Company must be arraigned first for vicarious liability under deeming offences against officers and directors.

Vicarious criminal liability under deeming provisions for offences by a company arises only when the company is arraigned as the principal accused. Under Section 141 of the Negotiable Instruments Act, prosecution of signatories or officers alone was held not maintainable because strict construction requires the company to be before the court, except where prosecution of the company is legally impossible. The same principle was applied to Section 85 of the Information Technology Act, so a director alone could not be prosecuted when the company was not impleaded. The proceedings were quashed and the appeals allowed.

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Issues: (i) Whether prosecution under Section 138 of the Negotiable Instruments Act, 1881 could be maintained against the signatory or officers of a company without arraigning the company as an accused. (ii) Whether the same principle applied to prosecution under Section 85 of the Information Technology Act, 2000.

Issue (i): Whether prosecution under Section 138 of the Negotiable Instruments Act, 1881 could be maintained against the signatory or officers of a company without arraigning the company as an accused.

Analysis: Section 141 of the Negotiable Instruments Act, 1881 creates vicarious criminal liability only where the offence under Section 138 is committed by a company. The company is the principal offender, and the liability of persons in charge or responsible for its conduct is a deeming liability that operates only if the company itself is before the court. Because the provision is penal, it requires strict construction and full compliance with the condition precedent that the company be arraigned as an accused. The earlier view permitting prosecution of officers without impleading the company was held not to correctly state the law, save where prosecution of the company is legally impossible.

Conclusion: Prosecution against the signatory or officers alone was not maintainable; arraignment of the company was imperative.

Issue (ii): Whether the same principle applied to prosecution under Section 85 of the Information Technology Act, 2000.

Analysis: Section 85 of the Information Technology Act, 2000 is in pari materia with Section 141 of the Negotiable Instruments Act, 1881 and uses the same deeming structure for offences by companies. The requirement that the company be prosecuted as the principal offender applies equally, and the absence of the company as an accused vitiates prosecution of the director or other responsible officers.

Conclusion: The prosecution under Section 85 could not be sustained against the director alone when the company had not been arraigned.

Final Conclusion: The Court held that for offences governed by these deeming provisions, the company must be made an accused before vicarious liability can be fastened on directors or other responsible officers; all the appeals were therefore allowed and the proceedings were quashed.

Ratio Decidendi: Vicarious criminal liability under a deeming provision that speaks of offences by a company arises only when the company itself is arraigned and shown to be the principal offender, unless prosecution of the company is legally impossible.

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