SCHOOL OF LAW, NARSEE MONJEE INSTITUTE OF

MANAGEMENT STUDIES, BENGALURU

DIRECTORS CAN’T BE HELD VICARIOUSLY LIABLE IN

CRIMINAL CASES MERELY BECAUSE THEY HOLD A
POSITION IN THE COMPANY1

COMPANY LAW- II

Batch: 2021-2026

SUBMITTED TO: SUBMITTED BY:

Dr. Kush Kalra Name: Shailja
Choudhary
Prof. of Company Law II SAP ID: 81012100052
NMIMS (SOL), Bengaluru BA.LL.B. 3rd Year

1
Case Title: S. Rajgopal Vs. State of Haryana and Ors.
Citation: CRM-M No.34999-2019 (O&M)
Court: THE HIGH COURT OF PUNJAB AND HARYANA
Coram: Hon'ble Justice Harpreet Singh Brar
 I. FACTS OF THE CASE

1. On 10.02.2014, at approximately 10:30 PM, while traveling on Mathura Road on a

Honda Aviator two-wheeler, the complainant, along with her husband and a 3-year-
old son named Pavitr, encountered a pothole, causing them to fall. Subsequently, an
unidentified four-wheeler, driven recklessly, struck the complainant's son, resulting in
fatal injuries to the child and leg injuries to the complainant.

2. The police initially filed a cancellation report due to the inability to trace the
offending vehicle. Upon dissatisfaction with the investigation, the matter was directed
to the Crime Branch-CID by the National Human Rights Commission (NHRC).
Despite investigations, the offending vehicle could not be traced conclusively, and the
poor road condition's contribution to the accident could not be established.

3. A Civil Writ Petition was filed against the National Highway Authority of India
(NHAI) for negligence in road maintenance, leading to the accident. NHAI was
directed to decide on compensation, but failing to do so resulted in a contempt
petition.

4. An SIT determined that the road's condition contributed to the accident. The road
widening project on NH-2 was awarded to Reliance, who sub-contracted maintenance
to Larsen and Toubro (L&T). Both Reliance and (L&T) were found to have failed in
their contractual responsibilities, leading to charges against them.

5. L&T's Director was summoned ambiguously, leading to a court order to specify the
responsible individual. Consequently, all 15 directors of L&T were summoned.

II. ISSUE
 Whether Directors Can Be Held Vicariously Liable in Criminal Cases Merely Because
They Hold a Position in Company?

III. ARGUMENTS BY PETITIONER

1. Mr. Mukul Rohatgi, Senior Advocate, representing the petitioners, commenced by

questioning the veracity of the cause of action, citing three versions of the incident's
origin. He underscored discrepancies in witness testimonies and underscored the
petitioners' absence of specific accusations in the summoning order and chargesheets.
Moreover, he contested the notion of vicarious liability for directors under the Indian
Penal Code (IPC) and criticized the summoning order for lacking prima facie
satisfaction. He invoked legal precedents such as Suzuki Paras Rampuria Suitings
Pvt. Ltd. v. Official Liquidator of Mahendra Petrochemicals Ltd.2 and
Ravindranatha Bajpe v. Mangalore Special Economic Zone Ltd. 3 to support his
arguments.

2. Mr. R.S. Cheema, Senior Advocate, representing the petitioners in another case,
argued that to establish the offense under Section 304-A of the IPC, specific essential
ingredients must be established, including a direct and immediate causal link between
the accused's actions and the death. He stressed that mere corporate positions, such as
those held within L&T in this instance, do not ipso facto render the petitioners
culpable, particularly in the absence of particularized allegations indicating their
involvement in the purported crime. He further contended that the summoning order
lacked substantive reasoning and failed to consider prior judicial rulings. He invoked
legal authorities such as Kurban Hussein Mohamedalli Rangawalla v. State of
Maharashtra4 and Pepsi Food Ltd. v. Special Judge Magistrate5 to substantiate his
arguments.

3. In summary, both advocates for the petitioners presented legal arguments challenging
the integrity of the cause of action, emphasizing the lack of direct involvement and

2
Suzuki Paras Rampuria Suitings Pvt. Ltd. v. Official Liquidator of Mahendra Petrochemicals Ltd. (2018) 10
SCC 707
3
Ravindranatha Bajpe v. Mangalore Special Economic Zone Ltd. (2022) 15 SCC 430.
4
Kurban Hussein Mohamedalli Rangawalla v. State of Maharashtra AIR 1965 SC 622
5
Pepsi Food Ltd. v. Special Judge Magistrate (1998) 5 SCC 749
 specific allegations against the petitioners, contesting the concept of vicarious
liability, and highlighting the need for a direct causal nexus between the accused's
actions and the resultant death to establish criminal culpability under Section 304-A
of the IPC.

