Vicarious liability of company officers requires prosecution of the company first; proceedings against directors were quashed.

Vicarious criminal liability of company officers under Section 25 of the Contract Labour (Regulation and Abolition) Act, 1970 arises only where the company is prosecuted as the principal offender and the complaint contains the necessary foundational averments. Applying that principle, the court held that directors and authorised signatories could not be proceeded against when the company itself was not arraigned as an accused. The prosecution against the officers was therefore not maintainable and was liable to be quashed.

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Issues: Whether prosecution of company officers for an offence allegedly committed by the company was maintainable when the company itself was not arraigned as an accused.

Analysis: Section 25 of the Contract Labour (Regulation and Abolition) Act, 1970 creates liability of the company and, in specified circumstances, of persons in charge of its business. The provision is analogous to Section 141 of the Negotiable Instruments Act, 1881. The governing principle applied was that vicarious liability of directors and other functionaries arises only when the company, as the principal offender, is also prosecuted and the necessary foundational averments exist. As the company was not made an accused, the statutory basis for prosecuting the petitioners in their capacity as directors and authorised signatories was absent.

Conclusion: The prosecution against the petitioners was not maintainable and was liable to be quashed.

Ratio Decidendi: Where penal liability of company officers is derivative, prosecution of the company as the principal offender is a condition precedent to fastening vicarious liability on its officers.

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