vicarious liability

Case BriefsSupreme Court

Supreme Court: Explaining the law on vicarious liability under the Negotiable Instruments Act, 1881, the bench of Ajay Rastogi and Sanjiv Khanna*, JJ has held that while Section 141 of the NI Act extends vicarious criminal liability to officers associated with the company or firm when one of the twin requirements of Section 141 has been satisfied, which person(s) then, by deeming fiction, is made vicariously liable and punished, such vicarious liability arises only when the company or firm commits the offence as the primary offender.

The Court explained that the provisions of Section 141 NI Act impose vicarious liability by deeming fiction which presupposes and requires the commission of the offence by the company or firm. Therefore, unless the company or firm has committed the offence as a principal accused, the persons mentioned in sub-section (1) or (2) would not be liable and convicted as vicariously liable.

Sub-section (2) to Section 141 of the NI Act does not state that the persons enumerated, which can include an officer of the company, can be prosecuted and punished merely because of their status or position as a director, manager, secretary or any other officer, unless the offence in question was committed with their consent or connivance or is attributable to any neglect on their part. The onus under sub-section (2) to Section 141 of the NI Act is on the prosecution and not on the person being prosecuted.

It was further observed that the Partnership Act, 1932 creates civil liability. Further, the guarantor’s liability under the Contract Act, 1872 is a civil liability. The Partner may have civil liability and may also be liable under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. However, vicarious liability in the criminal law in terms of Section 141 of the NI Act cannot be fastened because of the civil liability.

“Vicarious liability under sub-section (1) to Section 141 of the NI Act can be pinned when the person is in overall control of the day-to-day business of the company or firm. Vicarious liability under sub-section (2) to Section 141 of the NI Act can arise because of the director, manager, secretary, or other officer’s personal conduct, functional or transactional role, notwithstanding that the person was not in overall control of the day-to-day business of the company when the offence was committed. Vicarious liability under sub-section (2) is attracted when the offence is committed with the consent, connivance, or is attributable to the neglect on the part of a director, manager, secretary, or other officer of the company.”

In the case at hand, even the Bank of Baroda had admitted that the appellant had not issued any of the three cheques, which had been dishonoured, in his personal capacity or otherwise as a partner. Hence, in the absence of any evidence led by the prosecution to show and establish that the appellant was in charge of and responsible for the conduct of the affairs of the firm, the conviction of the appellant had to be set aside.

“The appellant cannot be convicted merely because he was a partner of the firm which had taken the loan or that he stood as a guarantor for such a loan.”

[Dilip Hariramani v. Bank of Baroda, 2022 SCC OnLine SC 579, decided on 09.05.2022]

*Judgment by: Justice Sanjiv Khanna

Case BriefsSupreme Court

Supreme Court: In the 2006 Meerut fire case, the bench of Hemant Gupta and V. Ramasubramanian, JJ has held the Organizers responsible for the incident and not the Contractor as the Contractor was only responsible for executing work as assigned to him by the Organizers. It observed,

“The contractor has worked for the Organizers and not for the victims. Hence, the Organizers alone are responsible to protect the life and liberty of the victims.”

The court was dealing with the writ petition preferred by the victims of the fire tragedy which occurred on 10.4.2006, the last day of the India Brand Consumer Show organized at Victoria Park, Meerut, Uttar Pradesh by Mrinal Events and Expositions. The incident claimed the lives of 65 persons and left 161 or more with burn injuries.

The State of Uttar Pradesh had appointed Justice O.P. Garg (Retired) in terms of provisions of the Commission of Inquiry Act, 19521 vide order dated 2.6.2006 but the report submitted by this Commission was not found to be sustainable in Sanjay Gupta v. State of Uttar Pradesh, (2015) 5 SCC 283. The Court then appointed Justice S.B. Sinha (Retired) as a one-man Commission.

Observations

Holding that the report of the one-man Commission does not suffer from any infirmity so as to absolve the Organizers from their responsibility of organizing the exhibition, the Court made the following observations:

  • The victims or their families visited exhibition on the invitation of the Organizers and not that of the Contractor. The Organizers were supposed to make arrangements for putting up the exhibition hall, providing electricity and water and also the food stalls for the facility of the victims/visitors. They cannot now take shelter on the ground that the Contractor who was given work order was an independent contractor and the victims should seek remedy from him.
  • The Court Commissioner found that the contract with the Contractor was neither a turn-key project nor was he appointed as an independent contractor. Therefore, the argument of the Organizers that they are not liable for the acts of omission or commission on the part of the contractor was rejected by the Commission. Even otherwise, the Organizers were vicariously liable for the alleged acts of negligence on the part of the contractor. The Contractor was only responsible for executing work as assigned to him by the Organizers.
  • The ticket proceeds were collected by the Organizers. It is the responsibility of the Organizers, having collected the entry fee, to ensure the safety and well-being of the visitors. The Organizers have failed in that duty causing loss of life of the innocent victims who came to see the exhibition, which was purely a commercial event with an intention to earn profit by the organizers.
  • The argument that the Court Commissioner has not given any conclusive finding on the cause of the fire is not relevant in determining the civil liability. The maxim res ipsa loquitur would be applicable as organizing an exhibition of such substantial magnitude without proper and adequate safety factors which may endanger the life of the visitors, has been rightly found by the Court Commissioner, an act of negligence including negligence of the officers of the State.

Compensation

It is pertinent to note that,

  • The State has paid Rs.2 lakhs each as ex-gratia compensation to the families of the deceased, Rs.1 lakh each for the persons who suffered serious injuries and Rs.50,000/- each for the persons suffering from minor injuries.
  • The Union of India has paid ex-gratia compensation of Rs.1 lakh each for the deceased and Rs.50,000/- each for those with serious injuries. In terms of the order of this Court, the State has paid Rs.5 lakhs each to the deceased, Rs.2 lakhs each to the victims suffering serious injuries and Rs. 75,000/- each to the victims suffering minor injuries, apart from the amount paid by the Union of India.
  • The list of deceased and injured persons has been produced but the amount of compensation payable to each of the victim including the families of the deceased have not been computed and such amount is required to be computed in accordance with the principles of just compensation as in the case of accident under the Motor Vehicle Act, 1988 by the Motor Accidents Claims Tribunal.

The Court, hence, requested the Chief Justice of the Allahabad High Court to entrust the work of determination of compensation to a Judicial Officer in the rank of District Judge/Additional District Judge at Meerut within two weeks of the present order to work exclusively on the question of determination of the compensation on day-to-day basis. Further,

  • The High Court shall provide all necessary infrastructure to enable the Officer to discharge his duties.
  • The nominated Judicial Officer may permit the parties to lead such evidence as may be permissible.
  • The nominated Judicial Officer shall calculate the amount of compensation and forward the report to the Supreme Court for consideration in respect of compensation in accordance with law.
  • The amount paid by the State and a sum of Rs.30 Lakhs deposited by the Organizers has been disbursed to the victims. The said amount, excluding the ex-gratia payments made, be taken into consideration while determination of the amount payable by the Organizers and the State.

It is important to note that as per the report submitted by the Commission, the liability between the Organizers and the State was fixed as 60:40 and no dispute was raised regarding percentage of liability determined by any of the party.

The Court will now take up the matter after 4 months.

[Sanjay Gupta v. State of Uttar Pradesh, 2022 SCC OnLine SC 443, decided on 12.04.2022]

Counsels

For Organizers: Senior Advocate Shanti Bhushan

For Writ Petitioners: Senior Advocate Vikas Pahwa

Case BriefsDistrict Court

Patiala House Courts, New Delhi: Shreya Arora Mehta, Metropolitan Magistrate, while addressing a matter with regard to Section 138 of the Negotiable Instruments Act stressed the liability of a Director for such offences.

Accused Company through accused 2 – Chairman cum Managing Director along with accused 3 its Managing Director and accused 4 Deputy Managing Director approached the complainant in the year 2006 to engage their services for releasing advertisement of the accused company in various newspapers and publications.

The complainant agreed to extend a credit period of 60 days for payment of the bills with statutory taxes and services charges/commission. The accused persons sent a release order to the complainant for advertisement in various print media. Bills were raised on monthly basis for service provided.

It was stated that till the second quarter of 2008 the complainant received most of the payment but thereafter there was a default by the accused persons in making the time-bound scheduled payment. Later bills of 6 months were kept pending due to which the complainant was forced to ask the Indian Newspaper Society to issue a caution notice to its members regarding the accused company.

The accused company issued 84 cheques with the assurance that on presentation the same would be encashed, but all the cheques were dishonoured and returned unpaid for the reasons either “funds insufficient” and or exceeding arrangement.

Accused persons did not reply to the legal notice under Section 138 of the Negotiable Instruments Act, 1881. Hence the present complaint was filed.

Accused 3 admitted his signatures on all the cheques but stated that the same was done under the pretext of accused 2 who was the chairman cum director of the accused 1. The accused 4 submitted that he had no dealings whatsoever with the complainant company.

Section 141 of the Negotiable Instruments Act, 1881, does not say that a Director of a company shall automatically be vicariously liable for commission of an offence on behalf of the company.

“…the complainant has to make specific averments in the complaint that the accused persons were incharge or were responsible to the company or conduct of the business of the company. And prosecution could be launched not only against the company on behalf of which the cheque issued has been dishonoured, but it could also be initiated against every person who at the time the offence was committed, was in charge of and was responsible for the conduct of the business of the company.”

In the present case, specific averments were made against accused 3 and 4 that they are in charge of and responsible to the accused 1 company for the conduct of the business of the company and were looking after the business of the company and the offence under Section 138 NI Act had been committed with the knowledge, consent and connivance of the accused 3 and 4 besides other and was attributable to neglect on their part.

“…under Section 139 of the Negotiable Instrument Act, 1881 there is a presumption in favour of the complainant that the cheques in question were issued by the accused in discharge of his lawful liability. It is mandatory for the court to draw a presumption against the drawer/accused. However, the said presumption is rebuttable.” 

Accused persons raised arguments that no work order, release order or publication bill was placed on record nor the complainant produce the details of the newspapers etc. To substantiate the same, the accused person had failed to prove on record any admissible and reliable evidence to discharge their onus of rebutting the initial presumption in favour of the complainant as enshrined under Section 139 NI Act.

In view of the above, the essentials of Section 138 NI Act stand duly established and accused persons failed to rebut the same.[Prominent Advertising Services v. Koutons Retail India Ltd., 2022 SCC OnLine Dis Crt (Del) 12, decided on 22-3-2022]

High Court Round UpLegal RoundUp

82 reports on High Court Judgments to read from February 2022.

Allahabad High Court

 Bail

 22-year-old woman, burnt and buried due to demand of dowry: All HC denies bail to accused husband

Noting the brutality with wife a 22-year-old lady and mother of a one year’s infant child in causing her death, beating her cruelly by “her husband” Vikas Kunvar Srivastav, J. held that the said act was not only grave in nature but heinous also.

Read report, here…

Law on S. 311 CrPC

Power to the Court to summon a material witness or to examine a person present in Court or to recall a witness already examined: All HC discusses

Sanjay Kumar Pachori, J., while addressing a matter with regard to recalling of the witnesses expressed that, Section 311 of the Code confers a wide discretion on the Court to act as the exigencies of justice require.

Read report, here…

Law on Recovery of Maintenance

Limitation of 1 year for recovery of maintenance under S. 125(3) of CrPC and the law on enforcement to claim order of maintenance under S. 128 CrPC: All HC explains

Dr Yogendra Kumar Srivastava, J., while addressing a matter regarding recovery of maintenance amount, expressed that,

“Sentencing to jail can only be seen as a means of recovering the amount of arrears and not a mode of discharging liability.”

Read report, here…

Andhra Pradesh High Court

If the de facto complainant feels insulted as he was beaten in front of public and if he takes a hasty decision to commit suicide; will the accused be held responsible in the eyes of law?

Cheekati Manavendranath Roy J. partly allowed the petition by quashing FIR for the offence punishable under Sections 306 r/w 116 IPC.

Read report, here…

Bail

AP HC considered alleged attempt to threatening witness as a vague allegation; Cancellation of bail sought was rejected

“…nothing was brought to the notice of the police or the investigating agency stating that the accused are interfering with course of investigation by way of threatening the witnesses through their men.”

Read report, here…

Bombay High Court

 Law on Voluntarily Causing Grievous Hurt

In a land dispute, a person subjected to grievous injury with the use of ‘Khurpi’: Will he be punished under S. 326 or 325 Penal Code, 1860? Bom HC explains

The Division Bench of S.S. Shinde and N.R. Borkar, JJ., upheld the decision of the Trial Court in a case of causing grievous injury voluntarily.

Read report, here…

Bail

Constant quarrels between husband and wife: Bom HC observes while granting bail to husband accused of dowry and cruelty

Sarang V. Kotwal, J., on noting that the husband and wife cannot live together and there were constant quarrels between them, granted bail to the husband who was accused under the provisions of Dowry Prohibition Act and Penal Code, 1860. 

Read report, here…

Provocation by Wife

Wife subjected husband to humiliation by publicly calling him impotent and abusing him resulting in assault by husband: Husband will be convicted for murder or culpable homicide? Bom HC analyses

The Division Bench of Sadhana S. Jadhav and Prithviraj K. Chavan, JJ., modified the conviction of a husband who in provocation by wife on being subjected to abuses assaulted wife.

Read report, here…

Abetment to Suicide

Employer setting big targets, not granting leave and not accepting resignation would be acts in normal course of business: Bom HC grants anticipatory bail to employer accused of abetting suicide committed by employee

 Sarang V. Kotwal, J., addressed a matter wherein an employer was accused of abetting the suicide of an employee.

