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Synopsis

The Supreme Court has said that no vicarious liability can be attached to any of the directors or any office bearers of the company for cutting trees as it is the individual liability or the act that would make the person concerned liable for being prosecuted for the offence punishable under Section 19 of the Punjab Land Preservation Act, 1900.

A bench of Justices J B Pardiwala and R Mahadevan said it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made an accused, if the statute provides for such liability and if there is sufficient evidence of his active role coupled with criminal intent.

The court pointed out the primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable.

"For fastening criminal liability on an officer of a company, there is no presumption that every officer of a company knows about the transaction in question," the court said.

The bench quashed the criminal proceedings initiated against Sanjay Dutt, the Managing Director and Chief Executive Officer of TATA Realty and Infrastructure Limited and Tata Housing Development Co Ltd, and others including the General Manager and the Assistant Vice President of Tata Realty and Infrastructure Limited in its Corporate Relations Group and erstwhile Senior Manager of the company namely ‘Sector 113 Gatevida Developers Private Limited’.

When jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the CrPC, the Court concerned should remain vigilant and apply its mind carefully before taking cognizance of a complaint of the present nature, the court suggested.

"Having regard to the nature of the allegations, it is difficult for us to take the view that the appellants herein are responsible for the alleged offence. There are no allegations worth the name in the complaint that the three appellants before us are directly responsible for uprooting of the trees with the aid of Bulldozers or JCB machines or causing damage to the environment," the bench said.

The court also pointed out the persons who were actually found at the site of felling the trees had not been arrayed as accused in the complaint.

"Although the license or necessary permission for development of the land in the specified area had been granted in favour of the company, yet for the reasons best known to the complainant the company has not been arrayed as an accused in the complaint," the bench added.

The court also noted allegations that found place against the appellants in their personal capacity seemed to be absolutely vague.

"When a complainant intends to rope in a Managing Director or any officer of a company, it is essential to make requisite allegations to constitute the various liability," the bench said.

The appellants were aggrieved with the Punjab and Haryana High Court's order of December 8, 2022, which rejected their petition filed invoking Section 482 of the CrPC for quashing of the complaint lodged by the Range Forest Officer for the alleged offence under Section 4 of the Punjab Land Preservation Act, 1900, punishable under Section 19 of the Act.

As per the complaint on September 02, 2021, in the area of sector 113 Gate Vida Gurugram, which had been notified under the Forest Act, so, the same belonged to the Forest Department, the accused destroyed 256 trees using JCB. It was also claimed by the complainant that the illegal act committed by the accused, had caused a loss to the tune of Rs 90,580 to the Forest Department.

Going by the provisions of law, the bench said, "We take notice of the fact that having regard to the Scheme of the Act, 1900, there is no vicarious liability that can be attached to any of the directors or any office bearers of the company. It is the individual liability or the act that would make the person concerned liable for being prosecuted for the offence punishable under Section 19 of the Act, 1900."

The court said it appeared that the Courts below proceeded on the erroneous assumption that the three appellants herein being responsible officers of the company were liable for the alleged offence.

"While a company may be held liable for the wrongful acts of its employees, the liability of its directors is not automatic. It depends on specific circumstances, particularly the interplay between the director’s personal actions and the company’s responsibilities. A director may be vicariously liable only if the company itself is liable in the first place and if such director personally acted in a manner that directly connects their conduct to the company’s liability," the bench said.

The court also pointed out that mere authorization of an act at the behest of the company or the exercise of a supervisory role over certain actions or activities of the company is not enough to render a director vicariously liable.

"There must exist something to show that such actions of the director stemmed from their personal involvement and arose from actions or conduct falling outside the scope of its routine corporate duties. Thus, where the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. There has to be a specific act attributed to the director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company," the bench said.

At the same time, the bench said, wherever by a legal fiction the principle of vicarious liability is attracted and a person who is otherwise not personally involved in the commission of an offence is made liable for the same, it has to be specifically provided in the statute concerned.

"When it comes to penal provisions, vicarious liability of the managing director and director would arise provided any provision exists in that behalf in the statute. Even where such provision for fastening vicarious liability exists, it does not mean that any and all directors of the company would be automatically liable for any contravention of such statute. Vicarious Liability would arise only if there are specific and substantiated allegations attributing a particular role or conduct to such director, sufficient enough to attract the provisions constituting vicarious liability and by extension the offence itself," the bench said.

In the case at hand, the bench said, the High Court failed to pose unto itself the correct question i.e., as to whether the complaint even if given face value and taken to be correct in its entirety would lead to the conclusion that the appellants herein were personally liable for the offence under Section 4 of the Act, 1900 made punishable under Section 19 of the Act, 1900.

"No case could be said to have been made out for putting the three appellants to trial for the alleged offence. The court concerned could not have issued process for the alleged offence," the bench said, allowing the appeal and quashing the complaint and order taking cognizance.

The court, however, clarified that if it was the case of the department that the company had committed any breach or violation of any of the conditions imposed at the time of grant of license, then it was always open for authority concerned to proceed against the company for violation of such terms and conditions.

Case Title: Sanjay Dutt & Ors Vs The State of Haryana & Anr