Disclaimer: This has been reported after the availability of the order of the Court and not on media reports so as to give an accurate report to our readers.
Bombay High Court: In a petition challenging the complaint dated 31-10-2009 filed by the Pune Municipal Corporation and subsequent issuance of summons against the officials of the ICICI Bank Ltd., including the then CEO Chanda Kocchar in relation to evasion of Octroi by the bank, a single-judge bench of Neela Gokhale, J., quashed and set aside the complaint and the summons against Petitioner 2 to 5. However, ordered to continue the proceedings against petitioner 1, ICICI Bank Ltd.
In the instant matter, the petitioner 1, ICICI Bank Ltd., is a company incorporated under the Companies Act and a scheduled bank. Petitioners 2–5 were, at the relevant time, the CEO & MD, former Deputy Managing Director, a Legal Department officer, and the Branch Manager of the Bank’s Bund Garden Branch.
The Pune Municipal Corporation alleged that the Bank imported gold bullions/coins into the municipal limits between 01-04-2006 and 31-08-2009 “without paying the octroi/toll to the Corporation.” A notice dated 11-09-2009 was issued, followed by another notice dated 03-10-2009 demanding octroi and penalty. The octroi amount was computed at ?1,27,58,409/-.
The Pune Municipal Corporation filed the complaint under Sections 398 and 401 of the Bombay Provincial Municipal Corporation Act, 1949 (59 of 1949) (the Act), alleging contravention of Section 81/1/A of the delegation order and other provisions. The before the Judicial Magistrate First Class issued summons, prompting the present petition to quash proceedings against petitioners 2 to 5.
The Court analysed the relevant provisions and noted that Section 398 deals with penalty applies when goods liable to octroi are imported with the intention of defrauding the Corporation without payment or tender of duty and Section 401 creates vicarious liability for company officers unless he proves that the offence was committed without his knowledge or consent. The Court compared the statutory scheme under the Act with the vicarious liability regime under the Negotiable Instruments Act.
The Court relied on Kamalkishor Shrigopal Taparia v. India Ener-Gen (P) Ltd.,1 where the Supreme Court held that “a mere designation as director does not conclusively establish liability… liability is contingent upon specific allegations demonstrating active involvement;” in National Small Industries Corp. v. Harmeet Singh Paintal,2 it was held that the primary responsibility is on the complainant to make specific averment to make the accused vicariously liable and there is no presumption that every Director knows about the transaction; N.K. Wahi v. Shekhar Singh,3 held that there must be clear and unambiguous allegation as to how the Directors are in-charge and responsible for the conduct of the business of the company and SMS Pharmaceuticals v. Neeta Bhalla,4 where it was held that mere designation is not enough, specific role must be stated.
The Court held that Section 401 does not automatically rope in company officers for vicarious liability. The Court stated that there must be specific averments showing how each accused was “in charge of and responsible for the conduct of the business of the company at the relevant time.”
Upon examining the complaint, the Court noted that plain reading of the complaint does not demonstrate any role specifically attributed to any of the petitioner 2 to 5. The Court noted that the petitioners were merely described by designation, i.e., CEO, Director, Branch Manager, etc., but there were no allegations assigning a specific role or act relating to the alleged offence.
The Court held that the prosecution against the petitioners cannot continue in the absence of any averment ascribing a specific role to them. The Court held that the statutory preconditions for prosecuting individuals associated with a company under Section 401 of the Act, were not met.
The Court quashed and set aside the complaint and the summons against Petitioner 2 to 5. The Court ordered to continue the proceedings against petitioner 1, ICICI Bank Ltd.
[ICICI Bank Ltd. v. State of Maharashtra, Criminal Writ Petition No. 487 of 2010, Decided on 08-12-2025]
Advocates who appeared in this case :
Mr. Faisal Ali Sayyed i/by M.K. Ambalal, Counsel for the Petitioners;
Mr. Abhijit P. Kulkarni a/w Sweta Shah and Abhishek Roy, Counsel for the Respondent/PMC.