Read report, here…

Law on Custody

9-year-old child prefers to stay with mother’s father and his family members and shows animosity towards father: Whether father will get custody of child or not? Bom HC decides 

Addressing a matter wherein a child’s mother was diagnosed with cancer due to which she started living at her parental home with the child, and after the passing of the mother, a custody battle arose between the father of the child and the father and brother of wife, Division Bench of S.S. Shinde and N.J. Jamdar, JJ., noted animosity of the child towards his father, to which the Court expressed that, the same must have occurred due to ‘parental alienation syndrome’.

Read more, here…

Appeal

Appellate court can reverse the finding and sentence of the trial court ordering re-trial

The Division Bench of S.S. Shinde and Milind N. Jadhav, JJ. allowed an appeal against conviction of the Appellant by the Trial Court. The appellant was convicted of the offence punishable under Section 302 of the Penal Code, 1860, (“IPC”) read with Section 34 IPC. He was sentenced to suffer life imprisonment and to pay a fine of Rs. 15,000.

Read report, here… 

Transparency in Functioning

Disqualification of Sarpanch in suspicion of benefitting her close relations by allotting work under Panchayat’s order, without establishment of direct or indirect involvement as per S. 14(1)(g) of Maharashtra Village Panchayats Act: Is it correct? Bom HC analyses

Quoting a phrase from a story of a Roman Ruler Julius Caesar that, “Caesar’s wife should be above suspicion”, Bharati H. Dangre, J., remarked that,

“…those who are vested with the powers are to be made more accountable and transparent in their functioning and subjected to social audit with a view to minimize their discretionary decisions.”

Read report, here…

COVID-19 

Cinema Halls, Theaters, Malls, Restaurants, etc. permitted to carry on business with 50% capacity but banquet halls/Mangal Karyalaya & lawns not permitted with same capacity: Bom HC issues notice

The Division Bench of Sunil B. Shukre and Anil L. Pansare, JJ., addressed a petition wherein a grievance was filed stating that an unreasonable classification resulting in impermissible discrimination had been made by the respondents as Cinema Halls, Theaters, Malls, Restaurants and also other establishments have been permitted to carry on their business or operations with 50% capacity of the customers or attendees, provided customers or attendees are armed with two doses of vaccination, and whereas, Mangal Karyalaya/ Banquet Halls and Lawns where marriage functions are held and solemnised are not being permitted to carry on their business and operations with the same capacity of persons who have taken both the doses of vaccination. 

Read report, here… 

Consumer Protection

Consumer Protection Act requires State Government to constitute a State Consumer Disputes Redressal Commission and create circumstances to its effective functioning: Bom HC at Goa directs State of Goa to ensure filling up of vacant positions expeditiously

Stating that the State Administration comprises several IAS Officers, the least expected out of them is to find the solution to problems, so that State Consumer Disputes Redressal Commission functions effectively, The Division Bench of M.S. Sonak and R.N. Laddha, JJ., directed the State of Goa to ensure that the post of President and 3 other members of the Commission which are vacant be filled expeditiously.

Read report, here…

Dead Person

Notice to a dead person under S. 148 of Income Tax Act cannot be issued: Bom HC

The Division Bench of K.R. Shriram and N.J. Jamdar, JJ., reiterated that notice under Section 148 of the Income Tax Act, 1961 to a dead person cannot be issued.

Read report, here…

Legal Profession

“Notaries operating from public taxis around vicinity of Court”: Dignity of the profession needs to be maintained and the legal profession cannot be allowed to function from the streets | Bom HC

The Division Bench of S.J. Kathawalla and Milind N. Jadhav, JJ., requested the Department of Legal Affairs to give due consideration to this Court’s Order and the Report dated 9-12-2021 submitted by Nausher Kohli, Advocate whilst enacting the Draft Bill.

Read report, here…

Murder or Culpable Homicide?

Husband killed wife brutally in a heat of passion leaving husband with a wounded pride: Bom HC decides whether the said offence will come under “Murder” or “Culpable Homicide not amounting to Murder

Stating that, in the moment of anger spouses almost forgot about the two children who were hardly three years old at the time of incident, the Division Bench of Sadhana S. Jadhav and Prithiviraj K. Chavan, JJ., found that the case of a husband killing wife with a knife was a case of culpable homicide not amounting to murder.

Read report, here…

Arbitration

Bombay HC rejects argument that a dispute cannot be referred for arbitration on account of fraud: Read why

B.P. Colabawalla, J., addressed an arbitration application filed under Section 11 of the Arbitration and Conciliation Act, 1996

Read report, here…

Gangubai Kathiawadi

Can after certification granted by Board, public exhibition of a film be prohibited? Bom HC answers 

In respect to petitions with regard to the release of movie Gangubai Kathiawadi, Division Bench of Dipankar Datta, CJ and M.S Karnik, J., while expressing that “Once the film is granted a certificate by the competent statutory authority, i.e. the Board, the producer or distributor of the film has every right to exhibit the film in a hall unless, of course, the said certificate is modified/nullified by a superior authority/Court”, held that, there cannot be any kind of obstruction for the exhibition of a film, which is certified, unless the said certificate is challenged and Court stays its operation.

Read report, here…

Divorce 

If husband and wife get their marriage registered under Special Marriage Act & under Parsi Marriage and Divorce Act, 1936 as well, would this require them to get nullity of marriage under both Acts or one? Court decides

G.S. Kulkarni, J., expressed that, there is no provision under legislations, that if a marriage between the same couple is annulled under a competent law as enacted by the Parliament, it can as well be of a legal effect in the corresponding enactment.

Read report, here…

Calcutta High Court

Bail

S. 37 of the NDPS Act mandates a more stricter approach than an application for bail sans the NDPS Act: Cal HC

The Division Bench of Bibhas Ranjan De and Debangsu Basak, JJ., while addressing a bail application in a case under NDPS Act, remarked that,

Section 37 of the NDPS Act mandates a more stricter approach than an application for bail sans the NDPS Act.

Read report, here…

Sexual Assault

14-yr old girl subjected to penetrative sexual assault by man who called her grand daughter: Is girl’s complaint vital to form basis of conviction? Cal HC explains

The Division Bench of Joymalya Bagchi and Bivas Pattanayak, JJ., in a penetrative sexual assault case of a 14-year-old girl, expressed that,

“Crime against woman is increasing as a whole. Such type of crime is a direct insult to the human dignity of the society and therefore imposition of any inadequate sentence not only results in injustice to the victim and the society in general but also stimulates criminal activities.”

Read report, here…

Trademark

Disparagement or mere puffery? Court decides in matter of offending/misleading advertisements [Dabur India v. Baidyanath Ayurved]

Saraf, J. decided on a petition which was filed seeking remedy against impugned advertisements disparaging the goodwill and reputation of the petitioner and its product.

Read report, here…

Chhattisgarh High Court

 Jurisdiction

 Limited jurisdiction has been given to the High Court confined to the substantial question of law only

Anoop Kumar Dhand J. dismissed the appeal as it does not fulfill the requirement mandated under Section 30 of Workmen’s Compensation Act, 1923.

Read report, here…

If the party is able to make out an exceptional case and the court finds irretrievable injustice would occur if writ jurisdiction is not invoked, High Courts do have the power to entertain the writ petition

Sam Koshy J. partly allowed the petition and partly disposed of the petition expressing no opinion on the termination notice issued against the petitioner.

Read report, here…

Child Custody

Due to father’s field job, mother granted custody of child: Did Chh HC also grant contact and visitation right to father? Read

In a child custody battle, the Division Bench of Goutam Bhaduri and Rajani Dubey, JJ., reiterated the position of law in the Supreme Court’s decision of Yashita Sahu v. State of Rajasthan, (2020) 3 SCC 67, wherein it was held that the court cannot provide one happy home with two parents to the child then let the child have the benefit of two happy homes with one parent each, further this Court granted visitation and contact right to the father.

Read report, here…

Desertion 

If husband brings home concubine due to which wife leaves house, would that lead to desertion by wife? Chh HC explains

The Division Bench of Goutam Bhaduri and Rajani Dubey, JJ., expressed that,

“If the husband keeps another lady; gives shelter to her; and proceeds to have child with the said lady and for that reason if the first wife has to leave the matrimonial home because of physical and mental torture meted out to her it cannot be presumed as a desertion on the part of wife.”

Read report, here…

Delhi High Court

Trademark Dispute

Baazi v. WinZo | Trademark is used by a manufacturer or service provider to distinguish products from those of competitors: Here’s how Winzo appeared dishonest and unfair in adopting Baazi

“When people are satisfied with the products supplied by a manufacturer or service provider, they buy them on the basis of the trade mark and over time it becomes popular and well known. Thus, the use of a similar or identical trademark by a competitor in the same product would lead unwary customers to believe that it originates from the same source.”

Read report, here…

Deadly Weapons

Whether a ‘blade’ would be covered under S. 397 IPC as a deadly weapon? Del HC explains in view of settled position of law

Mukta Gupta, J., explained under what circumstances would Section 397 of penal Code, 1860 would be attracted.

Read report, here…

Law on Bail

Investigation complete, charge sheet filed, accused in jail since 6 months: Read whether Del HC grants bail

Dhari Singh, J., granted bail while referring to a catena of Supreme Court decisions with regard to the law on bail.

Read report, here…

4 years as undertrial, 2 witnesses examined out of 14, no probability of trial to be concluded in near future: Whether Del HC will grant bail to accused under S. 37(b)(ii) of NDPS Act? Read

Chandra Dhari Singh, J., granted bail to an accused on being satisfied with “reasonable grounds” as per Section 37 (b)(ii) of the NDPS Act, 1985.

Read report, here…

Judicial Separation 

Can judicial separation be granted instead of divorce for which party has approached the Court? Read what Del HC says

Expressing that the Family Court’s decision was based on optimism and hope rather than the actual factual matrix of the case, the Division Bench of Vipin Sanghi and Jasmeet Singh, JJ., while addressing a matter wherein matrimonial dispute occurred between the parties, observed that,

“..a decree of judicial separation can be rescinded by the same court; but a decree of divorce can be reversed only by a judicial order: either in review or in appeal. If it is passed ex parte, it may be recalled on an application being made for that purpose.” 

Read report, here…

Money Laundering

Money laundering offence under PMLA is, layered and multi-fold and includes stages preceding and succeeding offence of laundering money: Del HC

While expressing the object of PMLA Act Chandra Dhari Singh, J., expressed that, offence of money laundering is threefold including the stages of placement, whereby the criminals place the proceeds of crime to the general and genuine financial system, layering, whereby such proceeds of crime are spread into various transactions within the financial system and finally, integration, where the criminals avail the benefits of crime as untainted money.

Read report, here…

Uphaar Case

Manner in which judicial records tampered revealed well-planned & methodical attempt to subvert justice system: Suspending sentence of Ansal brothers would amount eroding faith of public? Read Del HC’s decision

Stating that the manner in which Court records tampered was insidious and revealed a well-planned and methodical attempt to subvert the justice system in order to escape conviction in the Main Uphaar Case, Subramonium Prasad, J., held that since the matter relates to tampering of judicial record, the same has to be decided expeditiously in order to ensure faith of the public in the judicial system.

Read report, here…

Law on Review

Can review be sought wherein Court has to delve into materials, apply its mind afresh after re-evaluating materials? Del HC throws light

Expressing that, Minor mistakes of inconsequential importance are insufficient to seek a review, Asha Menon, J., elaborated that, while seeking review of orders passed in a Civil Suit, the grounds mentioned in Order XLVII Rule 1 of the CPC have to be satisfied, which would not equate the hearing with the original hearing of the case or a hearing in an appeal 

Read report, here… 

Eviction

Group of leading artistes asked to vacate Government allotted premises under Discretionary Quota: Right to continue in public premises infinitely? Detailed report

Expressing that a state of indecision could not have given rise to a legitimate expectation, Yashwant Varma, J., held that, while the petitioners undisputedly were illustrious and pre-eminent exponents in their respective fields of the classical arts, the Court was not shown any material which may justify the continued retention of public premises in Delhi or that they would be unable to propagate the classical arts in any other State or city of the nation.

Read report, here… 

Shared Household

Where the residence is a shared household, would it create any embargo upon owner to claim eviction against his daughter-in-law? Read what Del HC says

Yogesh Khanna, J., held that right of residence under Section 19 of the Domestic Violence Act is not an indefeasible right of residence in a shared household, especially when the daughter-in-law is pitted against aged father-in-law and mother-in-law.

Read report, here…

Section 138 NI Act

Vicarious Liability of Directors of Company for offences committed under S. 138 NI Act: Person claiming to not being able to manage business due to his age, could this be accepted as defence? Del HC answers

Subramonium Prasad, J., addressed a matter pertaining to vicarious liability of directors of the company alleged for offences under Section 138 NI Act.

Read report, here…

Passport

Adoptive Father of a minor girl seeks issuance of her passport with details of adoptive parents so that she could write her TOEFL examination: Here’s what Del HC directed

Kameswar Rao, J., addressed a matter wherein a minor child was not able to apply for a passport either in the name of her biological parents or in the name of her adoptive parents, was unable to pursue her academics in the USA.

Read report, here…

Other

Power under Article 227 of Constitution of India cannot be exercised to upset conclusions, howsoever erroneous they may be, unless there was something grossly wrong or unjust: Del HC

Asha Menon, J., while expressing the scope of power under Article 227 of the Constitution of India dismissed the present petition. 

Read report, here…

Gujarat High Court

Will

Opportunity of being heard needs to be granted; Court decided in matter of the Will of Guru Ranchhoddas

A.P. Thaker, J. decided over a petition wherein the case of the petitioner was that the properties in question were originaly private properties of Guru Keshavdas, and after the death of Guru Keshavdas, Guru Karsandas became the Mahant and succeeded the properties under his Will. On the death of Guru Karsandas his chela Guru Atmaram became Mahant and succeeded to the properties of Guru Karsandas under his Will dated 08.12.1941. Thereafter, Guru Atmaram died leaving his Will dated 06-05-1947, appointing Guru Ranchhodas as Chela.

