and vague allegations. The State's counsel countered, pointing out that the trial court had found prima facie material for framing charges against the applicant, accusing him of not disclosing this fact in the application.

Issue 3: Vicarious Liability and Legal Precedents
The legal arguments revolved around vicarious liability and the applicant's role as a director. The applicant's counsel referenced legal precedents, emphasizing the need for evidence of active participation and criminal intent to impute liability on an individual associated with a company. The court referred to previous judgments highlighting the absence of vicarious liability unless specifically provided by statute.

Issue 4: Decision and Rationale
The court analyzed the applicant's position as a non-executive director with no decision-making authority or direct involvement in the loan transaction. Based on legal principles and precedents, the court concluded that the applicant's lack of direct participation warranted quashing the complaint against him. The court allowed the application, quashing the criminal case and associated proceedings against the applicant, emphasizing the need for expeditious trial for other accused individuals.

Conclusion:
The court granted the application under Section 482 of the Code of Criminal Procedure, quashing the criminal case against the applicant due to lack of evidence of his direct involvement in the alleged offenses. The judgment highlighted the importance of active participation and statutory provisions for vicarious liability, setting a legal precedent specific to the applicant's non-executive director role.