J&K High Court | File Photo
HC Dismisses Petition Seeking Action Against Office Bearers
Srinagar- The Jammu and Kashmir High Court on Monday dismissed a petition seeking criminal proceedings against officer bearers of a company for allegedly duping a man from South Kashmir’s Anantnag district worth Rs 3 crore.
A single Judge Bench of Justice Sanjay Dhar quashed a complaint and cheating proceedings initiated against office bearers of a firm ‘Aizen Communication Pvt. Ltd.’ for allegedly duping Nisar Ahmad Dar of Rs 3 crores.
The complaint against company’s officer bearers comprising chief managing director, managing director, manager and clerk was filed before the Chief Judicial Magistrate, Anantnag, alleging that they had entered into a criminal conspiracy by forming the company ‘Aizen Communications Pvt. Ltd’. to cheat the complainant.
The court ruled that criminal proceedings cannot be initiated against office bearers of a company for acts done by the company, unless there are specific allegations against the office bearers and the company is arraigned as an accused.
The complaint had alleged that he was introduced by Managing Director of the company to other accused who were on tour to Kashmir valley to promote the business of the company. Subsequently, a meeting was held by the petitioners with the respondent/complainant at Anantnag and the respondent was invited to invest money in the company and the company, in return, assured to pay double the amount within a span of three years with bonus.
The complainant’s case was that he was duped of Rs 3 crores after he believed in the scheme of the company. The complainant further alleged that the petitioners, after collecting huge wealth, stopped communication and fled from the valley thereby committing the offence of cheating.
After hearing the counsel for the petitioners, the High Court said that there can be no quarrel with the proposition that vicarious liability of managing director, director or any other office bearer of a body corporate would arise only if there exists any provision regarding the same in the statute.
It is also a settled law that even where vicarious liability is fastened under certain statutes, without impleading company as a party, no proceedings can be initiated against its director/officer bearers, the Court said.
“It is clear that Penal Code does not contain any provision for attaching vicarious liability on the office bearers of a company. Unless there are specific allegations against the office bearer of the company and the company is made an accused, the criminal proceedings against its office bearers cannot be initiated,” the Court said.
The High Court further stated that the Magistrate before issuing process against the petitioners who were residing beyond the limits of his territorial jurisdiction, did not conduct enquiry/investigation in the case, which is mandatory in terms of Section 202 of the CrPC.
Therefore, the order passed by the Magistrate issuing process deserves to be quashed, the Court ordered.
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