Read report, here…

Himachal Pradesh High Court

Couples have to make their choice at the threshold between career prospects and family life; HP HC observes in a case where a mother seeks job transfer to be with her daughter

“…mandamus is a public remedy and this remedy lies, when a public authority fails to perform the duty entrusted to it by law.”

Read report, here…

Jammu and Kashmir and Ladakh High Court

Inherent Power

Instead of filing an appeal before the Sessions Court petitioner rushed to this Court invoking its inherent power. Can High Court exercise its inherent power? Read J&K and Ladakh HC’s decision

Mohd. Akram Chowdhury, J., reiterated the settled position of law that if an alternate efficacious remedy is available under the statute, the inherent power of this Court cannot be invoked.

Read report, here…

Jharkhand High Court

Lokayukta 

Does Lokayukta have power to pass directions upon disciplinary authority to take action against erring officials? Jharkhand HC elaborates in light of Jharkhand Lokayukta Act, 2001

Sujit Narayan Prasad, J., addresses a very pertinent question of whether the Jharkhand Lokayukta Act, 2001 provides power for issuance of direction upon the disciplinary authority to take action against erring officials or can it’s order be limited to a recommendation.

Read report, here…

Kerala High Court

Cruelty

Is not taking treatment for mental illness to bring out a peaceful family atmosphere a form of cruelty and thus, a ground for divorce? HC answers

In an interesting case the Division Bench of A.Muhamed Mustaque and C.R. Sophy Thomas, JJ., held that not taking treatment for mental illness in order to bring out a peaceful and harmonious family atmosphere can also be counted as cruelty to the persons at the receiving end.

Read report, here…

If Court finds that marriage failed due to incompatibility, but one of the parties withholds consent for mutual separation, would that be ‘Cruelty’? Kerala HC elaborates

Expressing that, “If the conduct and character of one party causes misery and agony to the other spouse, the element of cruelty to the spouse would surface, justifying grant of divorce”, the Division bench of A. Muhamed Mustaque and Sophy Thomas, JJ., held that, Court cannot leave the life of a spouse to the mercy of the opposite spouse.

Read report, here…

Constitutional & Statutory Obligation

Whether State empowered to reject medical reimbursement for treatment being from unrecognized department of recognized hospital? HC decides

Murali Purushothaman, J., held that there is a Constitutional as well a statutory obligation on the part of the State to bear the expenses for treatment of the government servant and his family.

Read report, here…

Reservation

“Marrying a Christian man would not wipe off the benefit of reservation granted to a scheduled caste persons”, HC reiterates caste of a person is to be decided on the basis of birth

Raja Vijayaraghavan V, J., held that marrying a Christian man would not wipe off the benefit of a reservation granted to scheduled caste persons.

Read report, here…

Corporal Punishment

Teacher administering moderate and reasonable force to enforce discipline in classroom, can be exposed to criminal prosecution? Kerala HC answers 

While explaining that inflicting corporal punishment on a Child by a parent or teacher is forbidden, Dr Kauser Edappagath, J., observed that,

“Hurt of a less serious crime is not forbidden when inflicted in the reasonable chastisement of a child by a parent or by a school teacher.”

Read report, here…

Registration of Marriage

If a foreign embassy doesn’t issue ‘Single Status Certificate’ or NOC of an OCI card holder, can Declarations and Certificates be accepted for registration of marriage in India? Ker HC answers

While addressing a matter wherein an Indian Citizen intended to soleminse and register his marriage with a British Citizen, an OCI card holder, N. Nagaresh, J., held that f a foreign Embassy does not issue a Single Status Certificate or NOC due to the law, rules and regulations prevailing in that country, Declarations or Certificates evidencing the same should be accepted in India for registration of marriage.

Read report, here…

Tobacco at residence

If a person keeps tobacco at residence, would that amount to being an offence? Ker HC answers

While addressing a matter for an offence alleged under Cigarettes and Other Tobacco Products Act, Juvenile Justice Act and Kerala Police Act, Dr Kauser Edappagath, J., expressed that mere keeping tobacco at residence would not amount to being an offence.

Read report, here…

Admin of WhatsApp Group

Can an Admin of a messaging service group be held criminally liable for the offensive content posted by member of a group? Kerala HC addresses

While addressing the question of whether the creator or administrator of a WhatsApp group is criminally liable for offensive content posted by a group member, Dr Kauser Edappagath, J., held that a person can be criminally liable for the acts of another if they are party to the offence.

Read report, here…

Karnataka High Court

 Hijab Case

When Karnataka High Court temporarily restrained students from wearing hijab, religious flags, saffron shawls, etc.: Read Court’s interim order

While expressing that, “Endless agitations and closure of educational institutions indefinitely are not happy things to happen”, the Bench of Ritu Raj Awasthi, CJ and Krishna S Dixit and JM Khazi, JJ., restrained all the students regardless of their religion or faith from wearing saffron shawls (Bhagwa), scarfs, hijab, religious flags or the like within the classroom, until further orders.

Read report, here…

Sentence

Conviction sentence not to affect career and not be treated as a remark for employment; Kar HC confined the sentence to fine only in accordance with Ss. 279 and 337 IPC

Sreenivas Harish Kumar, J., disposed of the petition and modified the judgment of the appellate court.

Read report, here…

GST Exemption 

Whether GST exemption can be claimed for leasing out residential premises as hostel to students and working professionals? Kar HC answers 

The Division Bench of Alok Aradhe and M.I. Arun, JJ., addressed whether GST exemption can be claimed for leasing of residential premises as a hostel to students and working professionals.

Read report, here…

Madras High Court

Negotiable Instruments Act

Whether proceedings under Ss. 138 and 141 of NI Act can be initiated against corporate debtor during moratorium period? Madras HC answers

Sathish Kumar, J., while addressing a matter with regard to the dishonour of cheques under Section 138 of Negotiable Instruments Act, 1881, held that the moratorium provision contained in Section 14 of the Insolvency and Bankruptcy Code, would apply only to corporate debtor, but the natural persons mentioned in Section 141 of Negotiable Instruments Act continue to be statutorily liable under Chapter XVII of the Negotiable Instrument Act.

Read report, here…

Religious Practice

“One of the basic tenets to be followed by every Hindu is tolerance. Tolerance must be his own community or religion and in particular, to also to every other religious practice”: Madras HC

“Fundamental Rights and Duties are sacrosanct and binding on the Courts which adjudicate issues relating to the religion.”

Read report, here…

Madhya Pradesh High Court

 MBBS Seat

CBI’s self-contained note cannot form basis for rejecting application for increase of MBBS Seat; HC directs NMC to consider the application afresh 

The Division Bench of Sujoy Paul and Arun Kumar Sharma, JJ., quashed the National Medical Commission’s decision rejecting L.N. Medical College & Research Centre’s application for increase of MBBS seats.

Read report, here…

Writ of Mandamus

Provision for redressal of grievance in matter of radiation by mobile tower exists; Permission for installation can’t be revoked

Nandita Dubey, J. heard a petition which was filed seeking issuance of the writ of mandamus to the respondents to take appropriate effective steps against the Reliance Telecom Services not to permit them for installation of the mobile tower in the premises of Jai Hind School, V.V. Giri Ward, Pipariya.

Read report, here…

Departmental Inquiry

Desirable to stay the departmental proceedings till conclusion of the criminal case; Court prohibits Department to continue inquiry

Atul Sreedharan, J. decided on a petition which was filed by the petitioner who was aggrieved by the departmental proceedings against him on the identical charges by the CBI in the criminal case. 

Read report, here…

Land Acquisition

What would be an appropriate factor by which market value of land was to be multiplied to assess the compensation in the case where the land was situated in the rural area? [NH- 148N land acquisition] 

The Division Bench of Vivek Rusia and Rajendra Kumar Verma, JJ. took up a bunch of petitions which had similar facts that the petitioners were owners of agricultural land that came under the acquisition for construction of 12 lanes Delhi-Mumbai Expressway i.e. NH-148N under the provisions of the National Highways Act, 1956 (‘the NH Act of 1956’). 

Read report, here…

Acquittal

Unless the acquittal in criminal trial is honourable/clean, the employer has enough discretion to find a candidate to be unfit for employment

The Division Bench of Sheel Nagu and Sunita Yadav, JJ. while hearing a petition under Article 227 against order the Central Administrative Tribunal, Jabalpur Bench., dismissed the petition.

Read report, here…

Meghalaya High Court

Meghalaya Civil Service and the Meghalaya Police Service

There is no question of apples and orange being put in the same basket: Court calls State’s action foolish and justification of such act real tragedy

Sanjib Banerjee, CJ. while deciding in the matter between groups of persons in the Meghalaya Civil Service and the Meghalaya Police Service, pertaining to seniority between or among them, disposed the writ petition in favour of petitioners.

Read report, here…

Rape Case | Confession

Unequivocal confession leads to dismissal of appeal in a Rape case with minor

The Division bench of Sanjib Banerjee, CJ. and W. Diengdoh, J. dismissed the appeal which was filed on behalf of the convict with counsel engaged by the Legal Services Authority.

Read report, here…

Police Service 

“It is elementary that when the law requires a certain thing to be done in a particular manner, it has to be done in such manner or not at all”; Court upholds the dismissal of police official for passing information to outlaws 

“….the appellant had links with the banned outfit and had passed on information about police movements and operations to the outlawed organisation” 

Read report, here…

Orissa High Court

Ever-growing stock of seized vehicles

PIL filed about the ever-growing stock of seized vehicles and other properties in the various police stations in the State of Odisha; Directions issued

Muralidhar, CJ. issued directions regarding the ever-growing stock of seized vehicles and other properties in the various police stations in the State of Odisha

Read report, here…

Punjab and Haryana High Court

 Drug Menace

“Drug menace has become deep rooted and is taking its toll like a slow poison for the young generation”; HC expresses anguish over callously casual approach of officers

In a case exposing callous attitude of authorities while dealing with drug menace in the State of Punjab, Meenakshi I. Mehta, J., observed that in some paras of the Statu sreports/Reply, the police officers concerned had mentioned the tablets, allegedly recovered as ‘CLAVIDOL-100 SR’ whereas in certain other paras the same had been described as ‘CLOVIDOL-100 SR’. Criticizing the lackadaisical attitude of officers, the Bench remarked…

Read report, here…

State of Punjab which was known as one of the prosperous States is now at the brink of drug-trafficking

Expressing that, State of Punjab which was known as one of the prosperous States is now at the brink of drug-trafficking, Harnaresh Singh Gill, J., held that in order to curb the menace of drug trafficking the accused person are to be dealt with stringently even at the stage of granting her/him bail in NDPS Act cases involving commercial quantity.

Read report, here…

Patna High Court

Mental Health 

Mental health of a person and/or treatment of those who are in need, more so during the time of Covid-19, is the least priority of the State Government

The Division Bench of Sanjay Karol, CJ and S. Kumar, J., directed the Chief Secretary, Government of Bihar to take all steps ensuring the establishment of State Mental Health Authority as per Section 45 of the Mental Health Care Act, 2017.

Read report, here…

Rajasthan High Court

 Compensation | Motor Vehicle

Money cannot substitute a life lost but an effort has to be made for grant of just compensation having uniformity in approach; Court observes in a MV accident case demanding higher compensation 

Birendra Kumar J. allowed the appeal and enhanced the award considering the settled guidelines in the subsequent judgments to reach at “just compensation”.

Read report, here…

Customs Act 

DRI officer is not Competent Authority to issue show cause notice and adjudicate the same as “proper officer”; Show cause notice set aside 

A Division Bench of Akil Kumar, CJ and Sameer Kureshi, J. allowed the writ petition and set aside the proceedings issued by show cause notice and subsequent demands confirmed by OIO. 

Read report, here…

Rajasthan Public Service Commission

It would be open for RPSC to conduct written main examination on the rescheduled date, Single Judge bench order stayed

A Division Bench of Akil Kureshi CJ and Sudesh Bansal J. stayed the impugned judgment and left it open for RPSC to conduct a written main examination on the rescheduled date.

Read report, here…

Compassionate Appointment

“…on the ground of delay itself, the heir of the deceased employee shall not be entitled to appointment on compassionate ground.”; Raj HC observes in a case where delay is of almost 13 years 

A Division Bench of Manindra Mohan Srivastava and Anoop Kumar Dhand, JJ. dismissed the petition on the ground that the writ petition filed by the petitioners is without any substance. 

Read report, here…

Transfer

Accepting requests for inter-district transfer can lead to chain reaction and at times considerable administrative difficulties; Raj HC observes while dealing a case related to inter-district transfer

A Division bench of Akil Kureshi CJ and Madan Gopal Vyas J. dismissed the petition stating that nothing would come in the way of the petitioner in seeking inter-district transfer if the Government rules and regulations recognize any such policy.

Read report, here…

 Tripura High Court

 Qualifying Examination

No grievance for non-selection; Court finds criteria fixed by ONGC clear and categorical

Indrajit Mahanty, CJ. dismissed a petition which was filed by the petitioner who was appointed as Junior Security Supervisor at (A-1 Level) in the category of Scheduled Tribe and had appeared for the computer-based test and physical standard test conducted by the ONGC. It was alleged that in the selection process the petitioner was awarded 72 marks but was not selected whereas the candidate (respondent 3) who got only 66.10 marks was wrongly and illegally selected by the respondent 2.

Read report, here…

Conjugal Rights

Whether maintenance granted to the wife under S. 125 CrPC can be cancelled in view of husband’s obtaining a decree for restitution of conjugal rights and wife’s refusal for the same?

