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M.P.THAKKAR, R.B.MISRA, S.MURTAZA FAZAL ALI
Jethsur Surangbhai – Appellant
Versus
State of Gujarat – Respondent
The Supreme Court did not explicitly state that there is no liability of Key Management Personnel (KMP) of a company in general. Instead, the judgment focused on a specific case involving a cooperative society and clarified that, in the absence of a charge of conspiracy, the mere fact that an individual is the chairman of a committee does not automatically make him vicariously liable for the acts or omissions of others, such as defalcations or misappropriations, without direct or personal involvement or knowledge (!) (!) (!) (!) (!) .
This indicates that liability of KMPs or similar officials depends on their direct involvement, knowledge, or a proven conspiracy, rather than their position alone. The Court emphasized that, without concrete evidence of personal participation or awareness, holding a person vicariously liable solely based on their role is not justified (!) (!) (!) (!) (!) .
Therefore, the judgment supports the principle that liability of key personnel in such contexts requires proof of direct involvement, knowledge, or conspiracy, rather than automatic vicarious liability based solely on their position.
JUDGMENT
Fazal Ali, J. - After hearing counsel for the parties, by virtue of our Order dated October 4, 1983, we had allowed the appeal and acquitted the accused-appellant. We now proceed to give the reasons for the said Order.
2. The appellant was convicted by the High Court under S. 408 read with S. 109 Indian Penal Code in respect of criminal breach of trust with regard to several items which have been detailed in the judgment of the High Court. The appellant was also convicted under sections 471 and 467 read with section 109 of the Indian Penal Code. Under the first count (section 408) the appellant was sentenced to two years R.I. and a fine of Rs. 1000/- in default of payment of fine, further six months R.I. Under the second count (section 471) he was sentenced to imprisonment for one year. The High Court further convicted the appellant under section 409, Indian Penal Code for having committed breach of trust in respect of certain oil engines and sentenced him to 3 years R.I. and a fine of Rs. 1000/-; in default of payment of fine, imprisonment for six months. Thus, the sum total of the sentences under various sections mentioned above comes to five years but as the sentences h
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