Vicarious criminal liability does not arise for a managing director absent express statutory provision in breach of trust cases.

Criminal breach of trust requires entrustment of property and dishonest misappropriation, conversion, use or disposal in violation of law or contract. Where demand drafts were issued in the name of the company and the dealership arrangement was with the company, a managing director could not be prosecuted under section 406 IPC merely because of his office. In the absence of an express statutory provision creating vicarious criminal liability, a director or officer is not liable for an offence said to have been committed by the company itself. The complaint was held not to disclose an offence against the appellant, and the proceedings were quashed.

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Issues: Whether a managing director could be prosecuted for criminal breach of trust under section 406 of the Indian Penal Code, 1860, when the demand drafts were issued in the name of the company and the company itself was not arraigned as an accused.

Analysis: Criminal breach of trust under section 405 of the Indian Penal Code, 1860, requires entrustment of property or dominion over property followed by dishonest misappropriation, conversion, use or disposal in violation of law or contract. The drafts in question stood in the name of the company, and the dealership arrangement was between the complainant and the company. The appellant was only a managing director. In the absence of a statutory provision creating vicarious liability, a director or officer cannot be made criminally liable merely because the company may have been involved in the transaction. Such liability exists only where the legislature expressly provides for it.

Conclusion: The complaint did not disclose an offence under section 406 of the Indian Penal Code, 1860, against the appellant, and the proceedings against him were liable to be quashed.

Final Conclusion: The impugned orders were set aside and the appellant obtained relief from the criminal proceedings, with costs awarded against the complainant.

Ratio Decidendi: In the absence of an express statutory provision creating vicarious criminal liability, a director or managing director cannot be prosecuted for an offence of criminal breach of trust committed, if at all, by the company itself.

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