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JENISH MAGANLAL KANTARIA Versus STATE OF GUJARAT AND 1

2017 (5) TMI 313 - GUJARAT HIGH COURT

Liability of A Director who had resigned from the company - vicarious liability - Offences punishable under Sections 406, 420 and 114 of IPC - Held that:- It is evident even from perusal of the FIR that the complainant himself was aware about legal status of the petitioner that the petitioner is no more attached to the company against which the FIR is registered. A perusal of the FIR would also indicate that all the allegations in FIR, insofar as representing or inducing the complainant are conc .....

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ation which is there on record is a document which is evidence sufficient to come to conclusion that the relation between the petitioner and Shivami Enterprise has thus ended. Over and above, the communication to the Sales Tax authorities to discontinue his name from VAT / TIN numbers is also indicative of the fact that intention of the petitioner was to once and for all terminate any relation with Shivami Enterprise. - In view of the aforesaid, this Court has no hesitation in coming to conc .....

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nt : MR SALIM M SAIYED, ADVOCATE, MR SANTOSH D GOENKA, ADVOCATE, MS MONALI BHATT, APP ORAL JUDGMENT 1. This petition is filed under Section 482 of the Criminal Procedure Code for quashing of the FIR being CR NO.I-306 of 2011 registered with Rajkot City B Division Police Station for offences punishable under Sections 406, 420 and 114 of IPC. The FIR was registered on 10.12.2011 against three accused persons, of which the present petitioner is arraigned as accused No.3. 2. In the FIR, it is allege .....

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e for the goods would be sent. On such assurance, goods around 300 tons was sent to Shivami Enterprise, details of which are mentioned in the FIR itself. It is alleged that a huge amount was due from the accused persons towards the goods supplied. However, as and when any demand was made, the accused persons kept on promising to make good the payment towards the goods supplied. 2.2 It is on such allegations, the complaint came to be filed wherein allegations so far as the petitioner is concerned .....

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ocate Mr.Salim Saiyed for respondent No.2 - complainant. 4. Learned Advocate for the petitioner submitted that the prosecution against the petitioner should fail as from the allegations made in the complaint itself, it is evident that even before the original complainant entered into transaction with the accused company, the petitioner had already resigned from the said company. He took this Court through the official document in the nature of Form No.32 of the Registrar of Companies, which indi .....

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to the deed of dissolution which appears to have been signed by the petitioner on one side and one Mr.Yogesh Suvariya which was executed in the month of April 2009, which is indicative of the fact that the petitioner is now no more concerned with administration and functioning of Shivami Enterprise. 4.3 He submitted that in absence of any allegations to attract ingredients of the offences under Sections 406 and 420, the petitioner cannot be involved in the offence as the concept of vicarious lia .....

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cerns /firm /companies, which are in the name of Shivami. He also drew attention to the allegations that this is the modus operandi adopted by the Directors of Shivami to defraud not only the complainant but several other persons. He therefore submitted that the FIR against the petitioner may not be quashed, more particularly when the investigation qua other two accused persons has been completed and they have been charge sheeted. 6. Learned APP under the instructions of the officer tenders coun .....

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ence. 7. Having heard learned Advocates for the respective parties and having gone through the case papers, it is evident even from perusal of the FIR that the complainant himself was aware about legal status of the petitioner that the petitioner is no more attached to the company against which the FIR is registered. A perusal of the FIR would also indicate that all the allegations in FIR, insofar as representing or inducing the complainant are concerned, are directed against other accused perso .....

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is evidence sufficient to come to conclusion that the relation between the petitioner and Shivami Enterprise has thus ended. Over and above, the communication to the Sales Tax authorities to discontinue his name from VAT / TIN numbers is also indicative of the fact that intention of the petitioner was to once and for all terminate any relation with Shivami Enterprise. 9. The submissions made by the petitioner on the ground of vicarious liability of a Director should be upheld as is held by the .....

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pany is attributed and imputed to the appellants. It is difficult to accept it as the correct principle of law. As demonstrated hereinafter, this proposition would run contrary to the principle of vicarious liability detailing the circumstances under which a direction of a company can be held liable. (iii) Circumstances when Director/Person in charge of the affairs of the company can also be prosecuted, when the company is an accused person: 42. No doubt, a corporate entity is an artificial pers .....

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perpetrated the commission of an offence on behalf of a company can be made accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision. 44. When the company is the offend or, vicarious liability of the Directors cannot be imputed automatically, in the .....

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