Sanjay Dutt & Ors. Vs. State of Haryana & Anr.

The Supreme Court of India, in Sanjay Dutt & Ors. v. State of Haryana & Anr. (2025 INSC 34), delivered a landmark judgment clarifying the scope of criminal liability of company directors, particularly regarding vicarious liability for acts committed by the company. The case arose from allegations against directors of Tata Realty and Infrastructure Limited and Tata Housing Development Co. Ltd. concerning the illegal uprooting of 256 trees in Gurugram, purportedly violating the Punjab Land Preservation Act, 1900 (PLPA).

Facts
The complaint alleged environmental damage due to the uprooting of trees by the company. Three senior officials, including Sanjay Dutt (Managing Director), were named as accused based on their managerial positions. However, no direct or specific allegations were made against these directors regarding their personal involvement in the illegal act. The trial court took cognizance of the complaint, and the accused sought quashing of the proceedings in the Punjab and Haryana High Court, which was rejected. Consequently, the matter reached the Supreme Court.

Legal Issue
The primary question was whether directors could be held vicariously liable for the company’s alleged illegal act under the PLPA without any explicit statutory provision or proof of their personal involvement and criminal intent.

Supreme Court’s Ruling
The Supreme Court quashed the criminal proceedings against the directors, holding that:

Vicarious liability on directors is not automatic or presumed merely because they hold managerial or supervisory roles in the company.

For criminal liability to attach to directors, there must be specific statutory provisions imposing such liability and clear, substantiated allegations of personal involvement or criminal intent on their part.

Mere authorization of an act on behalf of the company or routine supervisory duties does not amount to vicarious liability.

The Court emphasized that directors’ liability arises only if their actions are directly connected to the company’s wrongdoing and fall outside the scope of normal corporate functions.

The absence of direct accusations or evidence linking the directors personally to the illegal uprooting of trees meant that the complaint could not be sustained.

Significance and Implications
This judgment reinforces the principle that criminal liability in corporate matters must be based on individual culpability and not on association with the company. It safeguards directors from unfair prosecution based solely on their positions and underscores the need for clear legislative backing and evidence of personal wrongdoing to hold them liable. The ruling provides a crucial precedent limiting vicarious liability of directors in environmental and other regulatory offenses, promoting fairness and clarity in corporate criminal law.

Summary
In Sanjay Dutt & Ors. v. State of Haryana & Anr., the Supreme Court held that directors cannot be held vicariously liable for a company’s illegal actions unless there is explicit statutory provision and evidence of their personal involvement and criminal intent. The Court quashed criminal proceedings against the directors for alleged illegal deforestation under the Punjab Land Preservation Act, emphasizing that mere managerial roles or authorization do not attract criminal liability. This judgment is a significant safeguard for directors, ensuring that liability is imposed only on proven individual culpability and not by mere association with corporate wrongdoing.

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