IPC Doesn’t Provide For Vicarious Liability For Offence By A Company

The Supreme Court  in HDFC Securities Ltd. & Ors vs State of Maharashtra & Anr. has recently held that the Indian Penal Code, 1860, does not provide for vicarious liability for any offence alleged to be committed by a company. A division bench of Justice PC Ghose and Justice Amitava Roy also held that if and when a statute contemplates creation of such a legal fiction, it provides specifically therefore, e.g. Negotiable Instruments Act, 1881. The Bench has relied on a previous judgment of Supreme Court in S.K. Alagh Vs. State of Uttar Pradesh & Ors, in which it is held that the Indian Penal Code, save and except some provisions specifically providing therefore, does not contemplate any vicarious liability on the part of a party who is not charged directly for commission of an offence. The court has also relied on another judgment in Maksud Saiyed Vs. State of Gujarat, wherein it is held as follows: “The Indian Penal Code does not contain any provision for attaching vicarious liability on the part of the managing director or the directors of the company when the accused is the company. The learned magistrate failed to pose unto himself the correct question viz. as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the respondents herein were personally liable for any offence. The bank is a body corporate. Vicarious liability of the managing director and director would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability”.

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