SC breather to office bearers at fraud-hit cos

New Delhi: The Supreme Court has observed that there can be “no question of attributing vicarious liability to the office bearers” if it is alleged that a company has committed the offence of cheating or criminal breach of trust.

A Bench, headed over by Justice JB Pardiwala, said that the office bearers could be arrayed as accused only if direct allegations are levelled against them.

“In other words, the complainant has to demonstrate that he has been cheated on account of criminal breach of trust or cheating or deception practised by the office bearers,” added the Bench, also comprising Justice Manoj Misra.

Further, it said that vicarious liability of the office bearers would arise provided any provision exists on that behalf in the statute and not otherwise.

The apex court was considering a plea filed by the Secretary and the Honorary President of Delhi Race Club (1940) challenging the summoning order issued in February last year by the Additional Chief Judicial Magistrate, Khurja in Uttar Pradesh’s Bulandshahr.

According to the complainant, the Delhi Race Club used to purchase grains and oats from him, but after 2017, he was not given any payment.

In his complaint filed for the offence punishable under Sections 406, 420, and 120B respectively of the IPC, he alleged that an amount of Rs9,11,434 is due and payable towards the supply of the consignment.

The apex court, in its detailed judgment, said that the penal law does not contain any provision for attaching vicarious liability on the part of the appellants, who are none other than office bearers of the Delhi Race Club.