Recently, the High Court of Jammu and Kashmir & Ladakh quashed a Criminal Complaint against the Directors of a Company.

The Court held that the complaint nowhere spells out as to how and in what manner the petitioners/accused were in charge of or were responsible to the accused company. The complaint was filed under the Essential Commodities Act, of 1955. The bench of Justice Rajesh Sekhri hearing a plea under Section 482 (Saving Inherent Powers of the court) CrPC, seeking quashing of a complaint and the cognizance order passed by the court of Judicial Magistrate against the petitioner-directors.

The legal intendment is clear that when the company is an offender, the vicarious liability of its directors can be imputed in terms of the provisions of a statute, making it a deeming fiction...There is no provision in the Penal Code to attach vicarious liability on Managing Director or Directors or employees of a Company.", Court said.

In the said matter, Petitioner challenged the complaint and submitted that in the absence of the company being an accused in the complaint, they cannot be prosecuted and held liable in their individual capacity in terms of Section 10 of the Essential Commodities Act.

The petitioner further submitted and said that they cannot be held responsible for the acts of the Company as there was nothing in the complaint to show that they were in charge and responsible for the conduct of the business of the company.

After the trials are done, the Court held that one cannot draw a presumption that the Managing Director of a Company is responsible for all acts committed by or on behalf of the company as It all depends upon the respective roles assigned to the officers or employees of a company.

"No doubt, the company being a corporate entity performs its functions through its officers including Chairman, Managing Director, Directors etc. However, it is trite position of criminal jurisprudence that no vicarious liability can be attached to said officers unless statute specifically provides so", the bench explained.

Advocate Areeb Kawoosa, Adv. and Adv Aatir Kawoosa appeared on the behalf of the Petitioner and Advocate Faheem Nisar Shah, GA appeared on the behalf of the Respondent.