S.G. Chattopadhyay, J., decided on a petition which was filed by the petitioner challenging order passed by the Additional Judge, Family Court which stated that the petitioner was not entitled to any maintenance allowance under section 125 Cr.P.C from her husband in view of her refusal to restore conjugal relationship with her husband pursuant to the judgment and decree passed by the District Judge for restitution of conjugal rights.

Read report, here…

Bail

Tests provided under S.37(1)(ii) of the NDPS Act should qualify in order to seek bail; Court rejects application 

S.G. Chattopadhyay, J., rejected a bail application which was filed for releasing the accused on bail who had been undergoing imprisonment since 16-09-2021 under NDPS Act, 1985. Successive applications of the accused for pre-arrest bail were rejected.

Read report, here…

Die-in-Harness Scheme

Exclusion of married daughters from the die-in-harness scheme of the State Government discriminatory? Court discusses

The Division Bench of Indrajit Mahanty, CJ. and S.G. Chattopadhyay, J. decided over a bunch of petitions which had a similar question pertaining to exclusion of married daughters from the die-in-harness scheme of the State Government. 

Read report, here…

Migratory Birds

More than 1000 ‘Rare’ Birds dead, no carcasses found; Court directs committee inspection 

The Division Bench of S.G. Chattopadhyay and Indrajit Mahanty, JJ., took up a PIL which was filed on the basis of press reports that in the Sukhsagar water body of Udaipur, Khilpara, large number of migratory birds of more than 1000 in numbers were found dead. Notices were issued and following the directions of this Court a report had come to be filed by the State wherein the State had taken note of the fact that many migratory birds come and find sanctuary in water bodies in the State of Tripura and they come all the way from Spain, Portugal, South East France, Italy and North Western Africa and have all been listed as “Rare” birds by the European Union, but it seems that the same has been detailed as localized by the State.

Read report, here…

Uttaranchal High Court

Right to Information

Husband seeking personal information such as salary of wife under Right to Information Act, 2005; Whether acceptable or not?

“….The only exception as to the information given under the Act under Section 8 of the RTI Act, is an exemption from disclosure of information.”

Read report, here…

Termination of Pregnancy

Compelling to continue pregnancy, infringement under Art. 21; Rape victim allowed to terminate Intrauterine Fetus of 28 weeks 5 days

Alok Kumar Verma, J., decided on a petition which was filed by the father of the minor petitioner to issue a writ in the nature of mandamus commanding and directing the respondent to ensure immediate medical termination of petitioner’s pregnancy after taking all precautions as required to be taken medically and legally.

Read report, here… 

Bail

Denial of bail on sole ground of apprehension that he may commit crime again, overturned by the Court

R.C. Khulbe, J. granted bail in a criminal revision petition moved against the order of Juvenile Justice Board (JJB), Dehradun as well as a judgment by Addl. Sessions Judge (POCSO)/FTC, Dehradun against the petitioner.

Read report, here…

8 Legal Stories of the Week: From High Courts to District Courts

7 Legal Stories of the Week: From High Courts to District Courts

11 Legal Stories of the Week: From Hijab ban to a Sexual Harassment complaint from an employee in ScoopWhoop & more

8 Legal Stories of the Week: From the release of movie Gangubai Kathiawadi to WhatsApp Admin’s liability if a member of group shares objectionable content on group and many more such stories

Case BriefsHigh Courts

Delhi High Court: Subramonium Prasad, J., addressed a matter pertaining to vicarious liability of directors of the company alleged for offences under Section 138 NI Act.

Petitioner sought to quash a criminal complaint which was filed under Section 138 of the Negotiable Instruments Act, 1881 along with this, he also sought to quash an order passed by the trial court issuing summons to the petitioner.

Respondent 2 had filed a complaint under Section 138 read with Section 142 of the NI Act before the Court of Metropolitan Magistrate, Saket Court.

Respondent 2 was appointed as CFO of India Ahead News Private Ltd. which was engaged in the business of running a TV news channel. Petitioner and accused 2 were the directors of India Ahead News Pvt. Ltd. and they were responsible for the day-to-day affairs of the company.

The complainant was taken in service by respondent 1 at a fixed salary of Rs 10,00,000 per month plus GST less TDS along with monthly expenditure and reimbursement if Rs 1,50,000 per month, along with this a stake of 10% was also assured to the complainant.

In the year 2019, the salaries of the staff along with complainant’s started getting delayed and even the statutory obligations like PF, ESI, etc., were not being fulfilled by the company. Since the dues and the arrears of salary were mounting up at the request of petitioner’s son the complainant offered to take a salary cut.

Further, when the cheques for payment of arrears of salary were presented for encashment the same were returned with remark “insufficient fund”. Hence, a legal notice was issued in compliance with to mandate of Section 138 NI Act demanding payment.

Since there was nothing on record to show that the accused’s 2 & 3 were the directors of the company, the complainant was directed to place on record the Master Data of the company. After the pre-summoning evidence, summons was issued and the said order of the Court has been challenged before this Court.

Despite several attempts to settle the dispute, the parties could not arrive at a settlement.

Supreme Court has in a number of decisions laid down the factors necessary to be kept in mind before making a person vicariously liable for the offences committed by the company under Section 138 of the NI Act:

(i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction.

(ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company.

(iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make the accused therein vicariously liable for offence committed by the company along with averments in the petition containing that accused were in charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with.

(iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred.

(v) If the accused is a Managing Director or a Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position, they are liable to be proceeded with.

(vi) If the accused is a Director or an officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in complaint.

(vii) The person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases.

[Refer Gunmala Sales Private Limited v. Anu Mehta, (2015) 1 SCC 103; National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330; S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89; S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2007) 4 SCC 70; Saroj Kumar Poddar v. State (NCT of Delhi), (2007) 3 SCC 693; N.K. Wahi v. Shekhar Singh, (2007) 9 SCC 481; N. Rangachari v. BSNL, (2007) 5 SCC 108; Paresh P. Rajda v. State of Maharashtra, (2008) 7 SCC 442; K.K. Ahuja v. V.K. Vohra, (2009) 10 SCC 48.]

The complaint read as a whole indicated that at the time of cheques being issued by the company and returned by the bank, the son of the petitioner and the petitioner were the only directors of the company and were responsible for the conduct of the business of the company. Hence, this Court was not inclined to interfere with the order issuing summons to the petitioner.

High Court stated that the petitioner should have established in trial that he was not responsible for the conduct of the business of the company owing to his age and the mere ipsi dixit of the petitioner that he was 80 years of age and was unable to manage the affairs of the company and the same cannot be accepted at present stage.

Supreme Court’s decision in Ashutosh Ashok Parasrampuriya v. Gharrkul Industries (P) Ltd., 2021 SCC OnLine SC 915 squarely covers the present case.

Lastly, the Court concluded that the observations of this Court are limited to the issue as to whether the complaint should be quashed or not because of the fact that the complaint does not state the exact role of the petitioner in the conduct of the business of the company.

“…it is always open for the petitioner to substantiate his assertion that he was not responsible for the conduct of the business of the company by leading evidence which should be considered on its own merits without being influenced by the observations made in this order.”

Therefore, the petition was dismissed. [Gopala Krishna Mootha v. State Govt of NCT of Delhi, 2022 SCC OnLine Del 530, decided on 21-2-2022]

Advocates before the Court:

For the Petitioner: Neeraj Malhotra, Senior Advocate with Shiv Gupta, Devahuti Tamuli, Advocates

For the Respondents: Neelam Sharma, APP for the State

Kamlesh Mahajan, Advocate for R-2

Case BriefsDistrict Court

Tis Hazari Courts, New Delhi: While deciding a matter under Section 138 of the negotiable Instruments Act, 1881, Devanshu Sajlan, MM-05 (NI Act) reiterated the settled position of law that there is no concept of vicarious liability in case of a sole proprietorship concern since a sole proprietorship concern does not have a separate legal identity from its proprietor.

A complaint was filed under Section 138 of the Negotiable Instruments Acts, 1881.

The complaint proceeded against the accused firm, accused persons 1 and 2. Though, later the proceedings against accused 1 were abated pursuant to her death. Thereafter, the matter proceeded only against an accused firm and accused 2.

It was stated that the accused firm was a partnership firm of which accused 1 was a partner and accused 2 was an authorized signatory/attorney.

The accused partnership firm had purchased Kirana Goods from the complainant and the parties had settled their accounts and pursuant to the said settlement, the accused firm issued two cheques in favour of the complainant and the said cheques were signed by accused 2.

The said cheques were returned dishonoured with remarks ‘Funds Insufficient’. After which, the firm sent a legal demand notice, but the accused persons allegedly failed to pay the cheque amount, due to which the present complaint was filed.

The stance of accused 2 was that the accused firm was a sole proprietorship concern, and he was merely the authorized signatory of accused 1, who was the sole proprietor of the accused firm.

Analysis, Law and Decision

High Court expressed that in order to establish the offence under Section 138 NI Act, the prosecution must fulfil all the essential ingredients of the offence. In addition to this, the conditions stipulated under Section 142 NI Act have to be fulfilled.

“Liability of authorised signatory of a proprietorship concern.”

The Bench held that the accused 2’s contention that the accused firm was a sole proprietorship concern and he was merely the authorized signatory of accused 1 who was the sole proprietor of the accused firm was indeed correct.

“It is a settled position of law that there is no concept of vicarious liability in case of a sole proprietorship concern since a sole proprietorship concern does not have a separate legal identity from its proprietor and therefore, it does not fall within the ambit and scope of Section 141 NI Act.”

The above-said position of law was laid down by the Supreme Court in Raghu Lakshminarayanan v. Fine Tubes, (2007) 5 SCC 103.

The Court remarked that as far as a sole proprietorship was concerned, it was only the sole proprietor who could be held liable under Section 138 NI Act for dishonour of a cheque drawn on the account of the sole proprietorship.

Adding to the above, Court stated that vicarious liability cannot be fastened on the employees/authorized signatories of a sole partnership firm, by taking aid of Section 141 NI Act. Hence, if the accused firm is proved to be a sole proprietorship concern, accused 2 would have no liability.

Though, in case the accused firm will be proved to be a partnership firm, then accused 2 would be liable under Section 141 NI Act since he is the signatory of the cheques.

“It is a settled position of law that the signatory of the cheque is vicariously liable in terms of 141 of the NI Act in case the accused is a company or a partnership firm.”

  • Who has the burden of proof to establish that the accused firm is a proprietorship concern or a partnership firm?

The Court stated that it needs to be proved by the complainant that the accused firm was a proprietorship concern or a partnership firm because the legal status of a firm is the very identity of the said firm and without establishing the said legal status, the identity of the firm as a “person” cannot be verified/confirmed/established.

Hence, without the proof of the above-said fact, the statutory presumption under Section 139 NI Act cannot be raised in a casual manner. Therefore, the burden of proof to establish that the accused firm is a partnership firm lies upon the complainant.

  • Whether it has been proved that the accused firm is a partnership firm?

The complainant could not conclusively establish that the accused firm was a partnership firm.

Decision

In view of the above discussion, accused 2 was acquitted from the charge of an offence punishable under Section 138 of the Negotiable Instruments Act, 1881.  Hence, accused 2 was directed to furnish bail bond and surety bond in terms of Section 437-A CrPC.

Note: The span of the present case was almost 21 years (beginning from the year 1999). 

[Durga Traders v. Saraswati Trading Co., 7538 of 2016, decided on 24-12-2021]

Advocates before the Court:

Sh. Vikas Aggarwal, Counsel for the complainant.

Sh. Pankaj Chawla, Counsel for the accused.

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of L. Nageswara Rao, Sanjiv Khanna* and BR Gavai, JJ has held that the post office/bank can be held liable for the fraud or wrongs committed by its employees.

In the case at hand, the appellants had sought transfer of their Kisan Vikas Patras from branch of the Post Office to another and they were made to believe that this transfer was not possible without the help of one Rukhsana, who convinced them that she had been working and associated with the post office for fifteen years. A sum of Rs. 25,54,000/- was paid in cash to Rukhsana, who had pocketed the entire amount. Later, the involvement of one of the Post Office Employees, one MK Singh, was alleged, who, contrary to the rules, had paid the maturity proceeds in cash and not by cheque in the names of the appellants.

Noticing that M.K. Singh is not a third person but an officer and an employee of the Post Office, the Court observed that post Office, as an abstract entity, functions through its employees. Employees, as individuals, are capable of being dishonest and committing acts of fraud or wrongs themselves or in collusion with others. Such acts of bank/post office employees, when done during their course of employment, are binding on the bank/post office at the instance of the person who is damnified by the fraud and wrongful acts of the officers of the bank/post office. Such acts of bank/post office employees being within their course of employment will give a right to the appellants to legally proceed for injury, as this is their only remedy against the post office. Thus, the post office, like a bank, can and is entitled to proceed against the officers for the loss caused due to the fraud etc., but this would not absolve them from their liability if the employee involved was acting in the course of his employment and duties.

In State Bank of India v. Smt. Shyama Devi, (1978) 3 SCC 399 held that for the employer to be liable, it is not enough that the employment afforded the servant or agent an opportunity of committing the crime, but what is relevant is whether the crime, in the form of fraud etc., was perpetrated by the servant/employee during the course of his employment. Once this is established, the employer would be liable for the employee’s wrongful act, even if they amount to a crime. Whether the fraud is committed during the course of employment would be a question of fact that needs to be determined in the facts and circumstances of the case.

The Court concluded that, in the present case, the payment was made in violation of the statutory mandate of Section 10 of the NI Act and, therefore, there is no valid discharge under clause (c) to Section 82 of the NI Act. Further, Rukhsana not being a ‘holder’, payment to her is not a valid discharge under Section 78 read with Section 8 of the NI Act. The respondents would have avoided the liability and claimed valid discharge if they had accepted the KVPs with the identity slip or if they had made payment by cross cheque, in which case, they would have satisfied the condition that they had made payment in good faith and there was no negligence, a requirement of clause (c) to Section 82 read with Section 10 of the NI Act.

