The central legal point established in the judgment is that vicarious liability cannot be fastened on the directors without arraigning the company as an accused, especially when the allegations are against the company for cheating or criminal breach of trust.

ORDER :

The respondent-Police have filed a charge sheet against the present petitioners and four other persons alleging that they have committed the offences punishable under Sections 406 and 420 read with Section 34 of the Indian Penal Code, 1860 (hereinafter for brevity, referred to as the 'IPC').

It is alleged in the charge sheet that the accused persons are the Directors of a company by name M/s. Synergy Financial Exchange Limited with its registered office at Chennai (hereinafter for brevity referred to as the 'Company'). The Company is said to have been incorporated under the Companies Act, 1956.

It is further alleged that, about in the year 1992, the Company opened its branch office at Bengaluru and collected deposits from several persons, promising them to return the amounts in deposit with good accruals thereupon. However, the amounts were not returned. Cheques were signed and issued by the authorised signatories of the Company. Thus, after conducting an investigation in their station Crime No.252/1999, the respondent – police filed charge sheet against the six accused for the offences mentioned above.

2. The Court of the XVII Additional Chief Metropolitan Magistrate (Special Court for CBI Cases), Bengaluru (hereinafter for brevity referred to as the 'Special Court') where the charge sheet was filed in C.C.No.8257/2001, proceeded to frame the charges against the accused, including the petitioners, for the offences punishable under Sections 406 and 420 read with Section 34 of the IPC for fourteen heads purported to have been committed between the dates 16.10.1996 and 14.09.1997. Challenging the said framing of charges against them, accused Nos.1 and 5 before the Special Court have preferred the present revision petition.

3. The respondent is being represented by the learned High Court Government Pleader.

4. Records from the Special Court pertaining to the matter were called for and the same are placed before this Court.

5. Heard the arguments of learned counsel for the petitioner and the learned High Court Government Pleader for the respondent. Perused the materials placed before this Court.

6. After hearing both side, the only point that arise for my consideration in this revision petition is:

Whether the Special Court was at error in framing the charge against the present petitioners (accused Nos.1 and 5) before it, when the Company -M/s. Synergy Financial Exchange Limited not being arraigned as an accused in the charge sheet?

7. The learned counsel for the petitioner, in his very brief argument, submitted that the offence is alleged to have been committed by the Company, however, the said Company has not been arraigned as an accused either in the FIR or in the charge sheet. The accused against whom the charge sheet is filed are only the Directors, as such, without arraigning the Company as one of the accused, no vicarious liability can be fastened and the act of framing of charges, without there being Company as an accused, would not sustain. He also submitted that nowhere in the charge sheet there is an averment of inducement by the Directors who are accused herein.

In support of his argument, the learned counsel relied upon few judgments of the Hon'ble Apex Court, which would be discussed hereafterwards at the relevant place.

8. The learned High Court Government Pleader appearing for the respondent, in his brief argument, submitted that the State can still either implead the Company in the case or can still file an additional charge sheet. Therefore, the framing of the charge cannot be set aside. However, he fairly conceded that the Company was not made a party, though arraigning the Company also as one of the accused was mandatory.

9. A perusal of the Special Court's records which were summoned and placed before this Court would go to show that the complainant and also the charge sheet witnesses who are said to have lodged the complaint and given their statements before the Investigating Officer respectively, have alleged th