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CR.MA/4493/1997 2/ 15 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
CRIMINAL
MISC.APPLICATION No. 4493 of 1997
For
Approval and Signature:
HONOURABLE
MS.JUSTICE H.N.DEVANI
=========================================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To
be referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
=========================================================
DR.
V KURIAN & 3 - Applicant(s)
Versus
STATE
OF GUJARA & 1 - Respondent(s)
=========================================================
Appearance
:
MR N
D NANAVATI WITH MR D A DAVE FOR NANAVATY
ADVOCATES
for
Applicants No.1 - 4.
MR UMESH A TRIVEDI, ADDL. PUBLIC PROSECUTOR
for Respondent(s) : 1,
NOTICE SERVED BY DS for Respondent(s) :
2,
=========================================================
CORAM
:
HONOURABLE
MS.JUSTICE H.N.DEVANI
Date
: 16/03/2010
ORAL
JUDGMENT
The
facts of the case stated briefly are that respondent No.2-Food
Inspector, Godhra Circle, lodged a complaint in the Court of learned
Judicial Magistrate, First Class, Halol, alleging commission of the
offence under section 7 (2) which is punishable under section 16 (1)
(a) (i) of the Prevention of Food Adulteration Act, 1954 (the Act).
According to the complainant, he had visited the shop of one
Mayankbhai Govindbhai Desai, accused No.1 along with panchas for the
purpose of sampling on 01.03.1996. Amongst various other items
iodised salt in 1 Kg. packing were being old hence, he had purchased
sealed bags of the salt for the purpose of analysis thereof with the
consent of the said Mayankbhai. Each bag was bearing label showing
that the same was manufactured and packed by Sabarmati Salt Farmer s
Society and that the iodine content was 50 PPM. After collecting the
sample in accordance with the provisions of the Act the same was
sent to the Public Analyst for analysis thereof. Upon analysis of
the sample, it was found that the iodine content was 40.33 PPM and
not 50PPM as indicated in the label. Hence, the sample was declared
as misbranded and the complaint in question came to be lodged. The
complaint came to be registered as Criminal Case No.490 of 1997 and
is pending in the Court of learned Judicial Magistrate, Halol, Dist:
Panchmahals.
By
this application under section 482 of the Code of Criminal
Procedure, 1973 (the Code), the petitioners have prayed to quash the
above referred complaint and all proceedings pursuant thereto.
Mr.
N. D. Nanavati, learned Senior Advocate with Mr. D. C. Dave, learned
Advocate for the petitioners has at the outset invited the attention
of the Court to the fact that during the pendency of this
application, petitioner No.3-Arvindbhai Buch has passed away. A copy
of the death certificate indicating that petitioner No.3 has expired
on 28/07/1998 is placed on record. It is, accordingly, submitted
that the proceedings qua the petitioner No.3 would stand abated.
It
is further submitted that insofar as the petitioner No.1 is
concerned, he was the Chairman of the society, whereas petitioners
No.2 and 3 were the trustees of the society. Insofar as petitioner
No.4 is concerned, he was the officiating Chief Executive of the
society. Inviting attention to the Explanation below section 17 of
the Act which defines company to mean any body corporate and
includes a firm or other association of individuals, it is pointed
out that the accused No.2 Society is a society registered under the
Societies Registration Act, 1860 and as such would fall within the
definition of company as contemplated under section 17 of the
Act. It is accordingly submitted that the provisions of the Act as
applicable to a company would be applicable to the society in
question. Inviting attention to section 17 of the Act, which makes
provision for Offences by companies it is submitted that
section 17 provides that where an offence under the Act has been
committed by a company, (a)(i) the person, if any, who has been
nominated under sub-section (2) to be in-charge of, and responsible
to the company for the conduct of the business of the company, or
(ii) where no person has been so nominated, every person who at the
time the offence was committed was in charge of and was responsible
to the company for the conduct of the business of the company; and,
(b) the company, shall be deemed to be guilty of the offence and
shall be liable to be proceeded against and punished accordingly, it
is submitted that in the facts of the present case no person has
been nominated under sub-section (2) of section
17 of the Act, hence the provision of sub-clause (ii) of clause (a)
of sub-section (1) would be applicable to the facts of the present
case. It is submitted that the petitioners herein, more
particularly, petitioners No.1 and 2 have been arraigned as accused
in view of the fact that petitioner No.1 is the Chairman of the
society and petitioner No.2 is a trustee of the society, however, a