[Pradeep Kumar v. Post Master General, 2022 SCC OnLine SC 154, decided on 07.02.2022]

*Judgment by: Justice Sanjiv Khanna,

Case BriefsSupreme Court

Supreme Court: In the case dealing with willful disobedience of the order passed by the Supreme Court in the year 2008 with respect to the levy made while upholding Section 21 of the Assam Agricultural Produce Market Act, 1972, the bench of Sanjay Kishan Kaul and MM Sundresh*,JJ has held that vicarious liability as a principle cannot be applied to a case of contempt and that the appellants cannot be implicated for alleged action of their subordinates.

The Court noticed that in the present case, it was the specific case of the appellants that they did not violate the directives of the court. Also, there was no material to either establish their knowledge on the action of their subordinates, or that they acted in collusion with each other.

In Ram Kishan v. Tarun Bajaj, (2014) 16 SCC 204, the Court explained that in order to punish a contemnor, it has to be established that disobedience of the order is “wilful”.

“The word “wilful” introduces a mental element and hence, requires looking into the mind of a person/contemnor by gauging his actions, which is an indication of one’s state of mind. “Wilful” means knowingly intentional, conscious, calculated and deliberate with full knowledge of consequences flowing therefrom. It excludes casual, accidental, bona fide or unintentional acts or genuine inability. Wilful acts does not encompass involuntarily or negligent actions. The act has to be done with a “bad purpose or 9 without justifiable excuse or stubbornly, obstinately or perversely”. Wilful act is to be distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It does not include any act done negligently or involuntarily. The deliberate conduct of a person means that he knows what he is doing and intends to do the same. Therefore, there has to be a calculated action with evil motive on his part. Even if there is a disobedience of an order, but such disobedience is the result of some compelling circumstances under which it was not possible for the contemnor to comply with the order, the contemnor cannot be punished.”

Taking note of the aforementioned ruling and also the facts of the case at hand, the Court explained that the Contempt of Courts Act, 1971 explains a civil contempt to mean a willful disobedience of a decision of the Court. Therefore, what is relevant is the “willful” disobedience. Knowledge acquires substantial importance qua a contempt order.

“Merely because a subordinate official acted in disregard of an order passed by the Court, a liability cannot be fastened on a higher official in the absence of knowledge.”

Further, when two views are possible, the element of willfulness vanishes as it involves a mental element. It is a deliberate, conscious and intentional act. What is required is a proof beyond reasonable doubt since the proceedings are quasi-criminal in nature.

Similarly, when a distinct mechanism is provided and that too, in the same judgment alleged to have been violated, a party has to exhaust the same before approaching the court in exercise of its jurisdiction under the Contempt of Courts Act, 1971. It is well open to the said party to contend that the benefit of the order passed has not been actually given, through separate proceedings while seeking appropriate relief but certainly not by way of a contempt proceeding. While dealing with a contempt petition, the Court is not expected to conduct a roving inquiry and go beyond the very judgment which was allegedly violated. The said principle has to be applied with more vigor when disputed questions of facts are involved and they were raised earlier but consciously not dealt with by creating a specific forum to decide the original proceedings.

[DR. U.N. BORA, EX. CHIEF EXECUTIVE OFFICER v. ASSAM ROLLER FLOUR MILLS ASSOCIATION, 2021 SCC OnLine SC 968, decided on 26.10.2021]

*Judgment by: Justice MM Sundresh

Case BriefsSupreme Court

Supreme Court: Explaining the law relating to vicarious liability of the Directors of a company under Sections 138 and 141 of the Negotiable Instruments Act, 1881, the bench of Ajay Rastogi* and Abhay S. Oka, JJ has held that if, at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company and and if statutory compliance of Section 141 of the NI Act has been made, the High Court cannot quash the proceedings against the person accused under Section 482 CrPC.

It can, however, do so, if

“… it comes across some unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of process of Court. Despite the presence of basic averment, it may come to a conclusion that no case is made out against the particular Director for which there could be various reasons.”

In S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89, while dealing with an offence under Section 138 of the NI Act, the Court explained the duty of a Magistrate while issuing process and his power to dismiss a complaint under Section 203 without even issuing process. It held,

“5. … a complaint must contain material to enable the Magistrate to make up his mind for issuing process. If this were not the requirement, consequences could be far-reaching. If a Magistrate had to issue process in every case, the burden of work before the Magistrate as well as the harassment caused to the respondents to whom process is issued would be tremendous. Even Section 204 of the Code starts with the words ‘if in the opinion of the Magistrate taking cognizance of an offence there is sufficient ground for proceeding’. The words ‘sufficient ground for proceeding’ again suggest that ground should be made out in the complaint for proceeding against the respondent. It is settled law that at the time of issuing of the process the Magistrate is required to see only the allegations in the complaint and where allegations in the complaint or the charge-sheet do not constitute an offence against a person, the complaint is liable to be dismissed.”

The same judgment then went on to explain the requirements under Section 141 of the NI Act:

(a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.

(b) Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.

(c) The managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under subsection (2) of Section 141.

In the case at hand, the Court was concerned with Directors who were not signatories to the cheques. So far as Directors who are not the signatories to the cheques or who are not Managing Directors or Joint Managing Directors are concerned, it is necessary to aver in the complaint filed under Section 138 read with Section 141 of the NI Act that at the relevant time when the offence was committed, the Directors were in charge of and were responsible for the conduct of the business of the company. This averment assumes importance because it is the basic and essential averment which persuades the Magistrate to issue process against the Director.

In the present case, the Court noticed that the allegations in the complaint are that at the time at which the cheques were issued by the Company and dishonoured by the Bank, the appellants were the Directors of the Company and were responsible for its business and all the appellants were involved in the business of the Company and were responsible for all the affairs of the Company.

“It may not be proper to split while reading the complaint so as to come to a conclusion that the allegations as a whole are not sufficient to fulfil the requirement of Section 141 of the NI Act.”

Since the complaint specifically refers to the point of time when the cheques were issued, their presentment, dishonour and failure to pay in spite of notice of dishonour, the High Court was right in not exercising its power under Section 482 of CrPC.

[Ashutosh Ashok Parasrampuriya v. Gharrkul Industries Pvt. Ltd., 2021 SCC OnLine SC 915, decided on 08.10.2021]

Counsels

For appellants: Senior Advocate Sidhartha Dave, Advocate Arundhati Katju

For respondents: Senior Advocate Pallav Shishodia

*Judgment by: Justice Ajay Rastogi

Know Thy Judge | Justice Ajay Rastogi

Op EdsOP. ED.

Introduction

The phenomenon of technological advancement has led private and government entities to collect personal data of citizens, traces of which are inadvertently left by users while browsing the internet. Such personal information collected without consent of the user is then used to influence the behaviour and action of the citizen through persuasive technology resulting in transgression of the liberty granted to each Indian citizen by the Constitution.

Although the need1 for a dedicated legislation2 on data protection and privacy was previously stated by Standing and Parliamentary4 Committees in their Reports, a major breakthrough did not arrive until the recent Puttaswamy5 judgment pronounced by the Supreme Court of India which recognised the Right to Privacy as a fundamental right and informational privacy, a postulate of human dignity emanating from liberty and right to life6. Placing the accountability on the State, the Court held that the individual at the center stage and directed the Central Government to put a robust mechanism in place.

Draft Data Protection Bill – Critical overview

 In accordance with direction of the Supreme Court, Justice B.N. Srikrishna Committee7 was set up which presented the Draft Personal Data Protection Bill, 20198 currently under consideration of a Joint Parliamentary Committee of the Parliament9. While the Bill elaborately discusses the categories of data10, inclusion of Government as a responsible party11, restriction of retention of personal data12 and process of obtaining consent13; particular important aspects of right to collection of such data evade through the voluminous white paper leaving emphasis only on secondary aspects of its usage. This view is corroborated by the letter written by eminent jurist, Justice M. Jagannadha Rao (retd.) to the Justice Krishna Committee where he questions the extent of permissible surveillance by the State. The Bill discusses the constitution of the regulatory authority14 which is to be appointed solely by the Central Government but does not specify the Committee members after laying down the selection criterion. Giving a free hand to the government entities it grants exemptions15 where the government agency shall elude from the consent procedure laid down as per the Act. The Parliamentary Committee presently considering the Bill is unbalanced in its composition with no diverse perspective present. Absence of dissent in the Committee with majority of the members aligned with the government view, steers the way free for the Bill to be passed with least or no amendments.

Government autonomy in draft Bill — Absolute power corrupts absolutely

The combined factors of structure of draft Bill and the lack of strong opposition in the Committee considering it, work towards autonomy remaining in hands of the Government, and the possibility of potential misuse by State surveillance. While persuasive technology has potentially affected the Indian democracy in the past16 such unrestricted power may well destroy the constitutional fabric by influencing voters using their data, instances of which have already occurred in some parts of the world17. If the current model is followed, a government in power can use persuasive technology to drive voters to vote in their favour and can escape the liability under the veil of exemptions or easily receive a clean chit from a favourable regulatory authority.

Affect of persuasive technology on elections — Deleting reoccurrence of Cambridge Analytica episode

The potential misuse of technology in elections through accessing personal data bits of the voter is an episode telecasted in India in the recent past too. Although an Indian citizen as per law18 is to be compensated for unauthorised access or leakage of personal information, no compensation was awarded when information from over thousands of facebook accounts were extracted to manipulate election results. Cambridge Analytica, a political consultancy firm based in the UK has shown us a prequel as to the search engine manipulation effect19 while its business brochure boasts experience of working in elections and political events from around the globe, speculations of it affecting the US elections leading to the victory of Trump, stirring political conundrums is a speculation which cannot be entirely put to rest. While the former employee of the company admitted to harvesting unsolicited personal information20 and claimed to work with national political parties in India the exemption clause to government entities in the Draft Data Protection Bill, 2019 shall make sure that such manipulation is masked and no evidence of manipulation remains. Linking the dots together we paint ourselves a tarnished image of democracy where choice of the people, by the people and of the people are all directed by the data holding puppeteer. Various studies21 conducted on the affect of persuasive technology across the globe have shown that direct response advertisements and personally targeted messages on the screens of the social media user were common around the months of election. For instance, “Our recovery will be made in America” surfaced on the screens of maximum American voters in region which were predominantly democrat. Thus, a legislation exempting the government entities to access sensitive personal data of its citizens will not only affect power play in politics but will also corrode the democratic structure.

Adjudging vicarious liability

The UK Supreme Court in a recent case of Various Claimants v. W.M. Morrison Supermarkets Plc22 decided on the vicarious liability of the employer Morrisons as his employee, Mr. Skelton, disclosed confidential data of over thousand employees. The Supreme Court held that as it was an act of personal vendetta and as the data was given for a legitimate task, the wrongdoing was not in the nature of employment of the employee the principle of vicarious liability shall not apply. The Draft Data Protection Bill is silent on this perspective. It is unclear whether a government employee in possession of sensitive personal information will be treated as an extension of the term government entity or will be labelled as an agent in case data is illegally outsourced for financial considerations. Will the Government be held vicariously responsible in case sensitive data of voters is traded to manipulate election outcome by any of its employees. This issue needs to be recognised and addressed in the light of the principle of vicarious liability and precedents on data breach.

Suggestive recommendations — Mending the road ahead

To prevent potential misuse, a methodical framework is to be adopted to thwart State surveillance. The first step would be to declare data of an individual as property and make it available on payment of consideration. It would be useful to consider the US senate hearings23 as a reference point to develop a framework whereby witnesses have accepted to social media websites like Facebook24, eating election advertising to influence voter pool. Adopting norms of laissez-faire; similar to US; where consent of the citizen is required before usage of their personal data becomes essential in curbing abuse of State surveillance. Further setting up standard security measures to be met with all entities in possession of such data can be framed on the lines of EU GDPR25 laws which would ensure strong security protocol. With security protocols in place the next step would be to set out a timeline which places a cap on the time period beyond which data retention by entities would not be permitted while also providing a cut-off date to delete previously retained data. The concept of vicarious liability of the government and private sector entities needs to be infused in the present draft Bill. To bring about such changes the defect in the composition of the Parliamentary Committee is to be cured by introducing members of diverse view (opposition party) in equal number of government representatives to avoid polarisation of opinion and ensure democratic action in data collection while keeping State surveillance in check.

† Shivani Dewalla, Advocate Supreme Court of India and High Court of Delhi, presently associated with the chambers of Mr R.S. Suri, Additional Solicitor General of India, e-mail: shivanidewalla5@gmail.com.

1 The 50th Report of the SCIT on the Information Technology (Amendment) Bill, 2006. See, <https://eparlib.nic.in/bitstream/123456789/63025/1/14_Information_Technology_50.pdf>.

2 52nd Report of the SCIT on Cyber Crime, Cyber Security and Right to Privacy. See <https://eparlib.nic.in/bitstream/123456789/64330/1/15_Information_Technology_52.pdf>.

4 The A.P. Shah Committee Report in 2012. See, <https://niti.gov.in/planningcommission.gov.in/docs/reports/genrep/rep_privacy.pdf>.

5 K.S. Puttaswamy v. Union of India, (2017) 10 SCC 1. This judgment overruled previous judgments of M.P. Sharma v. Satish Chandra, 1954 SCR 1077 and Kharak Singh v. State of U.P., (1964) 1 SCR 332 to the extent to which they did not recognise right to privacy as a fundamental right.

6 K.S. Puttaswamy v. Union of India, (2017) 10 SCC 1, See, Per S.A. Bobde, J. at para 6; Per Chelameswar, J. at para 9; Per Dr D.Y. Chandrachud, J. at para 320.

