LexS.K. ALAGH versus STATE OF U.P. & ORS.
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A B [2008) 2 S.C.R. 1088 S.K. ALAGH v. STATE OF U.P. & ORS. (Criminal Appeal No. 317 of 2008) FEBRUARY 15, 2008 [S.8. SINHA AND V.S. SIRPURKAR, JJ.] Penal Code, 1860 - s. 406 - Offence of criminal breach of trust - Vicarious liability of Managing Director/Employee of c Company - Held: For offence of criminal breach of trust vicarious liability is not extendable to the Directors or officers of the Company - The provision does not contemplate creation of such legal fiction - Vicarious liability. Respondent No. 2 was proprietor of a firm, which was D wholesale.dealer of a Company. He filed complaint against the appellant (Managing Director of the Company) u/s 406 IPC alleging that the firm had issued demand drafts in favour of the Company seeking delivery of. goods from the Company, but neither the goods were delivered nor E the drafts were returned. The Company was not impleaded as an accused. Accused was summoned. Subsequently he was discharged on merits. But in revision as well as proceedings u/s 482 Cr.P.C., the courts held that discharge of the appellant was not correct. F Hence the present appeal. Allowing the appeal, the Court HELD: Penal Code, save and except some provisions specifically providing therefore, does not G contemplate any vicarious liability on the part of a party who is ·not charged directly for commission of an offence. In a case falling under Section 406 IPC vicarious liability has been held to be not extendable to the Directors or officers of the company. A criminal breach of trust is an H 1088 -+ r. ,. ., .. 1- ! S.K. ALAGH v. STATE OF U.P. & ORS. 1089 [S.B. SINHA, J.] offence committed by a person to whom the property is A entrusted. The drafts were drawn in the name of the company, even if appellant was its Managing Director, he cannot be said to have committed an offence under Section 406 IPC. If and when a statute contemplates creation of such a legal fiction, it provides specifically B therefore. In absence of any provision laid down under the statute, a Director of a company or an employee cannot be held to be vicariously liable for any offence committed by the company itself. [Paras 17, 18, 20 and 21] [1094-D-E; 1095-A, 8, El C Sabitha Ramamurthy and Anr. v. R. B. S. Channabasavaradhya 2006 (10) SCC 581; Maksud Saiyed v. State of Gujarat and Ors. 2007 (11) SCALE 318 - referred to. CRIMINAL APPELLATE JURISDICTION: Criminal Appeal Q No. 317 of 2008. From the Judgment and Order dated 16.04.2007 of the High Court of Judicature at Allahabad in Crl. Misc. Application No. 6170 of 2002. ~ R.F. Nariman, Goodwill lndeevar for the Appellant. Ratnakar Dass and Shalini Dass, Anuvrat Sharma, Pramod Swarup, Prashant Chaudhary, Bharat Ram and M.C. Dhihgra for the Respondents. F The Judgment of the Court was delivered by S.8. SINHA, J. 1. Leave granted. 2. M/s. Akash Traders was an Area Wholesale dealer of Britannia Industries Limited (the Company) for Azamgarh, U.P. G' Dealership of Respondent No.2 was terminated by the said company. It was earlier informed that goods will be delivered only upon receipt of demand drafts issued by it. Complainant sent two demand drafts for a sum of Rs.18,000/- and Rs.1,50,000/- for supply of goods on 14.9.2000 despite the fact H 1090 SUPREME COURT REPORTS (2008] 2 S.C.R. A that the dealership had been terminated earlier. ~ ..... 3. The said demand drafts were sent to the appellant through the local Sales In-charge of the Company. It is stated that the complainant refused to take the same back. B 4. A new Area Wholesaler for Azamgarh was appointed by the company. 5. A demand was made by the complainant to deliver y· >- goods by a letter dated 24.9.2000 stating that the company owes him a sum of Rs.1,00,000/-. The stand of the company that his r c dealership had been terminated was reiterated by a letter dated 25.9.2000. 6. Ashok Kumar Aggarwal, purported to be the proprietor . of the firm Mis. Akash Traders, filed a complaint petition in the ~ D court of Chief Judicial Magistrate, Azamgarh against the appellant herein for commission of an offence under Section 406 of the Indian Penal Code. Britania Industries Ltd. was not ·+ impleaded as an accused therein. 7. On or about 17 .2 .2001, i.e., after filing of the complaint E petition, the dealer accepted the said demand drafts being dated 8.1.2002 for a sum of Rs.1,68,000/-. On or about 25.2.2001, Ashok Kumar Ag
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