S.VENKATRAMAN Vs. ADDITIONAL SUPERINTENDENT OF POLICE

JUDGEMENT

(1.) The criminal original petition in Crl.OP.No.8077 of 2025 has been filed praying to quash the final report in connection with CC.no.9825 of 2005 pending trial on the file of the Additional Chief Metropolitan Magistrate Court at Egmore, Chennai for offences under Sec. 120-B r/w 406 & 420 IPC and substantive offences under Sec. 406 and 420 IPC; the criminal original petition in Crl.OP.No.1190 of 2026 has been filed praying to quash the charge sheet dtd. 1/4/2005 in CC.no.9825 of 2005(now split up CC.No.1387 of 2006) on the file of the learned Additional Chief Metropolitan Magistrate Court at Egmore, Chennai against the petitioner.

(2.) The petitioner in Crl.OP.No.8077 of 2025 has been arrayed as A1 whereas the petitioner in Crl.OP.No.1190 of 2026 has been arrayed as A5, who is a split up accused from CC.No.9825 of 2005. The case of the prosecution is that the defacto complainant had matured deposit of Rs.30,00,000.00 during the year 1997-1998 with M/s.Synergy Financial Exchange Limited, Chennai (in short 'SFEL ') in the fixed deposit scheme for which the company issued post dated cheque and the same was dishonoured, thereby the company and Directors have cheated the complainant. They were evasive of any commitment to repay the deposits. Further, another victim P.S.B.Rajan invested a sum of Rs.9.25 lakhs in the fixed deposit schemes. The company and the other Directors failed to discharge their responsibilities in repaying the deposited amounts and committed wilful act of cheating and fraud after luring the public to invest through their repeated advertisements. After completion of investigation, the respondent filed final report and the trial court had taken cognizance in CC.No.9825 of 2005. There are totally 9 accused, in which the petitioner in Crl.OP.No.8077 of 2025 is arrayed as A1 whereas the petitioner in Crl.OP.No.1190 of 2026 has been arrayed as A5. However, due to absence, red corner notice was issued against A5 and he was also declared as proclaimed offender and the case has been split up against him and new case is assigned in CC.No.1387 of 2006.

(3.) The learned counsel for the petitioner in Crl.OP.No.8077 of 2025 submits that the company in which the deposits were collected is not arrayed as an accused. Though the petitioner floated the company in the name of SFEL, the petitioner was one of the Directors and without adding the company, no prosecution can be initiated as against the Directors. Under the penal code, there is no provision to punish the directors by way of vicarious liability for the offence committed by the company. The prosecution arrayed the ninth accused, which is a sister concern of SFEL represented by the official liquidator. Now the company is liquidated and has been taken over by official liquidator of this Court. Further, the post dated cheques issued by the company were dishonoured. The fixed deposits were also opened for the customers in the name of the company. In fact, the company board passed order against the company to settle the amount due with interest. The petitioner is not arrayed as accused in his individual capacity, but only as Director of the company. All the documentary evidences produced by the prosecution pertain to the company and not the Directors of the company. The vicarious liability is unknown to criminal jurisprudence unless specifically provided by statute. Therefore, if the company is not made as an accused, then the instrumentalities i.e. the Directors cannot be prosecuted. There are specific provisions making the Directors of the company liable to be punished for the offence committed by the company. But in the Indian Penal Code, there is no such provision that makes the Directors of the company vicariously liable for punishment for the offence committed by the company. Therefore, when the company is not arrayed as an accused, it is fatal to the case of the prosecution and the petitioner cannot be prosecuted in the capacity of Directors.