SC interprets Managing Director’s liability, highlights absence of specific allegations of negligence with criminal intent

Brief Facts: A visitor to the hotel (Hyatt Regency, owned by Asian Hotels (North) Ltd. – listed company on Indian stock exchanges) fell from the 6th floor to the 4th floor. It was found that a terrace next to the club lounge on the 6th floor was often used as a smoking zone, with the hotel not stopping smokers from using the place. The charge was that the hotel did not take adequate precautions to maintain safety. By the charge sheet the appellants (including MD) are sought to be prosecuted for the offences u/s 336 and 338 read with Sec. 32 of IPC, 1860 and Sec. 4 of Cigarettes and Other Tobacco Products (Prohibition of Trade and Commerce, Production, Supply and Distribution) Act, 2003.

In the present case, MD is the only non-independent and Executive Director of the Company who chairs meeting of the company and signatory for various decisions. SC observed that the merely because the appellant was holding position as MD, in absence of specific allegations of negligence with the criminal intent, is not liable for prosecution.

SC observed that the incident occurred only due to sheer negligence of the injured who walked out to the terrace for smoking and climbed on the parapet wall which was having additional fence.

SC observed that it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the Statute specifically provides for. “There is no reason and justification to proceed against him only on ground that he was the Managing Director of M/s Asian Hotels (North) Limited, which runs Hotel Hyatt Regency. The mere fact that he was chairing the meetings of the company and taking decisions, by itself cannot directly link the allegation of negligence with the criminal intent”

Based on its earlier judgments, SC stated that “In absence of specific allegations against the Managing Director of the company and having regard to nature of allegations made which are vague in nature, we are of the view that it is a fit case for quashing the proceedings, so far as the Managing Director is concerned.”

Criminal Appeal No.1263 of 2019 (Arising out of S.L.P.(Crl.) No.8008 of 2018)