Jharkhand HC quashes criminal case against L&T Finance MD, says no liability without specific allegations or legal provision

News Citation : 2026 LN (HC) 318 | 2026:JHHC:12798

April 30, 2026 : The Jharkhand High Court has quashed criminal proceedings against the Managing Director of L&T Finance Limited, holding that prosecution against a person solely by virtue of holding a corporate post is not legally sustainable without specific allegations.

In its order dated April 30, 2026, Justice Anil Kumar Choudhary allowed a criminal miscellaneous petition filed by the company and its Managing Director, setting aside the cognizance order passed by a Judicial Magistrate in Dhanbad.

The case stemmed from a complaint alleging cheating and criminal breach of trust under Sections 406 and 420 of the IPC. The complainant had transferred ₹8 lakh to the company as part of a deal arranged by a co-accused for the supply of a dozer machine worth ₹20 lakh. When the equipment was not delivered, criminal proceedings were initiated.

However, the High Court found that the primary allegations were directed against the co-accused, not the company’s Managing Director. The Court noted that there were no specific accusations of wrongdoing or dishonest intent against the petitioner.

Crucially, the Court emphasized a settled principle of criminal law: a “post” such as Managing Director is not a juridical person and cannot be prosecuted in isolation without naming the individual and establishing their role in the alleged offence. It also reiterated that vicarious liability does not arise under the IPC unless expressly provided by statute.

The Court further observed that the company had already refunded the ₹8 lakh to the complainant during the pendency of proceedings, which was acknowledged. While the complainant argued that interest and litigation costs remained unpaid, the Court held that this alone could not justify continuation of criminal prosecution in the absence of a prima facie case.

Calling the continuation of proceedings an “abuse of process of law,” the Court quashed the entire criminal case, including the 2017 cognizance and summons order, insofar as it concerned the Managing Director. The case against other accused persons remains unaffected.

Case Reference : Cr.M.P. No. 3717 of 2025, L & T Finance Limited and Another vs State of Jharkhand and Another; for the Petitioners: Mr. Bharat Kumar, Advocate, Mr. Sparsh Kumar Rai, Advocate, and Mr. Rahul Sinha, Advocate; for the State: Mr. Vineet Kr. Vashistha, Spl. P.P.; for Opposite Party No. 2: Mr. Santosh Kr. Tiwary, Advocate.