bare perusal of the complaint in question shows that there is no
averment to the effect that either of the said two petitioners were
in-charge of, and responsible to, the company for the conduct of the
business of the company at the time of when the offence was
committed. Reliance is placed upon a decision of the Supreme Court
in case of Municipal
Corporation of Delhi Vs. Ram Kishan Rohtagi & Ors., AIR
1983 SC 67,
more particularly paragraph 15 thereof, to submit that in absence of
any evidence to show, apart from the presumption drawn by the
complainant, that there is any act committed by the Directors from
which a reasonable inference can be drawn that they could also be
vicariously liable, no case could be said to have been made out
against the directors. It is submitted that in the circumstances
insofar as petitioners No.1 and 2 are concerned, no case can be said
to have been made out against them ex-facie on the allegations made
in the complaint and the proceedings against them are required to be
quashed. Insofar as petitioner
No.4 is concerned, it is submitted that he is merely the officiating
Chief Executive of the society and unless it is established that he
was routinely in-charge of and was responsible to the company for
the conduct of the business of the company, he too cannot be held
liable.
Opposing
the application, Mr. U A Trivedi, learned Additional Public
Prosecutor for the respondents has submitted that sub-clause (a) of
clause (i) of sub-section (1) of section 17 of the Act provides for
nomination of a person for the conduct of business who would be
in-charge of, and responsible to the company for the conduct of the
business of the company. It is submitted that in the present case,
in the first place the society has not nominated any person under
section 17 (1) (a) (i) of the Act, and now seeks to contend that all
other persons in-charge of the affairs of the society are also not
responsible. Attention is invited to the averments made in the
complaint to point out that the respondent No.2 Food Inspector had
sought for information from the society concerned and it is on the
basis of the information provided by the society that the
petitioners have been arraigned as accused in the complaint. It is
submitted that in absence of any nomination, the Chairman as well as
Director would be held responsible, unless they prove that the
offence was committed without their knowledge and that
they had exercised all due diligence to prevent the commission of
such offence as provided in the proviso to sub-section (1) of
Section 17 of the Act. It is submitted that the onus lies on the
petitioners to prove that they are not liable to any be punished
under the Act and that merely because they are Chairman and
Directors of the company; they cannot be absolved of their liability
under the Act. It is further submitted that prior to framing of the
charge, evidence would be recorded as to whether there exists any
prima-facie evidence for framing a charge, hence, it is for the
petitioners at that stage to lead evidence to show that they are not
in any manner responsible for the commission of the offence in
question. Reliance is placed upon a decision of the Supreme Court in
R
Banerjee and Others Vs. H D Dubey and Ors., (1992)
2 SCC 552,
to submit that where no person has been nominated under sub-section
(2) of section 17 of the Act, every person, who at the time of
commission of offence was in-charge of and was responsible to the
company for the conduct of its business can be proceeded against and
punished under the law.
This
Court has perused the record of the case and has considered the
rival submissions advanced by the learned Advocates for respective
parties as well as the decisions cited at the bar.
A
perusal of the complaint in question shows that the complainant has
stated therein that upon declaration of the product as misbranded by
the Public Analyst, the Food Inspector had called for information as
regards the trustees of the registered society, who are accused No.2
to 7 in the complaint. On the basis of the said information, he had
sought for written consent of the competent authority for lodging
the complaint in question. Under the provisions of section 17 (1)
(a) (ii) where no person has been nominated under sub-clause (i) of
clause (a), every person who at the time the offence was committed
was in charge of and was responsible to the company for the conduct
of the business of the company shall be deemed to be guilty of the
offence and shall be liable to be proceeded against and punished
accordingly. It may be pertinent to note that in the entire
complaint there is no averment to the effect that any of the
petitioners were in-charge of, and were responsible to, the society
for the conduct of the business of the society at the relevant time
when the offence is alleged to have been committed.
