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A listed hospitality Company found itself, along with its Managing Director (MD) and other senior personnel, in the dock for an accident involving a guest staying at one of its properties. It needed the Supreme Court to address the limitless liability that lower Courts had attributed to the MD.

  • In October, 2013, an FIR was registered against a listed Company, with a 5-star hotel in Delhi, the Managing Director of the Company, the General Manager of the hotel, the General Manager- Corporate Affairs, and 4 other persons in-charge of various departments in the hotel (collectively referred to as ‘accused’).
  • The complaint arose from that fact that a guest had fallen from the 6th floor to the 4th floor of the hotel. The guest had alleged that the terrace was dark and that the hotel staff had not stopped him from going there. There was a lapse alleged on the part of the hotel management in taking safety measures for the guests. The hotel stated that the guest had climbed on the parapet wall and was walking there.
  • The Board of the Company, had only one Executive Director, who was the MD of the Company.
  • A charge sheet was filed in March, 2015 against the accused.
  • The charges against the MD were –
    1. The Company, through its MD, looked after the hotel and was responsible for every criminal act done in the hotel.
    2. MD was the only Non-Independent and Executive Director of the Company. He was present in all the Board Meetings as the Chairperson, and all decisions of the Company/hotel were taken under his signature
    3. He was overall responsible for all omission and commission of the Company’s officials, and violations of lodging license/health trade licenses with regards to safety of its guests.
  • The District and Sessions Court passed an order against all ‘accused’.
  • The accused challenged the order, and it went right up to the Supreme Court (SC).
  • SC observed that in the absence of any specific allegations of negligence, with criminal intent, the MD, by virtue of his holding that position, was not liable for prosecution. The cause causans for the incident was the act of the injured climbing on the parapet wall and walking there. No individual can be made accused, along with the Company, unless there was sufficient evidence of his/her active role, with a criminal intent.
  • The incident occurred only due to sheer negligence of the injured.
  • SC further observed that the MD was neither the occupier nor the owner nor the licensee of the hotel.
  • The mere fact that the MD was chairing the Board meetings and taking decisions, by itself cannot directly link the allegation of negligence with the criminal intent.
    Points to Ponder
  • It is well established that men’s rea (a guilty mind) is a prerequisite in criminal offenses. How does being in a position of authority translate to men’s rea?
  • Given the facts of the case, was there anything the management could have done, within its sphere of responsibility, to prevent the accident?