Anil Khandelwal vs Phoenix India 2025 INSC 1069 - IPC - Company - Vicarious Liability

Indian Penal Code 1860 - There is no concept of vicarious liability of the officers or directors for the offences under the IPC - before any officer of a Bank or a body corporate can be prosecuted for an offence under the IPC on the allegation of having acted on behalf of the institution, it is incumbent upon the complainant to produce unimpeachable material indicating the precise role of the officer in the commission of the alleged offence. Mere bald assertions of vicarious liability, without foundational facts to show active participation, authorization, or deliberate omission on the part of the officer, are insufficient to justify issuance of process in such a situation. The law does not permit automatic prosecution of directors or officers merely because of their designation or official status. (Para 20-22)

Code of Criminal Procedure 1973 - Prosecution of the directors or officers of a company can be maintained only when the company itself is arraigned as an accused and additionally, the directors or officers must have acted in a manner that directly connects his/her conduct to the company’s liability. In the absence of the company being impleaded as an accused, its directors or officers cannot be fastened with vicarious liability for offences attributable to the company. (Para 16-17)