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Chairman/MD Cant Be Held Liable For Criminal Acts Of Company Without Specific Role

Can the key managerial personnel of the company be held vicarious liable under criminal law?

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Well, the Supreme Court has ruled that company officials like chairman, managing director and Directors cannot be held vicariously liable under criminal law for offenses committed by the company unless there are specific allegations against them with respect to their individual role.

An individual who has perpetrated the commission of an offence on behalf of a company can be made an accused, along with the company. However, the active role of the individual coupled with criminal intent holds the key. It is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so.

Merely because respondent Nos. 2 to 5 and 7 & 8 are the Chairman/Managing Director/Executive Director/Deputy General Manager/Planner & Executor, automatically they cannot be held vicariously liable unless there are specific allegations and averments against them with respect to their individual role, the Court held while dismissing the appeal.

In the present case, the top court dismissed the appeal filed by advocate Shailesh Madiyal on behalf of Ravindranatha Bajpe against the judgments of the Karnataka High Court and the sessions court, which had set aside a magistrate order, issuing summons against the accused. It was contended that the accused had a common intention to cut and destroy 100 valuable trees and laid a pipeline beneath the scheduled properties.

The complainant had further informed the court that he was out of station when the incident took place. He further argued that the said activities caused him a loss of more than 27 lakhs.


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