The Supreme Court reiterated that officers of the company, including directors, cannot be held liable unless their personal involvement is demonstrated and supported by a specific statutory provision.
The case arose from an appeal against the Punjab & Haryana High Court's decision to deny the quashing of an FIR filed against the appellants. The FIR alleged violations under Section 4 of the Punjab Land Preservation Act, 1900 (PLPA) related to the illegal uprooting of 256 trees in Gurugram by machinery, causing environmental damage. The appellants held managerial positions in Tata Realty and Infrastructure Limited and Tata Housing Development Co. Ltd.
The appellants argued that they were wrongly implicated as the complaint lacked allegations of their personal involvement in the act. They contended that vicarious liability could not be imposed without direct personal involvement supported by law.
The Supreme Court, setting aside the High Court's decision, clarified that mere association with a company does not automatically make its officials vicariously liable. The Court emphasized that for corporate liability to extend to an individual, specific allegations of personal involvement must be made, and there must be a statutory provision for vicarious liability. The Court also referred to previous precedents to underscore that directors cannot be held liable unless there is evidence of their direct involvement.
The Court quashed the criminal proceedings against the appellants, finding that the complaint lacked the necessary specific allegations to establish their personal liability.
𝗖𝗮𝘀𝗲 𝗧𝗶𝘁𝗹𝗲: 𝗦𝗮𝗻𝗷𝗮𝘆 𝗗𝘂𝘁𝘁 & 𝗢𝗿𝘀. 𝘃𝘀. 𝗧𝗵𝗲 𝗦𝘁𝗮𝘁𝗲 𝗼𝗳 𝗛𝗮𝗿𝘆𝗮𝗻𝗮 & 𝗔𝗻𝗿.
𝗖𝗿𝗶𝗺𝗶𝗻𝗮𝗹 𝗔𝗽𝗽𝗲𝗮𝗹 𝗡𝗼. 𝟭𝟭 𝗼𝗳 𝟮𝟬𝟮𝟱
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