Corporate vicarious liability cannot fasten criminal responsibility on former directors whose resignation is proved by statutory records.

Criminal liability under SEBI Act vicarious liability provisions attaches only to persons who were in charge of and responsible to the company when the offence was committed. Where unchallenged Form-32 established that the petitioners had resigned as directors before the alleged offence, that statutory record prevailed over a later letter naming them as directors. The necessary basis for fastening liability was therefore absent, and the complaint could not be continued against them; it was liable to be quashed qua the petitioners.

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Issues: Whether the criminal complaint could be quashed qua the petitioners on the ground that they had resigned as directors before the alleged commission of offence, and therefore were not persons in charge of and responsible to the company at the relevant time.

Analysis: Section 27 of the Securities and Exchange Board of India Act, 1992 fastens liability on persons who were in charge of and responsible to the company at the time the offence was committed. The petitioners placed on record Form-32 showing resignation prior to the alleged cause of action. The document was already on the trial court record and was not disputed as to authenticity. In these circumstances, the later letter showing their names as directors could not override Form-32. The requirement of establishing that the petitioners were directors at the time of commission of the offence was not satisfied.

Conclusion: The proceedings could not be continued against the petitioners, and the complaint was liable to be quashed qua them.

Ratio Decidendi: In proceedings based on corporate vicarious liability, criminal liability cannot be fastened on a person who had ceased to be a director before the alleged offence, particularly where the resignation is proved by a reliable statutory record such as Form-32.

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