Company Law Case: Raj Kumar Upreti vs. Raghav Kumar Mishra, NKP B.S, Vol.2, Pages 305
Case: Cheating
Plaintiff: Government of Nepal, on the complaint of Rajkumar Upreti and 410 other persons.
Defendant: Raghav Kumar Mishra, Rajesh Chaturvedi; Founder, Anuj Mishra; Chief Executive Officer, Webline Network Marketing Pvt. Ltd.
Decision No: 9954
This case is related to cheating and criminal liability of a company and its employees.
Facts of the Case:
Webline Network Marketing Pvt. Ltd. collected Rs. 12,000/- from each person by promising membership benefits, computers, commissions, bonuses and prizes. Raghav Kumar Mishra was working as the company’s Country Manager and was involved in promoting the scheme and collecting money from members. The members were initially given money for some months, but later the company’s cheques could not be encashed because there was no money in the bank account. Although the complaint mentioned 2,300 victims, complaints were actually filed by 410 persons. On the basis of those complaints, a claim of Rs. 3,46,00,000/- was made, including membership amounts and commissions.
Plaintiff’s Claim:
The Government argued that the accused had cheated the members by making false promises through Webline Network Marketing Pvt. Ltd. It argued that Raghav Kumar Mishra should be punished for the full amount claimed and that Webline Network Marketing Pvt. Ltd. itself should also be held criminally liable, because the cheating was carried out through the company. It further argued that the amount relating to all 2,300 alleged victims should be considered.
Defendant’s Arguments:
The judgment records that Raghav Kumar Mishra denied the accusation before the court and stated that his work was only related to computer maintenance. However, during investigation, he admitted that he was involved in collecting Rs. 12,000/- from members and received salary and commission from the company. The judgment also records the company’s position that it was a separate legal person.
Legal Issues:
- Whether Raghav Kumar Mishra committed the offence of cheating?
- Whether the fine should be calculated on the basis of 2,300 alleged victims or the 410 complainants?
- Whether Webline Network Marketing Pvt. Ltd. itself could be criminally punished for the cheating committed through it?
- Whether the company’s assets could be used to recover the victims’ loss?
Decision of Courts:
Kathmandu District Court: Initially convicted Raghav Kumar Mishra of cheating and sentenced him to 3 years imprisonment and Rs. 49,20,000/- fine.
Patan Appellate Court : The matter went through further proceedings. Ultimately, on 2067/07/15 BS, the Appellate Court held that Raghav Kumar Mishra was guilty of cheating and was sentenced to 2 years 6 months imprisonment and Rs. 49,20,000/- fine. Webline Network Marketing Pvt. Ltd. would not be criminally punished. If the company had movable or immovable property, it could be used to recover the complainants’ loss.
Supreme Court: The Supreme Court upheld the Appellate Court’s decision and dismissed the Government’s appeal. The Court found that the evidence established Raghav Kumar Mishra’s involvement in the cheating. However, the claim concerning 2,300 victims could not be accepted because the complaints and supporting receipts established the case only regarding the 410 complainants. Also the Court held that a company has a separate legal personality. Since a company acts through natural persons, criminal liability for criminal wrongs falls on the individuals who act on behalf of the company, rather than the company itself. However, a company may still bear liability for civil wrongs committed through it. Therefore, the company was not criminally punished, although its assets could be used to satisfy the victims’ claims.
Established Principles:
- A company has a separate legal personality, and because a company acts through natural persons, criminal liability for criminal wrongs is generally done by the individuals acting on behalf of the company rather than by the company itself. However, the company may remain liable for civil wrongs and their resulting liabilities.
