The Himachal Pradesh High Court clarified that vicarious criminal liability of directors/partners does not arise automatically without specific allegations of active role or criminal intent; at the stage of discharge, courts are confined to assessing prima facie material and cannot embark on a detailed evaluation of evidence. This decision upholds and applies established Supreme Court precedents, reinforcing the limits of criminal prosecution against company officers and setting binding standards for subordinate courts.
Summary
| Category | Data |
|---|---|
| Case Name | CR.R/533/2024 of JYOTI PERIS Vs CBI |
| CNR | HPHC010354052024 |
| Date of Registration | 21-08-2024 |
| Decision Date | 31-10-2025 |
| Disposal Nature | Allowed |
| Judgment Author | Hon’ble Mr. Justice Rakesh Kainthla |
| Court | High Court of Himachal Pradesh |
| Precedent Value | Binding on subordinate courts; persuasive for other High Courts |
| Overrules / Affirms |
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| Type of Law |
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| Questions of Law |
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| Ratio Decidendi |
The court held that under Indian penal law, there is no vicarious criminal liability of directors or partners unless the statute expressly provides for it. Mere status as director or partner does not justify prosecution in the absence of specific allegations, active role, or material indicating a meeting of minds in an alleged conspiracy. At the discharge stage (Section 227 CrPC), the court cannot conduct a threadbare analysis, weigh the probative value of materials, or accept defence contentions; it must only look for existence of a prima facie case. As the charge sheet and evidence did not attribute any overt act or active role to the petitioner nor show her signatures on disputed documents—indeed, her signatures were found to be forged—discharge was mandated. Suppositions based solely on position or generic involvement are impermissible grounds for prosecution. |
| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon by the Court |
The court focused on statutory interpretation that criminal vicarious liability must have an express legislative mandate, and, in absence, only specific individual involvement with criminal intent can justify prosecution. Applied Supreme Court principles restricting scope of enquiry at discharge, requiring material evidence of conspiracy (i.e., meeting of minds), and repeated that mere office-holding is insufficient for culpability. For conspiracy, emphasized need for direct or circumstantial evidence of agreement to commit a crime. |
| Facts as Summarised by the Court |
The CBI charge sheeted several people for availing a government grant of ₹9 crore for an integrated cold chain project through alleged forgery, conspiracy, and fabrication of documents, with charges under Sections 120B, 420, 467, 468, 471 IPC and Section 13(1)(d) of the Prevention of Corruption Act. The petitioner, a director, was accused of involvement. The trial court dismissed her discharge application. Evidence showed her purported signatures had been forged, and witnesses stated she was only a director on paper, with no active role and minimal presence. The charge sheet provided no evidence of her participation or agreement in any conspiracy. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts in Himachal Pradesh (and may be persuasive for others) |
| Persuasive For | Other High Courts and the Supreme Court |
| Follows |
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What’s New / What Lawyers Should Note
- Reaffirms that criminal liability of directors/partners cannot arise solely by virtue of holding office; explicit, specific allegations or evidence of active involvement and criminal intent are required.
- At the discharge stage (Section 227 CrPC), courts must strictly confine themselves to the existence of a prima facie case and cannot assess the credibility, reliability, or probative value of evidence.
- A mere allegation of “conspiracy” without evidence of a meeting of minds or an agreement cannot sustain prosecution.
- If the evidence (including handwriting reports) demonstrates that the accused’s signatures were forged, and there are no circumstances suggesting active participation, discharge is appropriate.
- Prosecution should not rely on generic or vague allegations against company officers; meticulous linking of the individual to the offence is legally required.
- This judgment is a strong precedent for quashing criminal proceedings against company officers where the only allegation is their holding of office, or where the supposed involvement is not supported by evidence.
Summary of Legal Reasoning
- The court relied on Supreme Court precedents (Vishnu Kumar Shukla, Ram Prakash Chadha, Yuvraj Laxmilal Kanther) for the proposition that, at the stage of considering discharge under Section 227 CrPC, the court must see only whether a prima facie case exists. No detailed analysis or evaluation of the admissibility or reliability of the evidence is permitted.
- Reiterated the legal principle from Sunil Bharati Mittal and Shiv Kumar Jatia: In the absence of statutory provisions to the contrary, no vicarious criminal liability attaches to directors or partners merely for their status. Only active involvement or evidence of criminal intent can justify their prosecution.
- Applied these principles to the facts: The petitioner’s alleged role was not supported by the evidence. Her signatures were found to be forged, and there was no direct or circumstantial material to suggest conspiracy or agreement to commit the offence.
- The trial court was found to have erred in not considering these aspects and in making a general finding against the petitioner unsupported by the record.
Arguments by the Parties
Petitioner
- No evidence linking her to the commission of the offence.
- Did not sign or submit any document to MoFPI; handwriting expert report established her signatures were forged.
- Criminal liability cannot arise merely by virtue of being a director; there are no specific allegations of active involvement or conspiracy.
- Trial court failed to discuss her individual role, making only general observations.
- Sought reliance on Sunil Bharati Mittal, Ram Prakash Chadha, and Shiv Kumar Jatia judgments.
Respondent (CBI)
- Petitioner was a director/partner and had an active role in securing the grant; forged/submitted documents to MoFPI.
- Charge sheet and evidence provided a prima facie basis to proceed; discharge would amount to evaluating evidence at the wrong stage.
- Defence pleas or roving enquiry not permissible at discharge stage.
Factual Background
The CBI filed a charge sheet against the promoters of M/s Resource Food Private Ltd. for allegedly availing a government grant of ₹9 crore through fraudulent means, including using forged documents and signatures. The petitioner, listed as a director of the company, was implicated on the basis of her position. Forensic analysis revealed the signatures attributed to her on key documents were forged. Witness statements described her as a director on paper with no active involvement. The trial court denied her application for discharge. This revision petition challenged that order.
Statutory Analysis
- Section 227 of CrPC (Discharge): The court stressed the statutory test—discharge is appropriate if there are no sufficient grounds to proceed based on the record and submissions.
- Cited the difference between the negative formulation in Section 227 CrPC and the positive finding under Section 232 CrPC (which applies at trial after evidence is led).
- Reiterated that penal statutes must be strictly construed; vicarious liability only arises if the statute creates it expressly.
- For criminal conspiracy under Section 120B IPC, emphasized the statutory requirement of an agreement (i.e., meeting of minds) to commit an offence—simple association is insufficient.
Alert Indicators
- ✔ Precedent Followed – Existing Supreme Court law on vicarious criminal liability and the limited scope of discharge under Section 227 CrPC has been strictly followed and applied.