The High Court of Bombay last week held that the director of a company can't be treated as its representative and asked to answer charges levelled against the establishment in a criminal trial. “A corporation by itself is a distinct legal entity than its director,” said justice AM Badar, while striking down the order of a special CBI Court which had ordered Sanjeev Malhotra, director of M/s Sudarshan Overseas Limited, accused in a case registered by CBI, to answer the charges on behalf of the firm.
The Judge said that for prosecuting a company as the accused, the Court is required to issue a process against the company and then it is for the latter to nominate its representative.
Malhotra approached the High Court after the special Court rejected his petition to send summons to the company for answering the charges levelled by CBI against it. The CBI Court had asked him and another director of the firm to remain present on the next date and answer charges on behalf of the company.
Lawyer Niranjan Mundargi, arguing on Malhotra’s behalf, said that section 63 of CrPC enabled the Court to serve summons to a corporation through its managing director, local manager or secretary and the corporation then chooses its representative to answer the charges. He submitted that therefore, the CBI Court couldn't have compelled Malhotra and the other director to answer the charges. Justice Badar accepted his contention and observed that section 305 of CrPC lays down the procedure to serve summons on a corporation and also states how the representative chosen can record statement of the company.
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