Vicarious liability under the Indian Penal Code cannot be fastened on an independent director without specific allegations of active involvement.

Criminal proceedings against a non-executive independent director were quashed because the complaint contained no specific allegations of active participation, decision-making authority, or direct involvement in the impugned loan transaction. The Court applied the principle that the Indian Penal Code does not impose vicarious liability unless a statute expressly provides for it, and that a director may be proceeded against only on material showing active involvement coupled with criminal intent. On the facts, the applicant was not concerned with the company's day-to-day affairs, had not signed the relevant documents, and was not linked to the transaction; the complaint, process order, and proceedings were therefore quashed against him.

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Issues: Whether criminal proceedings could be quashed against a non-executive independent director of a company in the absence of specific allegations of active involvement, decision-making authority, or participation in the transaction, and whether vicarious liability could be fastened on him under the Indian Penal Code.

Analysis: The application invoked the inherent jurisdiction of the Court to quash the complaint and process issued for offences under the Indian Penal Code. The material showed that the applicant was only a non-executive independent director, had no decision-making powers, was not concerned with the day-to-day affairs of the company, had not signed the relevant documents, and was not directly involved in the loan transaction. The governing principle applied was that the Indian Penal Code does not create vicarious liability in the absence of a specific statutory provision, and a director can be proceeded against only where there is material showing active participation coupled with criminal intent or where the statute expressly provides for such liability.

Conclusion: The criminal complaint, the process order, and all proceedings were quashed so far as the applicant was concerned.

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