The
law in this regard is by now well settled. In Municipal
Corporation of Delhi Vs. Ram Kishan Rohtagi & Others
(supra),
the Supreme Court in the facts of the said case found that so far as
the Manager was concerned, from the very nature of his duties
it could be inferred that he would undoubtedly be vicariously liable
for the offence; vicarious liability being an incident of an offence
under the Act. So far as the Directors were concerned, there was not
even a whisper nor a shred of evidence nor anything to show, apart
from the presumption drawn by the complainant, that there was any
act committed by the Directors from which a reasonable inference
could be drawn that they could also be vicariously liable. The
Court, accordingly, found that no case had been made out against the
Directors on the allegations made in the complaint and that the
proceedings against them had rightly been quashed by the High Court.
In
R
Banerjee and Others
Vs. H. D. Dubey and others, (supra)
on which reliance has been placed by the learned Additional Public
Prosecutor, the Supreme Court held thus
4.
It is clear from the plain reading of Section 17 that where an
offence under the Act is alleged to have been committed by a company,
where the company has nominated any person to be in charge of, and
responsible to, the company for the conduct of its business that
person will be liable to be proceeded against and punished for the
commission of the offence. Where, however, no person has been so
nominated, every person who at the time of the commission of the
offence was in charge of, and responsible to, the company for the
conduct of its business shall be proceeded against and punished for
the said crime. Even in such cases the proviso offers a defence, in
that, the accused can prove his innocence by showing that the offence
was committed without his knowledge and notwithstanding
the exercise of due diligence to prevent it. The scheme of
sub-section (1) of Section 17 is, therefore, clear that the cases
where a person has been nominated under sub-section (2) of Section
17, he alone can be proceeded against and punished for the crime in
question. It is only where no such person has been nominated that
every person who at the time the offence was committed was in charge
of, and was responsible to, the company for the conduct of its
business can be proceeded against and punished. The proviso, however,
lays down an exception that any such person proceeded against shall
not be liable to be punished if he proves that the offence was
committed without his knowledge and that he had exercised all due
diligence to prevent the commission thereof. Sub-section (2) of
Section 17 empowers the company to authorise any of its Directors or
Managers to exercise all such powers and take all such steps as may
be necessary or expedient to prevent the commission by the company of
any offence under the Act.
In
the said case, the main controversy before the Supreme Court was as
to whether when the company had nominated a person under sub-section
(2) of Section 17 of the Act, the Directors could be proceeded
against and punished for the crime. Another issue was as regards the
validity of the nomination. In the circumstances, the said decision
does not carry the case of the prosecution any further.
In
the case of State of Haryana
Vs. Brij Lal Mittal & Ors.,
(1998) 5 SCC 343,
the Apex Court while construing the provisions of Section 34 of the
Drugs and Cosmetics Act, 1940 which is in pari materia to
sub-section (2) of Section 17 of the Act held that the vicarious
liability of a person
for being prosecuted for an offence committed under the Act by a
company arises if at the material time he was in charge of and was
also responsible to the company for the conduct of its business.
Simply because a person is a director of the company it does not
necessarily mean that he fulfills both the above requirements so as
to make him liable. Conversely, without being a director a person
can be in charge of and responsible to the company for the conduct
of its business. In the facts of the said case, the Court that
except a bald statement in the complaint that the respondents
therein were directors of the manufacturers, there was no other
allegation to indicate, even prima facie, that they were in charge
of the company and also responsible to the company for the conduct
of its business. The Court placed reliance upon its earlier decision
in case of Municipal Corporation of Delhi Vs. Ram Kisan Rohtagi
(supra) and held that no case against the director has been made out
ex facie on the allegations made in the complaint.
In
case of S.M.S.
