Directors/ managers can’t be prosecuted and punished merely because the Company violated the law (SC)

Dayle De’souza Vs Government of India (Supreme Court of India) dated 29/10/2021

Facts- M/s. Writer Safeguard Pvt. Ltd. (Company) has entered into an agreement titled ‘Agreement for Servicing and Replenishment of ATM’ with M/s. NCR Corporation, the latter having earlier entered into an agreement with the SBI for maintenance and upkeep of SBI’s ATM.

A notice was issued by Labour Enforcement Officer to the appellant and one Vinod Singh, head of the company alleging non-compliance with the provisions of Minimum Wages Act, 1948 and Minimum Wages (Central) Rules, 1950 at the ATM.

Labour Enforcement Officer, on non-appearing, filed a criminal complain before the court of Chief Judicial Magistrate, under section 22A of the Act. Notably, the company is not enlisted as an accused in the complaint and has not been summoned to stand trial.

Conclusion- In absence of any specific averment, the prosecution in the present case doesn’t and cannot reply on section 22C(2) of the Act. Unless the company as a principal accused has committed the offence, the persons mentioned in sub-section (1) would not be liable and cannot be prosecuted. Section 141(1) of the Negotiable Instruments Act, extends vicarious criminal liability to the officers of a company by deeming fiction, which arises only when the offence is committed by the company itself and not otherwise.

Author: Business So Simple

Hi, I am business consultant working with a team of Chartered Accountants, Company Secretaries, Lawyers & MBAs. I am promoter of " Make Your Business So Simple" "Make Education So Simple" Make Life So Simple" Make Legal Affairs So Simple".

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