Paragraph numbers below are the court’s original numbering, recovered from the source text.
11. A revision application was filed thereagainst by the complainant which, by reason of an order dated 5.6.2002, was F allowed, stating: y "It is clear from the perusal of the file that the learned Chief Judicial Magistrate in the impugned order dated 13.12.2001 has not granted any opportunity of adducing the evidences in detail under the provisions of Section 244 Cr.P.C. but by not granting any opportunity to adduce the evidences by the complainant under Section 244 ..,( Cr.P.C. has passed the impugned order under the provisions of Section 245(2) Cr.P.C. which is not legal and proper. Under the provisions of Section 244 Cr.P.C.the S.K. ALAGH v. STATE OF U.P. & ORS. [S.8. SINHA, J.] complainant must be granted opportunity of filing the A evidences in detail as per the law. Under the above, provisions, the charges are framed against the accused persons after the evidences are taken on record otherwise not, that is to say, passing of order under Section 245 Cr.P.C. would be proper and justifiable."
12. An application filed by the appellant before the High Court in terms of Section 482 of the Code of Criminal Procedure was dismissed by the High Court by reason of the impugned judgment, stating : c "From the perusal of the allegations made against the applicants and from the perusal of the impugned order, it appears that prima facie offence is made out against the applicant and there is no procedural mistake in taking cognizance and summoning the applicants, therefore, the D prayer for quashing the impugned orders dated 8.5.2001 -t- passed by the learned Magistrate, Azamgarh and 5.6.2002 passed by the learned Additional Sessions Judge, Fast Track Court No.2, Azamgarh is refused. The interim stay order dated 3.7.2002 is vacated. Accordingly, this application is dismissed."
13. The short question which arises for consideration is as to whether the complaint petition, even if given face value and taken to be correct in its entirety, disclosed an offence as ·–( against the appellant under Section 406 of the Indian Penal Code.
14. Section 405 defines 'criminal breach of trust' to mean: Section 405.-Criminal breach of trust- Whoever, G …./ being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal A contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits "criminal breach of trust"."
15. Appellant No.1 is the Managing Director of the Company. Respondent No.3 was its General Manager. Indisputably, the company is a juristic person. The demand drafts were issued in the name of the company. The company was not made an accused. The dealership agreement was by and 'r" between M/s. Akash Traders and the company. c
16. Mr. Pramod Swarup, learned counsel appearing on behalf of Responent No.2, in support of the order passed by the learned Chief Judidal Magistrate as also the High Court, submitted that as, prima facie, the appellant was in charge of and was in control of the business of the company, he would be D deemed to be liable for the offence committed by the company.
17. Indian Penal Code, save and except some provisions specifically providing therefor, does not contemplate any vicarious liability on the part of a party who is not charged directly for commission of an offence.
18. A criminal breach of trust is an offence committed by a person to whom the property is entrusted.
19. Ingredients of the offence under Section 406 are : "(1) a person should have been entrusted with property, or entrusted with dominion over property; (2) that person should dishonestly misappropriate or convert to his own use that property, or dishonestly use or dispose of that property or willfully suffer any other person to do so; (3) that such misappropriation, conversion, use or –4. disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract which the person has made, touching the discharge of such trust." S.K. ALAGH v. STATE OF U.P. & ORS. [S.B. S·INHA, J.] y
20. As, admittedly, drafts were drawn in the name of the company, even if appellant was its Managing Director, he cannot be said to have committed an offence under Section 406 of the Indian Penal Code. If and when a statute contemplates creation of such a legal fiction, it provides specifically therefor. In absence of any provision laid down under the statute, a Director of a B company or an employee cannot be held to be vicariously liable for any offence committed by the company itself. {See Sabitha Ramamurthy and Anr. v. R.B.S. Channabasavaradhya [(2006) 10 sec 581]}.
21. We may, in this regard, notice that the provisions of G the Essential Commodities Act, Negotiable Instruments Act, Employees' Provident Fund (Miscellaneous Provision) Act, 1952 etc. have created such vicarious liability. It is interesting to note that Section 14A of the 1952 Act specifically creates an offence of criminal breach of trust in respect of the amount deducted D -r from the employees by the company. In terms of the explanations appended to Section 405 of the Indian Penal Code, a legal fiction . has been created to the effect that the employer shall be deemed to have committed an offence of criminal breach of trust. Whereas a person in charge of the affairs of the company and in control thereof has been made vicariously liable for the offence committed by the company along with the company but even in a case falling under Section 406 of the Indian Penal Code vicarious liability has been held to be not extendable to the Directors or officers of the company. {See Maksud Saiyed v. State of Gujarat and Ors. [2007 (11) SCALE 318]}.
22. The High Court, therefore, committed a manifest error in passing the impugned judgment.
23. For the reasons aforementioned, the impugned judgment cannot be sustained. It is set aside accordingly. The appeal is allowed. Respondent No.2 is liable to bear the costs of the appellant for causing harassment to him which is …., quantified at Rs.1,00,000/- (Rupees one lac only) . K.K.T. Appeal allowed.