Corporate liability requires arraigning the company before pursuing directors or officers for vicarious criminal liability.

Criminal proceedings against individual directors or officers for alleged offences under the Chit Funds Act and the Penal Code were found unsustainable where the company through which the business was conducted was not arraigned as an accused. The court applied the principle that, when corporate liability and vicarious liability are relied on, the corporate entity should ordinarily be made a party because its presence is necessary to sustain proceedings against persons said to be responsible for its conduct. In the absence of the company, the complaints against the individuals alone could not be maintained, and the impugned order and further proceedings were quashed.

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Issues: Whether criminal proceedings against individual directors or officers are maintainable when the company, against which the alleged offences are said to have been committed, is not arraigned as an accused.

Analysis: The allegations arose from offences under the Chit Funds Act and the Penal Code, but the company through which the business was carried on was not made a party to the complaints. The governing principle applied was that where corporate liability and vicarious liability are sought to be fastened, the company as a juristic person must ordinarily be arraigned as an in order to sustain proceedings against persons said to be responsible for its conduct. In the absence of the corporate entity, the complaints against the individuals alone could not be maintained.

Conclusion: The proceedings were not maintainable against the petitioners in the absence of the company, and the criminal petitions were allowed by quashing the impugned order and all further proceedings.

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