Company employees cannot be held vicariously liable unless the company is arraigned as an accused.

The complainant, a former employee of the insurance company, alleged that he resigned because of the petitioners’ conduct and that the company failed to pay amounts due to him, including provident fund, salary, gratuity and reimbursement of certain bills.

The Chief Judicial Magistrate took cognizance against the petitioners under Sections 406, 504 and 506 IPC and issued summons; the District Judge dismissed their criminal revision.

The petitioners then sought quashing of both orders under Section 482 CrPC.

1. Whether the complaint and the complainant’s statement disclosed the offences alleged under Sections 406, 504 and 506 IPC against the petitioners.

2. Whether the petitioners could be prosecuted in connection with the company’s alleged non-payment when the company itself had not been arrayed as an accused.

3. Whether the orders taking cognizance and dismissing the revision warranted interference under Section 482 CrPC.

The Court considered Sections 406, 504 and 506 IPC, under which the complaint alleged criminal breach of trust, intentional insult and criminal intimidation, and exercised its quashing jurisdiction under Section 482 CrPC.

Relying on Aneeta Hada v. M/s Godfather Travels and Tour Private Limited, (2012) 5 SCC 661, and Sharad Kumar Sanghi v. Sangita Rane, (2015) 12 SCC 781, the Court stated that employees would not be vicariously responsible for an offence in the absence of the company being arraigned as an accused.

It also relied on M/s Pepsi Foods Ltd. v. Judicial Magistrate, (1998) 5 SCC 749, for the principle that taking cognizance and issuing summons are serious judicial acts requiring application of mind and should not be undertaken mechanically.

The Court read the complaint and the complainant’s statement as alleging non-payment of employment-related dues by the company, rather than facts establishing criminal conduct by the petitioners.

It noted that the company was not made an accused and applied the cited authorities to conclude that the petitioners could not be held vicariously responsible in these circumstances.

It further considered the alleged unpaid dues to be matters for alternative civil or labour remedies and found no criminal intent or other allegations sufficient to make out the charged offences.

The cognizance order was also found to have been passed mechanically, without adequate judicial application of mind.

It allowed the application under Section 482 CrPC, quashed the orders dated 24 November 2021 and 3 July 2019, and quashed the prosecution arising from the complaint.