Company heads can't be blamed without direct negligence: HC
MUMBAI, Dec. 14 -- The Bombay High Court has ruled that the Indian Penal Code (IPC) does not recognise the concept of vicarious liability, meaning that senior company officials cannot be held criminally responsible for acts committed by others unless a specific role or negligence is directly attributed to them. Based on this, the court quashed a criminal negligence case against the managing director of a construction firm and its civil engineer, following the death of a two-and-a-half-year-old child who drowned in a construction pit.
A division bench of justices Urmila Joshi Phalke and Nandesh Deshpande held that criminal responsibility cannot be imposed on company executives because of their position, unless there they are accused of specific acts of negligence. The court added that no specific law exists either in the IPC or the current Bharatiya Nyaya Sanhita (BNS), to address 'vicarious liability', a concept where one party is legally held responsible for the wrongful acts of another party, even if it was not directly at fault.
The case arose from an incident in October 2017, after Someshwaraya Infrastructure, owned by a railway contractor Krishna Mandadi, was awarded a contract to construct an overbridge at the Wardha railway station. During the construction, a pit was dug at the site, and the two-and-a-half-year-old son of a labourer working there drowned in the pit. According to the case record, the child had followed his mother, who was leaving the site to visit a doctor's clinic, without her knowledge, and had fallen into the pit.
Following the incident, the Wardha police registered a case against Mandadi and Venkata Pantala, a civil engineer employed by the company, under Section 304A (death by negligence) of the IPC (currently section 106 of the Bharatiya Nyaya Sanhita). The two accused then approached the high court seeking to quash the criminal proceedings, arguing that they were not directly responsible for the day-to-day work at the construction site and therefore could not be held liable for the child's death.
Accepting their plea, the high court set aside the criminal proceedings, observing that criminal liability cannot be "fastened" on senior executives merely because they hold managerial positions in a company. "The managing director or the directors of the company cannot be said to have committed an offence only because they are holders of those offices," the court said, adding that they would be held liable only if such a legal provision exists. The court added that even where a law does address vicarious liability, it does not automatically make all directors or senior officials liable for every violation.
"Vicarious liability would arise only if there are specific and substantiated allegations attributing a particular role or conduct to such director, sufficient enough to attract the provisions constituting vicarious liability," the court said.
While quashing the case against the two accused, the court also noted that the engineer had joined the company after the date of the incident. The court also pointed out that there were no specific allegations showing how the managing director was personally negligent in the work carried out at the site....
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