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Criminal Lawyer: Criminal machinery cannot be set in motion, merely due to a person being Managing Director; SC.

Supreme Court of India

Justice R. Subhash Reddy and Justice Abhay Manohar Sapre

The SC { Shiv Kumar Jatia v. State of NCT of Delhi } holds 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 that 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. Further it was also held that an individual can be implicated in those cases where statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision.

It was held that in the present case there is no reason and justification to proceed against the MD only on ground that he was the Managing Director of M/s Asian Hotels (North) Limited, which runs Hotel Hyatt Regency. The mere fact that he was chairing the meetings of the company and taking decisions, by itself cannot directly link the allegation of negligence with the criminal intent, so far as appellant–accused no.2. It was held that an individual either as a Director or a Managing Director or Chairman of the company can be made an accused, along with the company, only if there is sufficient material to prove his active role coupled with the criminal intent. Further the criminal intent alleged must have direct nexus with the accused.

It was further held that the Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company, when the accused is a Company. It was held that vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the Statute. It was further held that Statutes indisputably must provide fixing such vicarious liability. It was also held that, even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability.

It was held in the case on hand principally the allegations are made against the first accused-company which runs Hotel Hyatt Regency. The Managing Director of such company who is accused no.2 is a party by making vague allegations that he was attending all the meetings of the company and various decisions were being taken under his signatures. It was held that it is clear that principally the allegations are made only against the company and other staff members who are incharge of day to day affairs of the company. In absence of specific allegations against the Managing Director of the company and having regard to nature of allegations made which are vague in nature, It was held that it is a fit case for quashing the proceedings, so far as the Managing Director is concerned. Accordingly the judgment of the HC was set aside qua MD and the appeal was allowed by quashing the proceedings against Managing Director. 

In the present case, the injured Gaurav Rishi fell from the terrace of 6th floor to 4th floor of the hotel i.e. Hyatt Regency and a complaint alleging criminal negligence and illegal omission on part of the hotel management was made against the Hotel, Managing Director, General Manager and other officials.

In view of above, criminal proceedings initiated against the appellant (A-2) and the chargesheet filed in FIR No.390 of 2013 on the file of Police Station at R.K. Puram and further summoning order dated 16.5.2015 passed by the learned Metropolitan Magistrate, Patiala House Court, New Delhi stands quashed, qua the said appellant by the SC. 

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