Pharmaceuticals Ltd. Vs. Neeta Bhalla & Another, (2005)
8 SCC 89,
on which reliance has been placed by the learned Advocate for the
petitioners, the Supreme Court while construing a similar provision
under the Negotiable Instruments Act, 1881 held that there was
almost unanimous judicial opinion that necessary averments ought to
be contained in a complaint before a person can be subjected to
criminal process. A liability under Section 141 of the Negotiable
Instruments Act (NI Act) is sought to be fastened vicariously on a
person connected with a company, the principal accused being the
company itself. It is a departure from the rule in criminal law
against vicarious liability. A clear case should be spelled out in
the complaint against the person sought to be made liable. What is
required is that the persons who are sought to be made criminally
liable should be, at the time the offence was committed, in charge
of and responsible to the company for the conduct of the business of
the company. That the respondent falls within the parameters of
Section 141 of the NI Act has to be spelled out. A complaint has to
be examined by the Magistrate in the first instance on the basis of
averments contained therein. If the Magistrate is satisfied that
there are averments to bring the case within Section 141 of the NI
Act, he would issue the process. That merely being described as a
Director in a company is not sufficient to satisfy the requirement
of Section 141 of the NI Act. The Court, accordingly, held that it
is necessary to specifically aver in a complaint under Section 141
that at the time offence was committed, the person
accused was in charge of, and responsible for the conduct of
business of the company. This averment is an essential requirement
of Section 141 and has to be made in a complaint. Without this
averment being made in the complaint, the requirement of Section 141
cannot be said to be satisfied.
From
the principles enunciated in the decisions referred to herein above,
it is abundantly clear that for the purpose of prosecuting a person
on the ground that he is vicariously liable for an offence under the
Act committed by a company, it is necessary for the complainant to
specifically aver in the complaint that said person was in charge
of, and was responsible to the company for the conduct of the
business of the company at the relevant time when the offence under
the Act was committed. Insofar as the proviso to sub-section (1) of
Section 17 of the Act is concerned, the same would be required to be
invoked only when the provisions of sub-clause (a) of Section 17 of
the Act are satisfied. The proviso to sub-section (1) of Section 17
comes to the aid of a person falling under sub-clause (i) and (ii)
of Clause (a) of sub-section (1) of Section 17 inasmuch as it is
open for him to prove before the Court that the offence was
committed without his knowledge and that he had exercised all due
diligence to prevent the commission of such offence and should not
held liable for the offence in question.
Examining
the facts of the present case in the light of the aforesaid
decisions, as already noted herein above, in the facts of the
present case there are no specific averments made in the complaint
to the effect that the petitioners No.1 and 2 were in charge of, and
were responsible to, the accused No.2 society for the conduct of the
business of the society, therefore, the basic ingredients for
prosecuting the said petitioners on the ground that they are
vicariously liable for the offence committed by the accused No.2
society are not satisfied. Hence, insofar as petitioners No.1 and 2
are concerned, they cannot be prosecuted for the alleged commission
of offence and as such the application deserves to be allowed qua
the said petitioners.
Insofar
as petitioner No.4 is concerned, he stands on the different footing.
As is evident from the cause title of the application, petitioner
No.4 is the officiating Chief Executive of the society. Thus, from
his designation itself, it is apparent that the petitioner No.4 as
officiating Chief Executive would be in charge of the affairs of the
company. Merely because the designation is officiating
Chief Executive and not Manager would not absolve the petitioner
No.4 from his responsibilities in connection with the affairs of the
society as he would be directly in charge of the affairs and as such
vicariously liable for the offence committed by the society. In the
circumstances in light of the law laid down by the Apex Court in
Municipal
Corporation of Delhi
Vs.
Ram Kishan Rohtagi & Others
(supra),
the petitioner No.4 from the very nature of his duties would
undoubtedly be vicariously liable for the offence and as such, is
not entitled to any relief as prayed for.
In
view of the above discussion, the application is allowed qua
petitioners No.1 and 2. Criminal Case No.490 of 1997 pending in the
Court of learned Judicial Magistrate, First Class, Halol, District:
Panchmahals is hereby quashed qua petitioners No.1 and 2. Rule is
made absolute qua the said petitioners. Considering the fact that
petitioner No.3 has expired during the pendency of the application
the application shall be treated as abated insofar as petitioner
No.3 is concerned. Insofar as petitioner No.4 is concerned, the
application stands rejected. Rule is, accordingly discharged qua
petitioner No.4.
(H.N.DEVANI,
J.)
sompura
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