The state of Maharashtra vs. Syndicate Transport Company Pvt. Ltd – Law Times Journal Company Law


In the High Court of Bombay
Equivalent citation: AIR 1964 Bom 195
Petitioner: 
State of Maharashtra 
Respondent: 
Syndicate Transport Company Pvt. Ltd. 
Decided on: 
26th September, 1963
Bench: 
Hon'ble Justice Paranjpe

Introduction:

Trust is the main factor behind every successful business. In India, breach of trust is punishable under both the Civil and Criminal Code. The case of State of Maharashtra v. Syndicate Transport Company Pvt. Ltd, deals with the question as to whether a corporate body is liable for punishment of offence involving men’s rea. It also highlights the criminal liability for breach of trust and cheating under Section 406, 403 and Section 420 of the Indian Penal Code. 

Facts:

Kmart motors received a letter requesting an advanced amount of Rs.11,000 for purchasing a diesel engine for the company by Mr Manohar (Opp. No. 2). 

The letter stated the said diesel engine shall be filled in company’s bus no. BYY-610 and then the bus be transferred in his name. The bus shall be run by the company on hire purchase agreement till the advance amount of Rs.11,000 is satisfied. However, after receiving the amount the engine was fitted to another bus and no transfer of bus took place. 

The Complainant filed a complaint against the company’s managing director, another Director and a shareholder under Section 420 and Section 406 or 403 of Indian Penal Code, on which the Magistrate passed a separate order charging its Managing Director Chinta, shareholder and Director Harinarayan under Section 420 of IPC and discharged their directors. 

Issue

Whether a company can be prosecuted for an offence involving men’s rea under IPC. 

Contentions raised

Mr Hardas on behalf of the complainant company opposed the said reference stating that Section 2 and 11 of IPC clearly states that under this Code every person shall be liable for punishment and “person” includes a corporate body. He further submitted that a corporate body is indictable for all offences including men’s rea on the grounds that the acts of authorised agents and servants can attribute to the company. Further, the offence of breach of trust or misappropriation of property by dishonest means does not mandatorily prescribe imprisonment, based on these facts the Magistrate should be allowed to proceed against the company. 

On the other hand, Mr Madholkar and Mandpe for Messrs. Contended that although the definition of “person” includes a body corporate, a company only acts on behalf of its agent making it incapable to commit certain offences punishable with imprisonment. Further, the qualifying clause of Section 2 states that unless otherwise in subject or context the corporate body may be immune to prosecution for certain offences. Further, he contended that it was not permissible to prosecute a company or corporate body for an offence involving men’s rea if the men’s rea of an agent or servant of a company cannot be attributed to the company. 

Observations

The Court observed various cases including Anath Bandhu v. Corporation of Calcutta, Director of Public Prosecution v. Kent and Sussex Contractors Ltd., etc. which was put forth by the learned advocates in support of their contention and stated that in the above-mentioned cases none of them included the question of men’s rea. 

Later in Rex v. Haulage Ltd, the counsel for the Crown conceded that there were some offences for which a company can be indicted, exception to this were the offences of perjury or bigamy for which apart from a natural person, cannot be committed vicariously. Apart from these a company or corporation may be prosecuted for statutory and common law offences even if it involves men’s rea. 

Further, taking into view the claim submitted by Mr Hardas which stated that under Section 406 and 403 of IPC the Magistrate should proceed against the company for criminal breach of trust and misappropriation the company was discharged as no cognizance was taken by the Magistrate for the same.

Judgement

The Court considering the observations and arguments put forth by both the parties stated that a corporate body acts on behalf of its agents or servants, criminal acts are done by its authorised agents or servants or omission of the same including his intention, state of mind, knowledge or belief is ought to be treated as acts or omission on the part of the company irrespective whether it involves men’s rea or not. 

Further the complainant failed to show that the Managing or Board of Directors had made any dishonest representation or has authorised the shareholder to make such a representation on behalf of the company and received the amount. The allegations made by the complainant indicates that the shareholder acted on its own but in the name of the company. In the given situation, though the company may have reaped the benefits of the diesel engine fitted into the bus, the company cannot be attributed to the false or dishonest representation or misappropriation made by the shareholder Manohar. So, it would not be permissible to direct the Magistrate to proceed with a charge under Section 406 and 403 of IPC against the company. 

Conclusion

On the basis of the above facts and observations, the Court accepted the reference quashing the charge framed against M/s. Syndicate Transport Company Pvt. Ltd. However, the Magistrate shall be at liberty to arrive at his conclusion and findings on the evidence presented before him.

Edited by: Purnima Ojha

Reference

State of Maharashtra v. Syndicate Transport Company Pvt. Ltd, AIR 1964 Bom 195

https://indiankanoon.org/doc/677388/



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