IV. ARGUMENT BY RESPONDENT

1. Mr. Vikas Bharadwaj, learned State counsel, supported the complainant's stance by
referring to the affidavit filed by the Commissioner of Police, Faridabad, specifically
highlighting negligence in road maintenance as established during the investigation.
He argued that the fatal accident resulted from the presence of potholes on the site,
attributing responsibility to the petitioners due to their alleged negligence in
maintaining the road. He relied on the investigative findings to bolster his argument.

2. The respondent asserts that the petitioners can be held vicariously liable for the
negligence exhibited by L&T in road maintenance, as they were responsible for
overseeing the company's operations. They argue that the actions or inactions of L&T,
as a subsidiary or contractor, reflect the supervision and control exercised by the
petitioners.

3. Respondents accuse the petitioners of concealing relevant facts and providing an

incomplete chargesheet, suggesting an attempt to evade accountability. They argue
that this behaviour indicates a lack of transparency and integrity on the part of the
petitioners, further supporting the imposition of vicarious liability.

4. The respondent presents legal principles and precedents supporting the concept of
vicarious liability in criminal law. They emphasize the need to hold individuals
accountable for the actions of others under certain circumstances, particularly when
there is a relationship of control or authority.

5. Respondents assert that vicarious liability is a well-established principle in Indian

criminal law and should be applied in the present case. They argue that holding the
 petitioners vicariously liable is consistent with the objectives of criminal justice and
deterrence, ensuring accountability for negligent acts resulting in harm.

V. JUDGEMENT

1. The doctrine of vicarious liability, primarily a civil concept, finds exceptional

application in criminal cases. While certain statutes explicitly provide for vicarious
liability, such as the Negotiable Instruments Act, 1881 6, the Indian Penal Code (IPC)
18607, does not contain provisions for automatic vicarious liability. Rather, it requires
a specific attribution of active participation with culpable intent.

2. The legal framework for imputing vicarious liability on corporate entities is well-
established, as evidenced by various legislations and judicial pronouncements.
However, in the absence of legislative mandate or specific allegations indicating
individual culpability, vicarious liability cannot be automatically fastened upon
Directors of a Company.

3. In the present case, the FIR and Supplementary Chargesheet lack specific allegations
regarding the role played by the petitioners in the alleged offence. Furthermore, the
impugned summoning order was passed without recording prima facie satisfaction of
the petitioners' involvement.

4. Therefore, considering the absence of specific allegations and legal provisions for
vicarious liability under the IPC, the offence under Section 304-A of IPC is not
attracted against any of the petitioners. The impugned summoning order lacks
sufficient reasoning and fails to establish prima facie involvement of the petitioners.

5. Hence, the petitioners cannot be implicated solely based on their positions as

Directors of the Company, and the charges against them are dismissed.

6
Negotiable Instruments Act, 1881
7
Indian Penal Code (IPC) 1860
 VI. CRITICAL ANALYSIS

Upon meticulous scrutiny of the case, the ruling offers that the court unearthed insufficient
evidence to establish a direct causal link between the alleged negligence in road maintenance
and the tragic demise of the complainant's son. While the presence of potholes on the road
may have contributed to the accident, it could not be conclusively proven that they were the
sole or primary cause of the tragedy. The court adjudged that the vicarious liability of
directors for offenses committed by a company, particularly in cases of criminal negligence,
necessitates specific allegations and evidence linking them to the wrongful act. In the absence
of such evidence and considering the principles delineated in relevant legal precedents, the
petitioners could not be held vicariously liable for the alleged negligence exhibited by the
company in road maintenance.

This case assumes significance in shaping legal interpretations of vicarious liability in

criminal cases, particularly concerning the liability of directors for offenses committed by the
company. By accentuating the need for a clear causal nexus and specific allegations against
individual directors, the judgment underscores the importance of procedural fairness and due
process in criminal proceedings. In forthcoming legal matters involving allegations of
vicarious liability in criminal cases, courts should ensure a meticulous examination of the
evidence and legal arguments proffered by both parties. It is imperative to uphold the
principles of natural justice and procedural fairness while adjudicating such cases, ensuring
that liability is attributed based on sound legal principles and sufficient evidence.

In conclusion, while this case underscores the importance of corporate accountability and the
imperative to address negligence in road maintenance, it also sheds light on the intricacies
involved in attributing liability to directors for offenses committed by the company. By
providing clarity on the evidentiary standards and legal principles governing vicarious
liability, the judgment contributes to the development of a robust legal framework for
addressing corporate malfeasance while safeguarding the rights of individual directors.