Allahabad HC: Firms Not Immune From Criminal Prosecution

allahabad high court law insider

Khushi Gupta

Published on: May 31, 2022 at 20:54 IST

The Lucknow Bench of Allahabad High Court has said that companies, corporate houses and corporations are not immune from criminal prosecution only on the basis that they do not possess criminal intent to commit any offence.

It clarified if an offence is committed by the company, the company itself along with persons at the helm of affairs of the company would expose themselves for criminal prosecution.

With the above observation, the High Court set aside a criminal prosecution launched against two directors of a company without arraying the company itself as the accused in the complaint.

A Bench of Justice Shree Prakash Singh passed the order on a Petition moved by Director Uma Shanker Soni and another of Shi Bhawani Paper Mill Private Limited, Rae Bareli. The two directors were prosecuted in 2016 by filing a complaint before Additional Chief Judicial Magistrate (ACJM), Court No 15, Rae Bareli for not depositing shares of employees towards Employee Provident Fund (EPF) and Employee State Insurance (ESI).

The ACJM on May 19, 2017, took cognizance of offences under Sections 419, 420 of IPC and summoned the two directors. Against the said order, the two filed revision, but the additional district judge 9th, Rae Bareli on September 29, 2021, dismissed it. The two directors then challenged those two orders before the High Court.

Considering the issue at length, Justice Singh set aside the two orders passed against two directors of the company only on the ground that the company itself was not made a party while filing a complaint in the matter before the ACJM.

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