"If a Company Commits a Crime, the Responsibility Does Not Fall on Its Officers"

 

UV INDIA NEWS: The Supreme Court has ruled that the responsibility does not automatically extend to its officers if a company is accused of fraud or criminal conspiracy. The court emphasised that questioning the officers' accountability does not arise unless specific allegations are made against them.

A bench of Justices JB Pardiwala and Manoj Mishra stated that officers cannot be held accused just because they hold positions in the company. It must be proven that the criminal conspiracy or fraud was committed directly by the officers in question. The court further clarified that the responsibility of the officers will only be established if the law has specific provisions indicating such. Otherwise, it cannot be assumed.

The bench was hearing a petition filed by Rattanlal Gulati, the head of the Delhi Race Club, challenging a decision by the Additional Chief Judicial Magistrate in Bulandshahr last year. According to the petitioner, Delhi Race Club had purchased goods from the complainant but had not made any payments since 2017, leading to a pending payment of ₹9,11,434.

The court stated that under penal law, mere allegations against the company's officers without direct involvement do not hold ground. This decision underscores the need for specific and direct accusations against individuals within a company so that they can be held personally liable.