7 Report of the Committee, available on <https://www.meity.gov.in/writereaddata/files/white_paper_on_data_protection_in_india_171127_final_v2.pdf>.

8 <http://www.scconline.com/DocumentLink/A3yGRo3e>.

9<https://www.meity.gov.in/writereaddata/files/constitution_of_committee_of_experts_to_deliberate_on_data_governance-framework.pdf>.

10 Ss. 3 (19), (21), (28) and (36) of the Personal Data Protection Bill, 2019. <http://www.scconline.com/DocumentLink/A3yGRo3e>

11 S. 2 of the Personal Data Protection Bill, 2019 <http://www.scconline.com/DocumentLink/A3yGRo3e>

12 S. 9 of the Personal Data Protection Bill, 2019. <http://www.scconline.com/DocumentLink/A3yGRo3e>

13 S. 11 of the Personal Data Protection Bill, 2019. <http://www.scconline.com/DocumentLink/A3yGRo3e>

14 Ss. 41 and 42 of the Personal Data Protection Bill, 2019. <http://www.scconline.com/DocumentLink/A3yGRo3e>

15 Ch. VIII, Cls. 35-40 of the Personal Data Protection Bill, 2019. <http://www.scconline.com/DocumentLink/A3yGRo3e>

16 See, <https://in.reuters.com/article/facebook-cambridge-analytica-india/india-queries-cambridge-analytica-over-alleged-facebook-data-breach-idINKBN1H00B0> to assess misuse of data over internet to affect Indian elections.

17 US election affected by persuasive technology <https://www.dni.gov/files/documents/ICA_2017_01.pdf>.

18 S. 43-A Information Technology Act, 2000.

19 See, <https://www.pnas.org/content/112/33/E4512#sec-5>, to assess case studies proving potential misuse of search engines.

20 See more information on, Ex-Cambridge Analytica boss admits getting Facebook data from researcher on <https://www.reuters.com/article/facebook-privacy-britain-idINKCN1J222L?edition-redirect=in>.

21 See, <https://adobservatory.org/>, New York University project on ad observatory providing information on spending on social media by President nominees in America.

22 (2020) 2 WLR 941: 2020 UKSC 12.

23 See, <https://www.commerce.senate.gov/services/files/20789C1F-12C1-400E-9936-092F6AC74EDC>, US Senate hearings — “Responses to Written Questions submitted by Honorable John Thune to Tristan Harris”, emphasising on digital well-being of the user.

24 See, <https://www.commerce.senate.gov/services/files/96E3A739-DC8D-45F1-87D7-EC70A368371D>. Mr. Tristan Harris — Co-Founder and Executive Director — Center for Humane Technology, Facebook “eats” election advertising.

25 General Data Protection Regulation (EU) 2016/679 (GDPR) came into force on 25-5-2018 as an umbrella regulation to safeguard data and privacy in the European Union (EU) and European Economic Area.

Case BriefsSupreme Court

Supreme Court: The bench of MR Shah* and AS Bopanna, JJ has held that merely because someone is the Chairman/Managing Director/Executive Director/Deputy General Manager/Planner & Executor, automatically they cannot be held vicariously liable, unless there are specific allegations and averments against them with respect to their individual role in a criminal case.

Factual Background

The Court was dealing with a case wherein it was alleged that all the accused had conspired with common intention to lay the pipeline beneath the schedule properties belonging to the complainant without any lawful authority and right whatsoever.

It is pertinent to note that original accused no.1 was a company incorporated under the Companies Act, original accused nos. 2 & 3 being Chairman and Managing Director of Accused no.1- company and accused no.4 was arrayed as an accused being Deputy General Manager (Civil & Env.) of accused no.1. Accused No.5 was the Planner and Executor of the project work of accused no.1. Likewise, accused no. 6 was also a company incorporated under the Companies Act, accused nos. 7 & 8 were arrayed as an accused being Chairman and Executive Director respectively of accused no.6. Accused no.9 was the Site Supervisor of accused no.6 and accused no.10 was the Sub-Contractor under accused no.6 and accused nos. 11 to 13 were the employees of accused no.10.

Accused No.1 intended to lay water pipeline by the side of Mangalore-Bajpe Old Airport Road abutting the schedule properties. Accused No.2 on behalf of accused No.1 appointed accused No.6 as a contractor for execution of the said project of laying the water pipe line. Accused No.6 in turn authorized accused Nos. 7 and 8 to execute and oversee the said work. They in turn had appointed accused No.9 as site supervisor and the accused No.10 being the sub-contractor engaged accused Nos. 11 to 13 as labourers. Accused Nos. 4 and 5 were entrusted the work of supervision and overseeing the pipeline works carried out by accused Nos. 6, 7 and 8 through accused Nos. 9 and 10 to 13. Accused Nos. 6 to 8 had put into service heavy machineries and excavators and their vehicles for carrying out the work. It was contended that accused Nos. 2 to 5 and 7 to 13 had conspired with common intention to lay the pipeline beneath the schedule properties belonging to the complainant without any lawful authority and right whatsoever. In furtherance thereof, they had trespassed over the schedule properties 3 and demolished the compound wall which was having the height of 7 feet and foundation of 2 feet to a distance of 500 metres. They had cut and destroyed 100 valuable trees and laid pipeline beneath the schedule properties.

It was contended that

“… the accused have committed the act of mischief and waste and caused pecuniary loss of more than Rs.27 lakhs to the complainant. All the accused are jointly and severally liable to make good the loss to the complainant.”

Analysis

The bench noticed that except the bald statement that accused nos. 2 to 5 and 7 & 8 have conspired with common intention to lay the pipeline within the schedule properties belonging to the complainant, without any lawful authority and right whatsoever and in furtherance they have committed to trespass into the schedule properties of the complainant and demolished the compound wall, there were no other allegations that at that time they were present.

There were no further allegations that at the command of A2 to A5 and A7 & A8, the demolition of the compound wall has taken place. All of them are merely arrayed as an accused as Chairman, Managing Director, Deputy General Manager (Civil & Env.), Planner & Executor, Chairman and Executive Director respectively.

“Therefore, as such, in absence of any specific allegations and the specific role attributed to them, the learned Magistrate was not justified in issuing process against accused nos. 1 to 8 for the offences punishable 12 under Sections 427, 447, 506 and 120B read with Section 34 IPC.”

The Court held that issuing summons/process by the Court is a very serious matter and therefore unless there are specific allegations and the role attributed to each accused more than the bald statement, the Magistrate ought not to have issued the process.

Here are some authorities on the power of the magistrate of summoning of an accused in a criminal case:

Sunil Bharti Mittal v. Central Bureau of Investigation, (2015) 4 SCC 609

“No doubt, a corporate entity is an artificial person which acts through its officers, Directors, Managing Director, Chairman, etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so.

(…)

When the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect.”

Read more: Order issuing summons to Sunil Mittal and others in 2G Scam case by Special Judge, CBI, set aside

GHCL Employees Stock Option Trust v. India Infoline Limited, (2013) 4 SCC 505

In the order issuing summons, the learned Magistrate has to record his satisfaction about a prima facie case against the accused who are Managing Director, the Company Secretary and the Directors of the Company and the role played by them in their respective capacities which is sine qua non for initiating criminal proceedings against them.

Maksud Saiyed v. State of Gujarat, (2008) 5 SCC 668

“13. Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. The 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.”

Pepsi Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC 749

“28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the 14 Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused.”

[Ravindranatha Bajpe v. Mangalore Special Economic Zone Ltd, 2021 SCC OnLine SC 806, decided on 27.09.2021]

_________________________________________________________________________

Counsels:

For original complainant: Advocate Shailesh Madiyal

For accused persons: Advocates Nishanth Patil and P.P. Hegde

*Judgment by: Justice MR Shah

Know Thy Judge | Justice M. R. Shah

Case BriefsHigh Courts

Bombay High Court: The Division Bench of Z.A. Haq and Amit B. Borkar, JJ., while addressing the matter, observed that:

In the absence of a specific penal provision creating vicarious liability, an administrator of a WhatsApp group cannot be held liable for objectionable content posted by a member of a group.

Common intention cannot be established in the case of WhatsApp service user merely acting as a group administrator.

By the present application under Section 482 of the Code of Criminal Procedure, the applicant laid challenge to charge-sheet filed in the Court of Judicial Magistrate in pursuance of FIR registered with non-applicant 1 for offences punishable under Sections 354-A(1)(iv), 509 and 107 of the Penal Code, 1860 and Section 67 of the Information Technology Act, 2000.

As per the FIR, applicant was an administrator of a WhatsApp group, that accused 1 used filthy language against non-applicant 2 on a WhatsApp group of which applicant was an administrator, that despite accused 1 using filthy language against the non-applicant 2, applicant had not taken any action against accused 1.

Further, it was alleged that the applicant being the administrator had not removed nor deleted accused 1 from the WhatsApp Group.

In view of the above, non-applicant 2 lodged the FIR against the applicant and accused 1.

Hence, the applicant has, therefore, filed a present application challenging filing of charge-sheet and continuation of proceedings against the applicant.

Crux of the Issue

Whether an administrator of a WhatsApp group can be held criminally liable for the objectionable post of its member for committing offences punishable under Sections 354-A(i)(iv), 509 and 107 of the Penal Code, 1860 and Section 67 of the Information Technology Act, 2000?

Powers of the WhatsApp Group Administrator:

A group administrator has limited power of removing a member of the group or adding other members of the group. Once the group is created, the functioning of the administrator and that of the members is at par with each other, except for the power of adding or deleting members to the group.

The administrator does not have the power to regulate, moderate or censor the content before it is posted on the group. But, if a member of the WhatsApp group posts any content, which is actionable under law, such person can be held liable under relevant provisions of law.

Further, it was expressed that, a group administrator cannot be held vicariously liable for an act of a member of the group, who posts objectionable content, unless it is shown that there was a common intention or pre-arranged plan acting in concert pursuant to such plan by such member of a Whatsapp group and the administrator.

In the FIR it was stated that sexually coloured remarks were made by accused 1 and applicant being administrator of the WhatsApp group had not taken action of deleting the accused 1 from the group, nor had sought an apology from accused 1.

Decision

In Court’s opinion, non-removal of a member by the administrator of a WhatsApp group or failure to seek apology from a member, who had posted the objectionable remark, would not amount to making sexually coloured remarks by the administrator.

Court found that essential ingredients of Section 107 of IPC that the applicant had instigated or intentionally aided by his act or illegal omission to accused 1 to make sexually coloured remarks against non-applicant 2 were conspicuously absent. Hence the said Section will not be attracted in the present case.

Section 509 of the IPC criminalizes word, gesture, or act ‘intended’ to insult the modesty of a woman. In order to establish this offence, it is necessary to show that modesty of a particular woman has been insulted by a spoken word, gesture or physical act.

In the present matter, the above-stated offence cannot be made out against applicant, when the grievance of non-applicant 2 was that accused 1 had used filthy language against the non-applicant 2.

To constitute an offence under Section 67 of the Information Technology Act, 2000, a person must publish or transmit an obscene material in electronic form.

High Court in view of the above discussion, found no allegation or material that the applicant had either published, transmitted or caused to be published or transmitted in electronic form any material, which was lascivious or appealed to prurient interest or its effect was such to tend to deprave and corrupt persons who were likely to read, see or hear the matter contained.

Bench added that the applicant had neither published nor transmitted or caused to be published or transmitted any electronic form, any material which was obscene in nature.

Lastly while concluding, the High Court held that parameters of exercise of the powers conferred on this Court under Section 482 CrPC being settled, that in order to prevent the abuse of process of any Court and to secure the ends of justice, this power can be exercised.

Bench stated that the present case is the one where power needs to be exercised.

Taking the overall view of the matter, Court was satisfied that even if allegations in the FIR were accepted as correct and considering the material in charge sheet on its face value it does not disclose essential ingredients of offences alleged against the applicant under Sections 354-A(1)(iv), 509 and 107 of the Indian Penal Code and section 67 of the Information Technology Act, 2000.

Hence the continuation of present proceedings against the applicant would amount to an abuse of process of Court. [Kishor v. State of Maharashtra, 2021 SCC OnLine Bom 654, decided on 01-03-2021]

Advocates before the Court:

Mr R.M.Daga, Advocate for the applicant. Mr T.A.Mirza, A.P. P. for the non-applicant No.1.

Mr Sanjay A. Bramhe, Advocate for the non-applicant No.2.

Case BriefsHigh Courts

Allahabad High Court: Ravi Nath Tilhari, J., addressed a matter wherein a person being the director of the company signed a cheque on behalf of the company and since the said cheque got dishonoured, he was made liable, without the company being made liable under the offence of Section 138 of Negotiable Instruments Act, 1881.

The instant petition was filed under Section 482 of the Code of Criminal Procedure, 1973 for quashing of summoning order passed by Additional Chief Judicial Magistrate under Section 138 of the Negotiable Instruments Act.

Facts as stated by the applicant

Applicant has been stated to be the Director of a Company and complainant/OP 2, an employee in the railways, by giving assurance of contract of road construction from his superior officers in favour of applicant’s company obtained post-dated cheque of 5 lakh rupees in terms of security money.

Complainant had assured the applicant that once he starts earning profits from the said contract work he would return the post-dated cheques.

However, applicant without any prior notice to the company, complainant presented the cheque in the bank which was dishonoured due to non-availability of funds. One of the legal notice, though was not received by the applicant, but the second notice was served.

Points that arose for consideration:

High Court formulated the following points of consideration:

  • Whether criminal prosecution against the person in charge of, and responsible for conduct of the business of the company under Section 138 NI Act, can be maintained, in the absence of any prosecution of the Company for such offence and without making the company an accused, in view of Section 141 of the NI Act?
  • Whether the cheque in question was issued by the applicant in his personal capacity or in the capacity of director of the company?
  • Whether the orders under challenge and the criminal proceedings against the applicant deserve to be quashed in the exercise of jurisdiction under Section 482 CrPC?

