Company officer liability under the Reserve Bank of India Act turns on specific averments at the summoning stage.

Section 58C of the Reserve Bank of India Act, 1934 creates liability for a company's officers where the complaint contains specific averments showing that they were in charge of, and responsible for, the company's business, or that the offence occurred with their consent, connivance, or neglect. At the stage of issuance of process, the court examines only whether the complaint discloses a prima facie basis to bring the officer within that statutory responsibility; detailed proof is reserved for trial. A complaint describing the respondent as Executive Director and referring to active control over finance and accounting functions was sufficient to justify summoning, so refusal to issue process was unsustainable.

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Issues: Whether process could be issued against an executive director of a company on the basis of the complaint averments and supporting material in a prosecution for offences by a company under the Reserve Bank of India Act, 1934.

Analysis: Section 58C of the Reserve Bank of India Act, 1934 creates a legal fiction under which not only the company, but also persons who were in charge of and responsible for its business, and other officers whose consent, connivance, or neglect led to the offence, may be proceeded against. At the stage of issuance of process, the court is concerned with whether the complaint contains allegations sufficient to bring the respondent within that statutory responsibility, not with the proof to be led at trial. The complaint specifically described the respondent as Executive Director of the company and stated that the accused persons were in charge of and responsible for the conduct of the business. The supporting audit report also referred to the respondent's active control over the finance and accounting functions.

Conclusion: The complaint disclosed a prima facie basis for summoning the respondent, and the refusal to issue process was unsustainable.

Ratio Decidendi: In a prosecution of a company under Section 58C of the Reserve Bank of India Act, 1934, process may be issued against a director or executive officer if the complaint contains specific averments showing that person's charge of, and responsibility for, the company's business; proof of liability is a matter for trial, not for the stage of summoning.

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