Case Law Details
M/s. Thermax Ltd. & Ors. Vs. K.M. Johnny & Ors. (Supreme Court of India)- Though civil law recognises the principle of ‘vicarious liability’ of directors of companies, the concept is not acknowledged in criminal law, the Supreme Court stated while allowing the appeal case, M/s Thermax Ltd Vs K M Johnny. The company was accused of criminal offences and the directors were also named in the complaint case moved by a contracting party due to disputes over the termination of the agreement. The Bombay high court allowed the prosecution to proceed.
On appeal, the Supreme Court quashed the complaint and set aside the high court order. The Supreme Court stated that there was no specific allegation against the members of the board of directors or senior executives but they have been roped in for being in the management of the company. The offence of cheating and misappropriation of property could be filed only against the company and not against the persons in such circumstances, the court said. Provisions of the Negotiable Instruments Act and the Industrial Disputes Act cannot be imported into the offences under the Indian Penal Code, the judgement explained.
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1868 of 2011
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