The principle of vicarious liability has been established in other branches of law a long time back. With the enactment of the Companies Act of 2013, the principle of vicarious liability has been given much greater importance. A corporate body is separate from its members and employees, however, a company can be held liable for the acts of its members and director. The principle of vicarious liability is applied in such a scenario, where the principle is held for all the acts of its agent. In the corporate system

m, the principle is the company and its members and directors are the agents who act on its behalf.
The principle of vicarious liability if further strengthened by the Latin Maxim “Qui facet alium facet per se” which implies that the authorized act which is done through another is deemed to be done by him, therefore a company is can be easily held liable for the acts of its agents and employees which have been done during the course of employment. The main operative criteria are that the said act should be authorized by the principle and during the course of employment. If an act is done by the agent has not been authorized and is not under the purview of his employment then the company cannot be held liable.

This principle has evolved with time. Earlier the courts assumed that since a corporation does not have a mind of its own, it cannot be held liable for civil actions involving malice intention. This was held in the case of Stevens v. Midland Counties Rly. Company (1854) 10 Exch 352. This view was later overturned in the case of Citizen’s Life Assurance Company v. Brown (1904) AC 423. This case was a landmark judgment that settled that a corporation can be held liable for offenses that involve malice, such as defamation. However, it is to be noted that a company is not liable for the acts of the agents which is not included under the Article of Association of the company. In India as the same principle has been adopted by the courts.

The directors of the company also have their duties towards the company. If these duties are not fulfilled then the company may also sue the director for the same. This includes breach of fiduciary duties, the ultra virus acts as been defined under the Companies Act of 2013, Negligent Acts, acts caused by mala fide intentions, etc. These could also lead to criminal liabilities. In criminal cases, it becomes important to identify the person who was involved or under who the act was committed. The term used in law is “officer in charge”. Vicarious liability is attached to the officer in charge and the one responsible to conduct the business of the company, although he may or may not be directly involved in the act.

Vicarious liabilities of the directors of the company have to be determined by applying the test as laid down by the Supreme Court of India. The Apex court in the case of Maksud Saiyed vs. the State of Gujarat and Ors (2008) 5 SCC 668 observed that the managing director and the director of the company cannot be held liable for vicarious liability if the statute does not provide the same. If the statute does not provide for the vicarious liability of the director then he cannot be prosecuted for the same unless it is established that he has actively participated with criminal intent.

The doctrine of vicarious liability is used by the courts for civil as well as criminal offenses. This principle has been applied by the courts in its true form time and again. This is to ensure that no one would commit the offense hiding behind the corporate veil. A company could be held liable for the acts of its employees provided it was authorized by the company, included under the article of association of the company, and performed by the employee during the course of its employment. The doctrine has also been applied to the directors of the company. They can be held liable for vicarious liability under both civil and criminal laws provided the statutes state about the vicarious liability of the director.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.