Vicarious criminal liability for company offences requires specific averments showing control and responsibility, not mere shareholder status.

Vicarious criminal liability for company offences cannot be imposed on a person merely because their name appears in company records or they are shown as a shareholder. Specific averments are required in the complaint to show that the person was in charge of, and responsible for, the conduct of the company's business at the relevant time. Where the complaint contains only general allegations and no material links the person to day-to-day management or control, proceedings are unsustainable. On the facts stated, the petitioners were shown only as shareholders, with no specific role attributed to them, so the proceedings against them were set aside.

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Issues: Whether the petitioners, being only shareholders and not shown to be directors, promoters, or persons in charge of the company's affairs, could be proceeded against vicariously for alleged violations of the SEBI Act and the Collective Investment Scheme Regulations.

Analysis: Liability for offences committed by a company does not arise merely from a person's name appearing in the company records. To fasten vicarious liability, the complaint must contain specific allegations showing that the person was in charge of, and responsible for, the conduct of the company's business at the relevant time. A bare or general averment is insufficient. On the material on record, the petitioners were shown only as shareholders, with no specific role attributed to them in the complaint and no material indicating participation in the day-to-day management or control of the company.

Conclusion: The petitioners could not be held liable for the company's alleged offences, and the notice framed against them was unsustainable.

Final Conclusion: The proceedings against the petitioners were set aside because the complaint did not establish the foundational facts necessary to attract vicarious criminal liability.

Ratio Decidendi: Vicarious criminal liability for company offences can be fastened only on persons against whom the complaint contains specific averments showing that they were in charge of and responsible for the conduct of the company's business; mere shareholder status or a general assertion of control is insufficient.

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