SC to fix corporate criminal liability

In an appeal filed in the court, the Managing Director of a Bangalore-based IT solution provider had asked whether the corporate criminal liability lies on the company or its Managing

Director in the event of any violation of the exemption granted to establishments/ firms, for employing women during night shifts under the Karnataka Shops and Commercial Establishment Act, 1961.

The state Government initiated criminal prosecution against the MD in December 2005 after an unfortunate incident involving a woman employee of the company. Taking cognizance of the complaint, the Metropolitan Magistrate on December 30, 2005 made the senior official an accused for violation of Section 25 and other provisions of the Karnataka Shops and Commercial Establishment Act.

On Wednesday, a Bench consisting Justices H K Sema and Markandeya Katju while agreeing that the question raised in the appeal must be settled, noted that there’s an absence of a specific and clear provision under the above Act defining the penal liability in case anybody contravenes exemption granted under it.

Senior advocate K K Venugopal, appearing for the MD, argued that the “employer” as defined under the Act is the company and not the officials per se. Justice Katju,meanwhile, observed that, “If there’s a lacunae in the Act, the benefit must go to the accused.”