Mere Designation Doesn’t Establish Criminal Liability: Bombay High Court Quashes Proceedings Against ICICI Officials in Octroi Evasion Case

"Vicarious Liability Cannot Be Attracted Without Specific Allegations of Active Role or Mens Rea", Bombay High Court (Bench of Justice Dr. Neela Gokhale) delivered a significant judgment in ICICI Bank Ltd. & Ors. v. State of Maharashtra & Pune Municipal Corporation, clarifying the scope of vicarious criminal liability under the Bombay Provincial Municipal Corporation Act, 1949 (BPMC Act). The Court allowed a criminal writ petition filed by senior officers of ICICI Bank, quashing criminal proceedings initiated against them for alleged octroi evasion in respect of import of gold bullions/coins into the jurisdiction of Pune Municipal Corporation (PMC).

Justice Gokhale held that “mere designation or official status of a person in a company is not sufficient to attract criminal liability under Sections 398 and 401 of the BPMC Act”, in the absence of specific averments attributing a role or intent to defraud.

"Complaint is Completely Bereft of Any Pleading Demonstrating Active Role of Directors or Officers" — Court Holds Continuation of Criminal Process as Abuse of Law

The complaint, registered as Criminal Case No. 236 of 2009, arose from an allegation by Pune Municipal Corporation that ICICI Bank imported gold bullions and coins during 2006 to 2009 without paying due octroi, a local levy imposed on goods brought into municipal limits. Summons had been issued by the Judicial Magistrate First Class (JMFC), Pune, not only to the bank but also to its senior functionaries — including then CEO & MD Ms. Chanda Kochhar, former Deputy MD Dr. Nachiket Mor, Legal Officer Vasudeo Kulkarni, and Branch Manager Asavari Patankar. These individuals sought to quash the complaint and the summons, arguing absence of any allegation demonstrating their active involvement or mens rea.

The PMC claimed that between 01.04.2006 and 31.08.2009, ICICI Bank imported gold bullions and coins into Pune without paying applicable octroi. Notices were issued on September 11, 2009 and again on October 3, 2009, calling upon the bank to pay ₹1.27 crore as unpaid octroi along with penalty under Section 398 BPMC Act. The non-payment led to the filing of the criminal complaint under Sections 398 and 401 of the BPMC Act, which resulted in issuance of summons to the bank and its officers on November 20, 2009.

Challenging this, the petitioners approached the High Court under Article 226 read with Section 482 CrPC, seeking quashing of the complaint and summons.

The pivotal legal issue was whether senior functionaries of a company can be criminally prosecuted for municipal offences like octroi evasion without specific allegations of their role, intent, or involvement in the alleged offence, merely by virtue of their position.

Counsel for Petitioners, Mr. Faisal Ali Sayyed, contended that no specific averments were made against Petitioner Nos. 2 to 5 (i.e., the officials) in the entire complaint. The allegations were vague and omnibus, lacking any reference to how or in what manner the said officers were involved in the alleged transaction. The issuance of summons, according to the petitioners, was based on conjecture and surmise, thereby constituting an abuse of process of law.

On the other hand, Mr. Abhijit P. Kulkarni, appearing for the PMC, argued that importing goods into municipal limits without paying octroi is itself a completed offence, and that duty is cast on the importer to disclose and pay the octroi. He relied on P.D. Kashikar v. State of Maharashtra to argue that intention is irrelevant once non-payment is established.

Justice Gokhale carefully examined Section 398 BPMC Act, which punishes intentional evasion of octroi, and Section 401, which creates vicarious liability on persons managing the company.

She observed: “Section 398 can be invoked only when three essential elements co-exist: (i) import of goods liable to octroi, (ii) non-payment, and (iii) intent to defraud the Corporation.”

In relation to vicarious liability, the Court underscored that Section 401 BPMC is akin to Section 141 of the Negotiable Instruments Act, 1881, and must be interpreted in the same manner. For this, the Court drew from a catena of Supreme Court precedents:

• SMS Pharmaceuticals v. Neeta Bhalla (2005) 8 SCC 89: “Mere designation as a director is not enough to infer liability; specific role must be shown.”

• National Small Industries Corporation v. Harmeet Singh Paintal (2010) 3 SCC 330: “There is no presumption that every director knows about the transaction; liability must be pleaded and proved.”

• N.K. Wahi v. Shekhar Singh (2007) 9 SCC 481: “There must be clear, unambiguous allegation of how directors are responsible for conduct of business.”

The Court then held:

“Although the statutory regime of the BPMC Act attracts the doctrine of vicarious liability, prosecution against the Petitioner Nos.2 to 5 cannot continue in the absence of any averment ascribing a specific role attributed to them.”

The Court concluded that allowing proceedings to continue against the company’s senior officers, without any specific averments about their role or mens rea, would amount to a travesty of justice and an abuse of process of criminal law. However, it declined to quash proceedings against ICICI Bank itself, keeping all contentions open before the trial court.

Accordingly, the High Court held: “Complaint bearing Criminal Case No. 236 of 2009 against Petitioner Nos.2 to 5 is quashed and set aside. Summons dated 20th November 2009 issued to the Petitioner Nos.2 to 5 is also quashed. Complaint against Petitioner No.1-Bank remains as it is.”

The rule was thus partially made absolute.

This judgment reinforces a settled but frequently contested principle of criminal law — vicarious liability cannot be presumed merely from a person’s designation. It must be explicitly alleged and legally established. The Bombay High Court's ruling ensures protection against indiscriminate criminal prosecution of top management in the absence of foundational pleadings.

As businesses face increasing regulatory scrutiny, this decision serves as a crucial safeguard against arbitrary extension of criminal liability to corporate executives, unless their specific involvement and culpable intent is demonstrable on the face of the complaint.

Date of Decision: December 8, 2025