Directors can’t be booked just because a company violated the law.
Directors can’t be booked just because a company violated the law.
The Hon’ble Supreme Court has delivered a landmark Judgement on 29.10.2021 wherein it has laid down that the Directors can’t be booked just because a company violated the law.
The Supreme Court has asked investigating and prosecuting against directors of erring companies merely because of the post held and said such avoidable prosecution leads to humiliation and loss of reputation in the society.
Quashing prosecution and summons issued to a director of a company which allegedly failed to pay minimum wages to some workmen, the Bench of SC said “A person cannot be prosecuted and punished merely because of their status or position as a director, manager, secretary or any other officer, in a company unless the offence in question was committed with their consent or connivance or is attributable to any neglect on their part.”
The Bench further said that arresting directors or officers without them having any remote role in the perpetration of the alleged violation of law by the company is fraught with serious consequences and must be avoided at all costs.
Though The judgment is given in the context of the Labour Act, it has wider repercussions and applicability. The ratio laid down in the present judgment can be applied in various other statutes.
