Madan Mohan Upadhya And Ors. vs State Of Bihar on 30 April, 1986

Patna High Court
Madan Mohan Upadhya And Ors. vs State Of Bihar on 30 April, 1986
Equivalent citations: 1987 (35) BLJR 305
Author: S Sandhawalia
Bench: S Sandhawalia, P Sahay, S Hasan


JUDGMENT

S.S. Sandhawalia, C.J.

1. The two significant questions which fall for determination in this reference to the Full Bench may be precisely formulated in the following terms:

(i) Whether Section 10 (1) of the Essential Commodities Act inflexibly requires the incorporation of the words “was in charge of and was responsible to the firm for the conduct of the business of the firm”-in all complaints a partner of the firm for offences in contravention of the said Act ?

(ii) Whether Section 10 (2) of the Act aforesaid necessarily mandates the incorporation of the allegation that the offence was committed with the consent or connivance or was attributable to the neglect on the part of the partner of the firm in the complaint itself ?

2. The facts may be noticed with the stricktest brevity in so far as they are relevant to the two pristinely legal questions aforesaid. The four petitioners are admittedly partners of the firm named and styled as M/s. Nalanda Trading Stores, Bakhtiarpur carrying on the business of a cement selling agency thereat. On the basis of a complaint (Annexure-1) made by Shri Basistha Narayan Singh, General Secretary of the District Janta Party alleging serious irregularities against the petitioners and their firm an inquiry was apparently made and a report dated 28th of September, 1978 of the Assistant District Supply Officer, Barh, (Annexure-2) was rendered. Pursuant thereto, Shri Devendra Kumar, Supply Inspector, Bakhtiarpur, presented a complaint (Annexure-3) in the court of the Additional Chief Judicial Magistrate, Barh. Therein it was expressly averred that the petitioners are the partners of M/s. Nalanda Trading Stores and they are interested in the loss and profit of the business of the cement selling agency. In terms the allegation that the aforesaid business is under the direct control and supervision of the petitioners was made. Numerous allegations coming within the ambit of the offences Under Sections 7, 9 and 10 of the Essential Commodities Act (hereinafter referred to as ‘the Act’) were enumerated in paragraphs 2 to 9 of complaint and a prayer was made that cognizance Under Sections 7, 9 and 10 of the Act may be taken against all the four petitioners.

3. On the 20th of March, 1979 the learned Additional Chief Judicial Magistrate, Barh, by his order of even date took cognizance against the petitioners and transferred it to the file of Shri K. P. Verma, Sub-divisional Judicial Magistrate, for trial.

4. Aggrieved by the aforesaid cognizance the present criminal miscellaneous petition has been preferred seeking the quashing of the proceeding at the very threshold. The primal grounds urged herein are that in the petition of complaint itself it has not been expressly pleaded that the petitioners or any of them was in charge of or was responsible to the firm for the conduct of its business. Further stand is that there is no allegation in the complaint that the alleged contravention of the Essential Commodities Act has been committed with the consent, connivance or negligence on the part of the petitioners or any of them so as to attract the application of Sub-section (2) of Section 10 of the Act.

5. This criminal miscellaneous petition originally came up before a learned Single Judge, who after hearing, apparently found the issues involved to be of some significance and, therefore, referred the matter to a Division Bench. Before the Division Bench reliance was placed on a series of judgments of this Court taking the view that unless specific allegations are made in the petition of complaint itself in terms pari meteria whit the language of Sub-sections (1) and (2) of Section 10 of the Act, the proceeding would virtually stand vitiated. Noticing some conflict of precedents and raising some doubt about the correctness of the earlier view the matter was referred to a Full Bench on 27th of March, 1985 and that is how it is before us.

6. It will appear that subsequent to the date of the reference the gordian knot of the somewhat ticklish issues involved herein have been cleanly cut by two Full Bench Judgments of this Court in Mahmud Ali v. State of Bihar, 1986 (34) B.L.J.R. 154. and Badri Prasad Gupta and Ors. v. State of Bihar, 1986 (34) B.L.J.R. 244. in the context of the virtually identical provisions of Section 47 of the Water (Prevention and Control of Polution Act, 1974 and Section 35 of the Bihar Shops and Establishments Act, 1953. learned Counsel for the petitioners inevitably discheaitened by the array of binding precedents against him nevertheless made a brave, though vain, effort to forcefully distinguish his case or even to assail the correctness of the view in the earlier two Full Benches aforesaid. It, therefore, becomes necessary to examine the matter in detail afresh even at the cost of some repetition.

