July 3, 2012
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Avnish Bajaj v. State & anr; Ebay India Pvt. Ltd v. State & Anr decided by Supreme Court on 27th April, 2012.
The main issue involved in this batch of appeal is whether Directors of a Company alone can be prosecuted without making the Company as one of the accused. However, the Supreme Court in the case of State of Madras v. C.V. Parekh & Anr (1970) 3 SCC 491 has held that without suing the Company its Directors cannot be prosecuted.
Conflicting judgments have been passed from time to time and the issue was once again raised in the present batch of appeals. After considering numerous judgments and making an elaborate analysis in this respect, the Supreme Court of India had restated the law on this aspect.
Decision and Reason:
If the offence is by a Company, arraigning of a company as an accused is imperative, the company can have criminal liability and further, if a group of persons that guide the business of the companies have the criminal intent, that would be imputed to the body corporate. In this backdrop, Section 141 of the Act clearly stipulates that when a person which is a company commits an offence, then certain categories of persons in charge as well as the company would be deemed to be liable for the offences under Section 138. Thus, the statutory intendment is absolutely plain. As is perceptible, the provision makes the functionaries and the companies liable.