IMPORTANT POINTS
The Information Technology Act, 2000 being a special Act shall prevail over the Indian Penal Code, 1860.
If a charge relating to obscene electronic record has not been made out under Section 67 of the IT Act, the person cannot be proceeded under Section 292 IPC.

JUDGMENT

Dipak Misra, J.

Leave granted.

2. The appellant along one Avnish Bajaj and others was arrayed as an accused in FIR No. 645 of 2004. After the investigation was concluded, charge sheet was filed before the learned Metropolitan Magistrate who on 14.02.2006 took cognizance of the offences punishable under Sections 292 and 294 of the Indian Penal Code (IPC) and Section 67 of the Information Technology Act, 2000 (for short, “the IT Act”) against all of them. Avnish Bajaj filed Criminal Misc. Case No. 3066 of 2006 for quashment of the proceedings on many a ground before the High Court of Delhi which vide order dated 29.05.2008 came to the conclusion that prima facie case was made out under Section 292 IPC, but it expressed the opinion that Avinish Bajaj, the petitioner in the said case, was not liable to be proceeded under Section 292 IPC and, accordingly, he was discharged of the offence under Sections 292 and 294 IPC. However, he was prima facie found to have committed offence under Section 67 read with Section 85 of the IT Act and the trial court was directed to proceed to the next stage of passing of order of charge uninfluenced by the observations made in the order of the High Court.

3. Being grieved by the aforesaid order, Avnish Bajaj preferred Criminal Appeal No. 1483 of 2009. The said appeal was tagged with Ebay India Pvt. Ltd. v. State and Anr. (Criminal Appeal No. 1484 of 2009). The said appeals were heard along with other appeals that arose from the lis relating to interpretation of Sections 138 and 141 of the Negotiable Instruments Act, 1881 (for short, “NI Act”) by a three-Judge Bench as there was difference of opinion between the two learned Judges in Aneeta Hada v. Godfather Travels and Tours (P) Ltd., (2008) 13 SCC 703.

4. Regard being had to the pleas raised by Avnish Bajaj and also the similarity of issue that arose in the context of NI Act, the three-Judge Bench stated the controversy that emerged for consideration thus:-

“2. In Criminal Appeals Nos. 1483 and 1484 of 2009, the issue involved pertains to the interpretation of Section 85 of the Information Technology Act, 2000 (for short “the 2000 Act”) which is in pari materia with Section 141 of the Act. Be it noted, a Director of the appellant Company was prosecuted under Section 292 of the Penal Code, 1860 and Section 67 of the 2000 Act without impleading the Company as an accused. The initiation of prosecution was challenged under Section 482 of the Code of Criminal Procedure before the High Court and the High Court held that offences are made out against the appellant Company along with the Directors under Section 67 read with Section 85 of the 2000 Act and, on the said base, declined to quash the proceeding.

3. The core issue that has emerged in these two appeals is whether the Company could have been made liable for prosecution without being impleaded as an accused and whether the Directors could have been prosecuted for offences punishable under the aforesaid provisions without the Company being arrayed as an accused.”

5. In the context of Section 141 of NI Act, the Court ruled thus:-

“58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words “as well as the company” appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted.”

6. As far as the appeal of Avnish Bajaj is concerned, the Court referred to Sectio