Vicarious criminal liability of company officers requires specific statutory basis and concrete individual allegations; bona fide SARFAESI acts are protected.

Officers of a company cannot be prosecuted for offences under the Indian Penal Code on a theory of vicarious liability unless a statute specifically creates such liability and the company itself is arraigned as an accused. Bare assertions based on designation, without concrete material showing individual participation, authorization, or culpability, are insufficient to sustain criminal process. The acts complained of were also treated as bona fide steps taken under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and therefore protected by Section 32 as acts done in good faith in discharge of statutory duties. The criminal proceedings were quashed as unsustainable.

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Issues: (i) Whether officers of a company can be prosecuted for offences under the Indian Penal Code, 1860 on a theory of vicarious liability when the company itself is not arraigned as an accused; (ii) Whether the complaint and the order issuing process disclosed sufficient individual role, culpability, or material against the officers to sustain prosecution; (iii) Whether the acts complained of were protected by Section 32 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 as acts done in good faith in the discharge of statutory duties.

Issue (i): Whether officers of a company can be prosecuted for offences under the Indian Penal Code, 1860 on a theory of vicarious liability when the company itself is not arraigned as an accused.

Analysis: The prosecution was founded on the allegation that the impugned possession notice was issued on behalf of the bank. The bank, being the juristic person on whose behalf the notice was issued, was not made an accused. For offences under the Indian Penal Code, 1860, vicarious liability of directors or officers is not presumed in the absence of a specific statutory provision creating such liability. The legal position applied is that prosecution of officers alone, without impleading the company or body corporate, is impermissible where the alleged act is attributable to the institution.

Conclusion: The prosecution of the officers alone was impermissible and could not be sustained.

Issue (ii): Whether the complaint and the order issuing process disclosed sufficient individual role, culpability, or material against the officers to sustain prosecution.

Analysis: The complaint proceeded largely on the basis of designation and general assertions that the appellants were in charge of the bank's affairs. The record did not disclose concrete material showing active participation, authorization, or personal conduct linking each appellant to the alleged defamatory act. Issuance of process requires application of mind to whether the complaint, if taken at face value, makes out personal criminal liability. Mere official status or bald averments are insufficient to justify criminal process against officers for an offence under the Indian Penal Code, 1860.

Conclusion: The allegations were insufficient to justify continuation of criminal proceedings against the appellants.

Issue (iii): Whether the acts complained of were protected by Section 32 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 as acts done in good faith in the discharge of statutory duties.

Analysis: The possession notice was issued under the statutory enforcement mechanism after default in repayment. The wrong figure in the notice was treated as a clerical error, and the bank promptly issued a clarificatory letter correcting the mistake. On these facts, the notice and the related action were held to be bona fide steps taken in the course of enforcement proceedings. Section 32 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 protects secured creditors and their officers from proceedings for acts done in good faith under the Act.

Conclusion: The officers were entitled to statutory protection and the prosecution was not maintainable.

Final Conclusion: The criminal proceedings and the orders taking cognizance and issuing process were quashed as an abuse of process, and the appellants were granted relief.

Ratio Decidendi: In the absence of a statute creating vicarious criminal liability, officers of a juristic person cannot be prosecuted for an offence allegedly committed on behalf of that entity unless the entity itself is arraigned and the complaint contains specific material showing their individual role and culpability.

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