Analysis of the above points:

In order to consider the first point, Court referred to Sections 138 and 141 of the Negotiable Instruments Act, 1881.

On perusal of the said provisions, the essential ingredients of offence under Section 138 NI Act as laid down by the Bench were:

  • The person drew a cheque on an account maintained by him with the banker
  • When such a cheque is presented to the bank is returned by the bank unpaid
  • such cheque was presented to the bank within a period of six months from the date it was drawn or within the period of its validity, whichever is earlier;
  • the payee demanded in writing from the drawer of the cheque the payment of the amount of money due under the cheque to the payee
  • Such a notice of payment is made within a period of 30 days from the date of the receipt of the information by the payee from the bank regarding return of the cheque, as unpaid and
  • Inspite of the demand notice the drawer of the cheque failed to make the payment within a period of 15 days from the date of receipt of the demand notice

For the offence to be constituted under Section 138 NI Act, all the above ingredients need to co-exist.

Supreme Court decision in Aneeta Hada v. Godfather Travels and Tours (P) Ltd., (2012) 5 SCC 661, held that Section 141 of NI Act is concerned with the offences by the company. It makes the other persons, vicariously liable for commission of an offence on the part of the company.

The vicarious liability gets attracted when the condition precedent laid down in Section 141 NI Act stands satisfied. There can be no vicarious liability unless there is a prosecution against the company. For maintaining a prosecution under Section 141 NI Act, arraying of the company as an accused is imperative.

 In Supreme Court’s decision of Standard Chartered Bank v. State of Maharashtra, (2016) 6 SCC 62, it was held that there cannot be any vicarious liability unless there was a prosecution against the Company.

In Harihara Krishnan v. J Thomas, (2018) 13 SCC 663, Supreme Court held that Section 141 stipulates the liability for the offence punishable under Section 138 NI Act when the person committing such an offence happens to be a company.

In Aneeta Hada v. Godfather Travels and Tours (P) Ltd., (2012) 5 SCC 661, it was settled that for maintaining a prosecution against the person in charge of and responsible for conduct of the business of the company under Section 138 NI Act, arraigning of the Company as an accused is imperative in view of Section 141 of the Act, as such a person can only be held vicariously liable.

With regard to point 1, hence Court held that such a person, cannot be prosecuted unless there was prosecution of the company.

Second Point

 Whether the cheque in question was issued by the applicant in his personal capacity or in the capacity of the Director of the Company?

The above-stated question can be determined from perusal of the cheque itself. It is one of the essential ingredients to constitute an offence under Section 138 NI Act, that the person drew a cheque on an account maintained with the Banker and the existence of this ingredient is to be proved from the document itself, i.e. the cheque, and for its proof no other evidence is required. Hence, Court could determine if the cheque was issued as authorized signatory or in personal capacity by the applicant by exercising its jurisdiction under Section 482 CrPC.

On perusal of the copy f the cheque it was found that the said was signed by Sanjay Singh, the applicant for Udit Infraheights Private Limited, as its authorized signatory.

Hence the cheque was not issued in the applicant’s personal capacity.

In the absence of the company, as accused, any offence was not made out, even prima facie, against the applicant for his summoning under Section 138 read with Section 141 of the NI Act.

While referring to the Supreme Court decision in Ashoke Bafna v. Upper India Steel Manufacturing and Engineering Company Ltd., (2018) 14 SCC 202, it was held that before summoning an accused under Section 138 NI Act, the Magistrate is expected to examine the nature of the allegations made in the complaint and the evidence, both oral and documentary, in support thereof, and then to proceed further with the proper application of mind to the legal principle of the issue.

Last Point

 With regard to the last point of consideration, Bench referred to the decision of Supreme Court in Rishipal Singh v. State of U.P., (2014) 7 SCC 215, Supreme Court, while considering the scope of Section 482 CrPC held that when a prosecution at the initial stage is asked to be quashed, the test to be applied is as to whether the uncontroverted allegations as made in the complaint prima facie establish the case.

In Pooja Ravinder Devidasani v. State of Maharshtra, (2015) 88 ACC 613, Supreme Court held that the Superior Court should maintain purity in the administration of justice and should not allow the abuse of process of the Court.

Therefore, Court opined that the complaint was not filed against the company, as the company was not made a party accused and no vicarious liability could be imposed upon the accused applicant.

Since, the cheque was not signed by the applicant in his personal capacity, the complaint could not have proceeded against him and no offence could be made out against the applicant.

Petition was allowed and the orders challenged were quashed. [Sanjay Singh v. State of U.P., 2021 SCC OnLine All 120, decided on 10-02-2021]

Case BriefsHigh Courts

Madras High Court: G.K. Ilathiraiyan, J., while addressing the instant matter, observed that, a person who is inducted as the Non-Executive Director of an accused company and not responsible for the day-to-day affairs of the company, he/she cannot be vicariously liable for the offence committed by the company.

Petitioners Counsel submitted that the petitioner was arrayed as Accused 3 on the complaint filed by the respondents for the offences punishable under Section 138 of Negotiable Instruments Act, 1881.

Magistrate took cognizance as against the petitioner when there was absolutely no specific allegation against the petitioner to attract the offences under Section 141 of NI Act and issued summon without application of mind.

Petitioner being merely Director of the company was not liable to be prosecuted for the offences under Section 141 of NI Act.

Further, it was stated that the respondent cannot presume every Director knows about the transaction while fastening criminal liability as against the Director of the Company.

To attract the offences under Section 141 of NI Act as against the petitioner, the complainant should have specifically averred in the complaint that at the time of offence the petitioner was in charge of and responsible for the conduct and the business of the company.

Adding to its contention, it was also stated that if a person who was in charge of the day to day management of the company or by stating that he / she was in charge of affairs of the company cannot be vicariously made liable under Section 141(1) of NI Act.

Counsel for the petitioner Nithyaesh Natraj and Counsel for the respondent R. Prasanna Vineeth Durai.

Dishonour of Cheque

On the Complaint lodged, in total there were 4 accused of the offences punishable under Sections 138 and 141 of NI Act. It was alleged that the accused persons had already availed term loan from the complainant to the tune of Rs 65 lakhs. Accused towards partial discharge of their liability issued eight cheques in favour of the respondent but the same were returned dishonoured on being presented for the reason “account closed”.

Respondent after serving statutory notice under Section 138 of NI Act, initiated proceedings for the offences punishable under Sections 138 and 141 of NI Act against the accused persons.

Respondent made allegation foisting liability on the petitioner in the complaint as follows:

“the second accused being the Managing Director and the third accused being one of the Director who are respectively in charge of the managing all such business activities of the first accused company and also running the day to day affairs naturally aware about their liability”.

Analysis and Decision

Bench stated that Section 141 of the NI Act does not make all the Directors liable for the offence. The person sought to be made liable should be in charge and responsible for the conduct of the business of the company at the relevant time.

Therefore, it was stated that there is no deemed liability of the Director in such case.

Several Supreme Court decisions have held that the complaint has to specifically say as to how and in what manner Director was responsible for the conduct of the business of the company.

Court held that unfortunately, in the impugned complaint, the allegation did not satisfy the requirements of Section 141 of the NI Act.

Further, on perusal of the complaint, Court observed that the petitioner was inducted as the Non-Executive Director of the first accused company, therefore the petitioner was not responsible for the day to day affairs of the company and hence cannot be made liable vicariously for the offence committed by the company.

Therefore, the Court, in order to secure ends of justice, opined to necessarily interfere with the proceedings in exercise of its jurisdiction under Section 482 of CrPC.

Hence, the Criminal Original Petitions were allowed and the proceedings on the file of Metropolitan Magistrate were ordered to be quashed as far as the petitioner was concerned, whereas, for other accused, the trial court has been directed to complete the trial. [Vijaya Arun v. New Link Overseas Finance Ltd., Crl. OP Nos. 5, 8 & 11 of 2020, decided on 18-08-2020]

Case BriefsHigh Courts

Allahabad High Court: While deciding a petition filed under Article 227 of the Constitution of India, Suresh Kumar Gupta, J., dismissed the same and declined to interfere in the judgment delivered by Sessions Court.

The present petition has been filed by the petitioner to set aside the impugned orders dated 31-10-2018 passed by Additional Court No. 3, Agra in Complaint No. 1500 of 2011 (Nepal Singh v. Dhirendra Singh) under Section 138 of Negotiable Instruments Act, 1881(Hereinafter referred as N.I. Act) and the order dated 6-02-2020 passed by Additional Sessions Judge, Agra in Criminal Revision No. 552 of 2018 (Dhirendra v. State of U.P. ) and to quash the summoning order dated 28-3-2012 as well as an entire proceeding of Complaint Case No. 1500 of 2011 pending in the Additional Court No. 3, Agra.

The factual matrix in the instant case is such that the present petitioner borrowed Rs 1,00,000 from respondent 2 and handed over cheques bearing Nos. 850213 & 850214 for repayment of the borrowed amount. However, the cheques were dishonoured by the bank due to insufficient amount in the account subsequent to which respondent 2 served a notice to the petitioner on 18-10-2011. Later, on 08-11-2011, respondent 2 filed a complaint case no. 1500 of 2011 (Nepal Singh v. Dhirendra Singh) under Section 138 of N.I. Act against the petitioner in the trial court. The trial court vide its order dated 28-3-2012 has taken cognizance and summoned the petitioner.

Counsel for the petitioner, Deepak Kumar Kulshrestha has relied on Section 138 of the N.I. Act, submitting that the complainant/respondent is incompetent to lodge the prosecution as the cheques were issued by the firm Rashmi Arosole & Chemicals and the petitioner is the proprietor of this firm but the firm is not arraigned as an accused. He relied on the judgments delivered in the cases of Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661 and Devendra Kumar Garg v. State of U.P., 1990 SCC OnLine All 806 and added that until and unless company or firm is arraigned as an accused director or the other officer of the company/firm cannot be prosecuted/punished in the complaint.

Counsel for the respondent, S.B. Maurya attempted to refute these contentions by submitting that the cheques were drawn by the petitioner in his personal capacity and were given by way of security for payment of money. The circumstances do not warrant the arraignment of the aforementioned firm as a party.

The Court perused the cheques closely and concluded that the cheques bear the petitioner’s signature and that there is no dispute with regard to the fact that the petitioner is the sole proprietor of Rashmi Arosole & Chemicals. Also, on perusal of the registration certificate of the firm, it can be established that the petitioner is the sole proprietor of the firm namely Rashmi Arosole & Chemicals.

Upon careful consideration of the facts, circumstances and arguments advances, the Court observed that-

“While a partnership results in the collective identity of a firm coming into existence, a proprietorship is nothing more than a cloak or a trade name acquired by an individual or a person for the purpose of conducting a particular activity. With or without such trade name, it (sole proprietary concern) remains identified to the individual who owns it. It does not bring to life any new or other legal identity or entity. No rights or liabilities arise or are incurred, by any person (whether natural or artificial), except that otherwise attach to the natural person who owns it. Thus it is only a ‘concern’ of the individual who owns it. The trade name remains the shadow of the natural person or a mere projection or an identity that springs from and vanishes with the individual. It has no independent existence or continuity.”

The Court was able to conclude that in a sole proprietary concern, vicarious liability cannot arise because there’s only one person involved. The identity of the sole proprietor and his concern remain one, even if the sole proprietor may adopt a different name for his concern. Hence, there is no defect in the complaint lodged by the respondent. The sole proprietorship firm need not be impleaded for the respondent to realise his claim against the petitioner.

In view of the above, the petition has been dismissed for lack of merit. The Court found no reason to interfere in the orders dated 31-10-2018 passed by Additional Court No. 3, Agra and the order dated 6-2-2020 passed by Additional Sessions Judge against the petitioner. [Dhirendra Singh v. State of U.P., 2020 SCC OnLine All 1130, decided on 13-10-2020]

Yashvardhan Shrivastav, Editorial Assistant has put this story together

Case BriefsForeign Courts

Court of Appeal of the Democratic Socialist Republic of Sri Lanka: A Division Bench of K.K. Wickremasinghe and K. Priyantha Fernando, JJ., dismissed an appeal filed aggrieved by the judgment of High Court which convicted the three appellants for the count of murder punishable under Section 296 to be read with Section 32 of the Penal Code, sentencing them to death and the fourth appellant was convicted for a lesser offence punishable under Section 314 of the Penal Code. The appellants contended that prosecution had failed to prove the charge against the 1st Appellant beyond a reasonable doubt, there appears a conflict of evidence between the witnesses; evidence led at the trial negates common murderous intention on the part of 2nd and 3rd appellant and thus imputation of vicarious liability was legally and factually flawed.

The deceased was a police officer. His wife was a school teacher and the deceased and the wife were living in the teacher’s quarters inside the school premises. The witness stated that when she had gone for band practices she saw the 2nd and 3rd appellant had gone to the quarters that the deceased was living and had tapped on the door and then they were seen fighting and then the deceased went inside and the appellants moved towards the road. After a while the deceased had come out of the house, dressed in his police uniform and had gone towards the road, then the 2nd and 3rd Appellants and the 4th  Accused carrying poles had come towards the deceased and had assaulted him. Another witness had told that the 1st Appellant had stabbed the deceased.

