2008 (11) TMI 709 - SC - Indian Laws

Directors not liable for theft of electrical energy due to lack of evidence

Tamil Nadu Electricity Board Versus Rasipuram Textile (P) Ltd. & Ors.

Tamil Nadu Electricity Board Versus Rasipuram Textile (P) Ltd. & Ors. - 2008 AIR 758, 2008 (17) SCR 11, 2008 (17) SCC 285, 2008 (13) JT 400, 2008 (16) ... Issues involved: Alleged theft of electrical energy detected during inspection, criminal prosecution against company and directors u/s 39(1) and 44(1)(c) of Indian Electricity Act, 1910, conviction of directors despite provisions of Section 49A, dismissal of revision application challenging judgment.The trial Judge convicted the accused directors despite provisions in Section 49A of the Indian Electricity Act, 1910, holding them liable for the offense committed by the company. The Judge emphasized that all persons responsible for company administration are liable, shifting the burden of proof to the accused to show lack of knowledge or due diligence in preventing the offense.The Additional District and Sessions Judge set aside the trial Court's judgment, stating that the burden of proof lies on the prosecution to establish the accused's responsibility for the company's business conduct under Section 49A. The Judge emphasized the need for evidence linking the accused directors to the offense, highlighting the lack of participation in day-to-day affairs as a crucial factor in determining criminal liability.The High Court dismissed the revision application challenging the trial Court's judgment, upholding the findings regarding the accused directors' lack of involvement in the company's affairs and the insufficiency of evidence to prove their responsibility for the offense under Section 49A of the Act.The appellant argued that the burden of proof under Section 49A required the accused directors to demonstrate their lack of knowledge or efforts to prevent the offense, emphasizing the prosecution's obligation to provide substantial evidence supporting the case. The appellant also stressed the importance of considering witness testimonies and documents in evaluating the merit of the case.The respondents' counsel supported the impugned judgment, aligning with the findings that the accused directors were not proven to be in charge or responsible for the company's business conduct, as required by Section 49A of the Indian Electricity Act, 1910.The judgment highlighted the relevant provisions of the Indian Electricity Act, 1910, including penalties for theft of energy and improper use, emphasizing the legal framework governing offenses related to electrical energy supply and usage.Section 49A of the Act imposes liability on company officials for offenses committed by the company, requiring proof of their involvement in the business conduct. The provision outlines the conditions under which directors can be held accountable for company offenses, emphasizing the need for specific allegations and evidence to establish criminal liability.The Court clarified that the burden of proof under Section 49A rests with the complainant to demonstrate the accused directors' responsibility for the company's affairs. Without sufficient evidence linking the directors to the offense, the proviso under Section 49A cannot be invoked, shifting the burden of proof to the accused.In conclusion, the Court upheld the decisions of the Additional Sessions Judge and the High Court, emphasizing the lack of evidence linking the accused directors to the offense and the failure to meet the requirements of Section 49A. The dismissal of the appeal was based on the absence of merit in challenging the findings regarding the accused directors' criminal liability.