Calcutta High Court Quashes Case Against Company Director Due to Absence of Company as Accused

In the judgment of Mr. Raj Sahai Vs The State of West Bengal & Anr., the Calcutta High Court addressed the critical legal issue of corporate criminal liability. Specifically, the Court examined whether a director of a company can be held criminally liable in the absence of the company being named as an accused in the proceedings.

Raj Sahai, a retired Army Officer and director of Duomo Distribution Private Limited, was accused under the Bengal Excise Act, 1909, for allegedly possessing and storing unregistered and non-duty paid foreign liquor. The prosecution argued that these acts were in violation of the Bengal Excise Act, 1909. Sahai contended that the seized liquor was not meant for sale but for marketing and promotion, and thus not subject to registration or excise duty.

Justice Shampa Dutt (Paul) evaluated the evidence, including import documents and invoices marked "Samples Not for Sale." The Court noted the absence of the company, Duomo Distribution Pvt. Ltd., as an accused in the case. Referencing the Supreme Court's ruling in Dayle De’ Souza Vs Government of India, the Court underscored that corporate entities must be party to proceedings for directors or officers to be vicariously liable.

"The prosecution has not impleaded the company in this instant case... initiation of proceedings and its continuation is bad in law."

The judgment primarily hinges on the principle of corporate criminal liability and the concept of vicarious liability in criminal law. It cites Section 46B of the Bengal Excise Act, 1909, which requires the company to be implicated in the offence for its directors or officers to be held liable.

The Court allowed the CRR 100 of 2020, quashing the proceedings against Raj Sahai due to the absence of Duomo Distribution Pvt. Ltd. as an accused party in the case. The judgment emphasizes the necessity of implicating the corporate entity in cases of corporate wrongdoing.

Date of Decision: 02.02.2024

Mr. Raj Sahai Vs The State of West Bengal & Anr.