The Court while dismissing the appeal held that the Trial Judge had considered all the evidence adduced at the trial, analyzed the same and rightly decided that the 1st Appellant stabbed the deceased that caused his death, there was no evidence of the 1st Appellant using his right of self-defence, at the trial and there was found no conflict between the evidence of the witnesses that would affect their credibility. Lastly, as per the established facts, the intention was clear that it was to kill the deceased when that injury was caused. There were 10 more injuries observed by the Medical Officer who conducted the autopsy on the body of the deceased, thus the High Court has rightly come to the correct conclusion that the prosecution has proved the charge of murder against the 1st, 2nd and 3rd Appellants beyond a reasonable doubt. [Maduwanage Francis Wimalaratne v. Attorney General, Court of Appeal Case No. HCC 226-227 of 2012, decided on 17-01-2020]

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Justice V.K. Jain (Presiding Member), while disposing of the present application with respect to negligence of doctors, noted a very significant point, that,

“A doctor writing a prescription advised by any doctor cannot be said to be negligent only on account of his writing such a prescription.”

In the present case husband of the complainant visited OP-2 (Dr Sandeep Agarwal) in Sahara Hospital, Lucknow. Later he was admitted there for a day; during his stay at the hospital his pathology tests were done and it was found that his serum creatinine was found to be excessive from what is to be in the range prescribed.

No investigations or treatment for monitoring and management of high creatinine which was found in his reports indicating kidney disease was advised to him during the time of discharge and nor was he asked to consult the Nephrologist for the said purpose. On being admitted again to the hospital, he was seen by OP-2 as well as OP-3 (Dr Muffazal Ahmed). OP-3 had informed the family of the deceased and the deceased as well of suffering from the end-stage renal disease for which he required dialysis.

Further, it was stated that the complainant was allegedly given iron injection during his stay at the hospital though such injection according to the complainant was contra indicated in case of a person suffering from kidney disease. He was also prescribed iron injection without checking his ferritin level.

Complainant also stated that medicine Metformin was advised to the deceased which was again contra indicated in his case. Medicine named Liofen was also prescribed to him which was also contra indicated in the deceased’s case.

In view of the above, complainant alleged negligence on the part of OPs in the deceased’s treatment. Complainant thus approached the Commission seeking compensation for damages.

The above complaint has been resisted by the opposite parties.

Case of OPs is that they thought that the serum creatinine level might have increased due to dehydration. The discharge summary, however, does not record any such assumption. Even if the opposite party / treating doctor was of the opinion that high creatinine level could be due to dehydration, the least expected from him was to note it down in the discharge summary and advise the patient to get his creatinine level checked regularly, since the said level would have come down in due course had the same been caused by dehydration. Considering the high level of creatinine the OP-2 ought to have suggested consultation by a nephrologist to confirm the cause of the increase in serum creatinine. Therefore, it would be difficult to say that the OP-2 was negligent in the treatment of the complainant, he had not given any treatment or advise to him for the monitoring, management and treatment of the high level of serum creatinine found nor having advised him to consult a Nephrologist during the course of his treatment.

It is to be noted that ‘Encicarb’ was advised to the deceased to be infused daily for two hours for two days after a detailed discussion.

Treating doctor should first get the TSAT and Ferritin level of the patient checked before initiating ESA therapy. Admittedly, ferritin and TSAT of the complainant were not got checked soon before 18.3.2014 when intravenous iron Encicarb was advised to him. His ferritin levels were last checked on 10.12.2013 and more than three months had already expired by the time iron injection encicarb was advised to him on 18.3.2014. In view of the guidelines issued by Indian Society of Nephrology advising the injection Encicarb on 18.3.2014, without checking TSAT and ferritin was an act of negligence on the part of the opposite party No.3.

Tribunal on noting the material submitted by the complainant and considering the facts and circumstances of the case found OP-2 and 3 to be negligent in the treatment of complainant who died during the pendency of the complaint. Since OP-2 and 3 were working with OP-1, the said opposite party is vicariously liable for the negligent acts of OPs 2 & 3.

The next question for consideration was with respect to the quantum of compensation. Though the complainants have claimed compensation running into crores of rupees, the facts, and circumstances of the case do not justify such a huge and fanciful compensation. The complainant was alive when this complaint was instituted and he died during the pendency of this complaint. There is no evidence to prove that the complainant died on account of the deficiency attributed to the opposite parties in his treatment. His creatinine level was pretty high even at the time it was checked in Sahara Hospital.

Thus, Complainant was entitled to an aggregate of Rs 30 lakhs. [Gyan Mishra v. Sahara India medical Institute Ltd., 2019 SCC OnLine NCDRC 333, decided on 07-11-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

Securities and Appellate Tribunal (SAT): Tarun Agarwala, J. (Presiding Officer) and Dr C. K. G. Nair, Member quashed an order passed by the Securities and Exchange Board of India (‘SEBI’) which imposed a ban on auditing firm, however, upheld the punitive damages awarded for wrongful gain.

In the present case, the appellants being the auditing firm, Price Waterhouse Coopers (‘PWC’) had challenged an order passed by the SEBI wherein a two-year ban was imposed on the firm from auditing any listed company due to its involvement in the 2009 Satyam Scam. The auditing firm had been the auditor of the Satyam Computers Services Limited (‘Satyam’) during the period 2000-2009 and in the year 2009, the Chairman of Satyam stated that the books of accounts of Satyam were not true and the company was involved in large scale financial irregularities and misappropriation of funds. SEBI, upon an investigation of the books of Satyam, found out that PWC was the statutory auditor of the company and there were fabrication, falsification and misrepresentation in the books of account and financial statements of Satyam.

The senior counsels representing the appellants, Janak Dwarkadas along with Mukul Rohatgi questioned the jurisdiction of SEBI in banning an audit firm and submitted that the impugned order deals with the roles of an auditor and its contravention which are prescribed by Institute of Chartered Accountants of India (‘ICAI’) and thus, having the jurisdiction to deal with matter relating to contravention by audit firms. It was contended that as on the date of the impugned order there were new partners who were not partners of the firms during the period 2000 to 2009 and thus, banning them from doing audit work of listed Company merely because those are presently partners in PWC firms is wholly arbitrary and illegal.

The senior advocates representing the respondents, Ravi Kadam being assisted by Kevic Setalvad, submitted that the impugned order does not suffer from any illegality since the Satyam scam had a direct and adverse effect on the securities market. They also urged that failure to comply with the basic auditing standards constituted fraud and thus it was ideal to impose a ban on the auditing firm.

The Appellate Tribunal upon perusal of facts and circumstances of the case stated that it was true that the network of firms under PWC alleged to have been involved in the scam was not under the PWC hence had no stake and vicarious liability of a chartered accountant cannot be extended to a firm. The Appellate Tribunal stated that “in the absence of any finding of connivance or collusion or intention or knowledge on the part of the ten firms in the audit of Satyam Computers, and in view of the clear cut directions of the Bombay High Court, no directions could have been issued by the Whole Time Member against the ten firms.” Dealing with the issue of jurisdiction the Tribunal said SEBI did not have any authority to look into the quality of audit and auditing services and it can only take remedial and preventative action. The direction issued is neither remedial nor preventive, but punitive in nature and thereby quashing the order passed by the SEBI. However, the Appellate Tribunal upheld SEBI’s direction on disgorgement of Rs 13 crore from the auditor along with interest of 12% since 2007 for the wrongful gain.[Price Waterhouse & Co. v. Securities and Exchange Board of India, 2019 SCC OnLine SAT 165, decided on 09-09-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

Securities Appellate Tribunal (SAT): Coram of Justice Tarun Agarwala (Presiding Officer), Dr C.K.G. Nair (Member), and Justice M.T. Joshi (Judicial Member), quashed an order by the WTM who held the appellant vicariously liable for an act of the Company she worked in.

SEBI received a complaint against Silicon Projects India Limited (SPIL) in respect of the issue of Secured Redeemable Non-Convertible Debentures (NCDs) and consequently made an investigation as to whether SPIL made any public issue of securities without complying with the provisions of the Companies Act, 1956. On investigation, it was found that SPIL had made an offer of NCDs in the financial years 2009-10, 2010-11, 2011-12 and raised an amount of Rs 18.03 crore from 406 allottees. This offer was found to be in violation of the provisions of SEBI Act, 1992, the Companies Act, 1956 and SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (ILDS Regulations). Accordingly, SEBI passed an order on 03-03-2016 for their debarment and refund to the investors against SPIL and its Directors. Since the directions were not complied with, SEBI initiated recovery proceedings against the Company and its Directors.

Along with the appellant, Shib Narayan Das and Antara Mukherjee were also Directors of SPIL during the issuance of the NCDs and were also engaged in fund mobilizing activity. SEBI issued an interim order on 07-03-2016 restraining them from accessing the securities market and further prohibited from buying, selling or dealing in the securities market and asked them to provide a full inventory of all their assets and properties.

By the same interim order, the appellant and the other Directors were directed to show cause as to why action should not be taken under Section 11 and 11-B of the SEBI Act to refund the money collected with interest.

The appellant filed a reply contending that she was appointed as a receptionist in 2009 on a salary of Rs 3000 and in March 2011, she was made a Director of the Company and her salary was increased to Rs 5000 per month. She gave her resignation as a Director on 01-12-2011. She contended that she had nothing to do with the issuance of NCDs and had never attended any meeting of the Board of Directors nor was a signatory to any Resolution in relation to the issuance of NCDs. Instead, Shib Narayan Das in his capacity of Chairman and Director of the Company used to sign all the necessary documents. Further, she was never involved in any activity of the Company. When CBI investigated the case against the Company in 2016, all the Directors including Shib Narayan Das was arrested but the appellant was not.

The WTM passed an order holding that the appellant is jointly and severally liable to refund the money collected by SPIL as she was a Director in the Company and cannot plead ignorance of the affairs of the Company. The appellant was aggrieved by this order and filed an appeal to challenge this order.

The Tribunal held that the said order was patently erroneous and against the provisions of Section 73(2) of the Companies Act as it was made on the assumption that in the absence of any officer being nominated as an officer in default then all the Directors were liable under Section 5(g) of the Companies Act. The WTM did not rely on any evidence on record and therefore, their order was illegal and unsustainable.

Usually, when an offence is committed by a company, the liability is not imposed on all the officers of the company en bloc. The Companies Act makes a departure from this pattern. It gives an opportunity to the board of directors to distribute the work as between the members of the board or to appoint a managerial person. If nothing of this sort is done, only then the whole board is liable to be prosecuted. In this case, it was not possible to hold one Director vicariously responsible for the acts of the Directors in charge of day-to-day affairs of the Company. The spirit of Section 27 of the SEBI Act indicates that an appellant who has nothing to do with the day-to-day affairs of the Company cannot be held guilty of any violation as there is no such thing as vicarious liability under Section 11-B of the SEBI Act. The order was quashed and the appeal was allowed.[Sayanti Sen v. Securities & Exchange Board of India, 2019 SCC OnLine SAT 132, decided on 09-08-2019]

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Dispute Redressal Commission (NCDRC): A Coram of R.K. Agrawal (President), J. and M. Shreesha (Member) allowed an appeal against the order of State Consumer Dispute Redressal Commission, Punjab that directed a doctor to compensate an aggrieved couple for the death of their three year old daughter caused by gross negligence.

Respondent herein was the father of a three-year-old girl who was diagnosed with blood cancer. The child was admitted to appellant-hospital where Dr Raman Arora (appellant 3 herein) prepared a written protocol of the treatment detailing that the patient was to be given four cycles of chemotherapy for which injections of Vincristine were to be given intravenously and injections of Methotrexate were to be administered intrathecally. Dr Vandana Bhambri and Dr Harjit Singh Kohli assisted him. The patient was given three cycles of chemotherapy, and then her bone marrow test was conducted which showed that her condition had improved. The requisite injections for the fourth cycle were handed over to Dr Harjit Singh Kohli in a sealed packet where it was clearly written that the medicine Vincristine was to be administered intravenously only. However, Dr Kohli administered the injection intrathecally, which led to the depletion in the health of the patient and ultimately she died. The aggrieved parents of child (respondents herein) filed a complaint before the State Consumer Dispute Redressal Commission which held that the doctors and hospital (vicariously) committed gross negligence. The present appeal was filed by the hospital and doctors challenging the said order.

Learned counsel for appellants Y. Rajagopala Rao, contended that the injection Vincristine was not administered on the given date, and the State Commission had erred in giving a finding that Vincristine was administered by an anesthetist i.e. Dr Kohli. Furthermore, he stated that the Histopathology report and the chemical examination report read together with the post-mortem report did not state that the death was due to Vincristine injection. Moreover, the State Commission had failed to consider the expert report which opined that the cause of death in the present case was Toxaemia of Acute Lymphoid Leukaemia, which is a natural cause in case of cancer patients. Also, he argued that Dr Raman Arora is not liable as he did not administer the medicine.

Learned counsel for respondents, Prashant Sareen, contended that the injection was given by Dr Kohli who had testified that he, along with the help of Dr Vandana, had administered the injection intrathecally and later on acquired the knowledge that such administration was fatal. Moreover, he accused Dr. Arora for being negligent as he did not even read the ordinary precautions for treatment.

The Commission relied on S.K. Jhunjhunwala v. Dhanwanti Kumari, (2019) 2 SCC 282, and applied the principle of Bolam Test that gives grounds to hold a professional liable for negligence; and ruled that the doctors were negligent in their conduct. It was held that that admittedly the entire standard protocol was given by Dr Raman Arora and the entire treatment was rendered under his care. Therefore, he was liable for any acts/ commission or omissions done by his team or the assistants who assisted him in rendering treatment to the patient.

The National Commission remarked that the State Commission had rightly relied on the expert opinion given by the Indian Medical Association, Ludhiana which held the doctors responsible for gross negligence.

Placing reliance on Achutrao Haribhau Khodwa v. State of Maharashtra, (1996) 2 SCC 634, it was held that the hospital was vicariously liable for the negligent acts of its doctors.[Mohan Dai Oswal Cancer Treatment & Research Foundation v. Prashant Sareen, 2019 SCC OnLine NCDRC 75, decided on 24-05-2019]