B.K. Panduranga vs The State

Rathnakala, J.—1. Learned HCGP takes notice for respondent.

The petitioner herein is arrayed as accused in a prosecution initiated against him under the provisions of Equal Remuneration Act, 1976, (for brevity, Act).

He is brought to book in the capacity of employer as contemplated under Sections 2 and 5 of the Act. That takes us to the definition clause of ''employer'' as contemplated under Section 2(c) of the Act which reads thus:

2(c) "employer" has the meaning assigned to it in clause (f) of Section 2 of the Payment of Gratuity Act, 1972 (39 of 1972)

That leads to Section 2(f) of the Payment of Gratuity Act, 1972. Relevant provision under the Gratuity Act is Section 2(f)(iii) which reads thus:

2(f)(iii) in any other case, the person, who, or the authority which, has the ultimate control over the affairs of the establishment, factory, mine, oilfield, plantation, port, railway company or shop, and where the said affairs are entrusted to any other person, whether called a manager, managing director or by any other name, such person;

It is authority who has ultimate control over the affairs of the company that can be held responsible and vicarious responsibility cannot be fastened. But the petitioner being a Company Executive, in the absence of specific averment against him, he cannot be a person having ultimate control over the administration and business of the company. That apart, though the allegation is against the company, it is not arrayed as co-accused.

In the judgment of the Apex Court, in Sunil Bharthi Mittal v. Central Bureau of Investigation, , (2015) 4 SCC 609, placing reliance on the judgment of the Constitutional Bench, in the case of Standard Chartered Bank v. Directorate of Enforcement, , (2005) 4 SCC 530, it was held at paras 42 and 44 read thus:

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 statue 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. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneet Hada, the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Here also, the principle of "alter ego", was applied only in one direction, namely, where a group of persons that guide the business had criminal intent, that is to be imputed to the body corporate and not vice versa. Otherwise, there has to be a specific act attributed to the Director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company.

In that view of the matter, the prosecution against this petitioner is mis-conceived and liable to be quashed. Petition is allowed. The entire proceedings in CC No. 2151/2014, on the file of the 4th Addl. Metropolitan Magistrate, Bengaluru, so far as this petitioner is concerned , is quashed.