7. Inevitably the issue herein has to turn on the language of the statute itself and it is, therefore, apt to quote the provisions of Section 10 of the Essential Commodities Act:

10. Offences by Companies. (I) If the person, contravening an order made Under Section 3 is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly:

Provided that nothing contained in this Sub-section shall render any such person liable to any punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.

(2) Not withstanding anything contained in Sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

Explanation. For the purposes of this Section,

(a) ‘company’ means any body corporate, and includes a firm or other association of individuals; and

(b) ‘director’ in relation to a firm means a patner in the Firm.

It deserves high-lighting that the view on the express terms of the explanation the word ‘company’ herein is inter changeable or is a synonym with a partnership firm, as the case may be. Similarly, the word ‘director’ used in Section 10 of the Act is the equivalent of a “partner” in case of a firm.

8. Mr. A, N. Sahay, the learned Counsel for the petitioners, has relied with some literality on the very words of Sub-section (1) of Section 10 of the Act, It was conteneded that the four petitioners had not in terms been specified in the complaint as the persons “in charge of and responsible to the firm for the conduct of the business of the said firm.” The firm stand was that this omission and the absence of pleading the specific words of Section 10 (1) of the Act was inflexibly fatal 10 the prosecution.

9. To appreciate the aforesaid contention, it becomes necessary to view Section 10 of the Act in a somewhat broader perspective. It would seem undisputed that the Essential Commodities Act is intended to hit at the root of rampant economic offences. That these offences are in a class by themselves has been so often high-lighted by the final court so as to not need any further elaboration. The provisions of the Act, therefore, have the character of beneficient legislation in favour of and for the protection of the pspulace in general and, therefore, have to be somewhat liberally construed.

10. Now the violation of the provisions of the Act, apart from individual persons, may also be committed by companies, or partnership firms. Section 10 of the Act, which we are called upon to construe, provides specifically for offences by companies, which by virtus of the explanation becomes inter-changeable with the partnership firm as well It is well settled that strict criminal liability of companies or partnership firms or other association of individuals is in a class by itself and poses legal problems peculiar to them. The issue of vicarious liability of a partner of a firm through whom the notional firm must necessarily act therefore, comes to the fore in this context. A plain reading of Section 10 of the Act would indicate that it is expressly intended to incorporate the stringent principle of strict vicarious criminal liability of persons, who are in charge of and responsible to the firm for the conduct of its business for all offences committed by the partnership firm. Now strict vicarious liability is somewhat of an exception to the general rule of direct personal culpability and is a modern development through statutory provisions. That there can be such vicarious criminal liability by legislative mandate is no longer in dispute. Nevertheless steeped as we are in the basic principle of criminal jurisprudence that mem rea must be the ingredient of an offence, it needs some effort to accept whole-heartedly the legislative mandate of vicarious criminality even in the absence of one or the other of the aforesaid ingredients, namely, that both the act and the intent must concur to constitute a crime.

11. The scheme of Section 10 of the Act calls for a somewhat closer analysis for its true construction. The word ‘company’ employed therein as has already been noticed, includes within its sweep a partnership firm and the ‘director in relation to such a firm means a partner of that firm. Sub-section (1) creates a deeming legal fiction whereby every person who is in charge of or responsible to the firm for the conduct of its business becomes automatically guilty of the off nee committed by such a firm and is liable to be proceeded against and punished accordingly. No other overt act or direct commission of the offence by such a person is necessary barring the fact of being in charge of the partnership firm or responsible thereto for the conduct of its business. As already noticed, this was by virtue of the deeming fiction under Sub-section (1) of Section 10 of the Act. The basic liability for the offence alleged or established may well be against the partnership firm as such. Once the allegation is levelled or established, then by a fiction of the law every person, including a partner in charge of or responsible to the firm for the conduct of its business, is in the eye of law, deemed as much guilty of the offence as the partnership firm itself.

12. That the aforesaid rule is stringent and rigorous is too manifest to call for elaboration. However, this is sought to be tempered and its rigours softened by the proviso to Sub-section (1). This lays down that such a person on whom vicarious liability has been foisted may escape the net, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of the same. The burden of proof is clearly laid upon such a person and it is thus plain that the proviso is also a rule of evidence, which reverses the ordinary mandate of criminal liability that the burden of establishing the offence always lies on the prosecution. Thus viewed, Section 10 (1) and the proviso thereto would lay down that once the offence is either alleged or established against the partnership firm and the added factum of being in charge of and responsible to the firm for the conduct of its business is existent against a person, he becomes liable therefore, without more, vicariously. The burden is then laid down upon him to establish and prove a total absence of knowledge about the commission of the crime or the diligent prevention thereof.

13. Analysed as above, Section 10 (1) spells out a deeming fiction of vicarious liability and also a rule of evidence laying the burden of proof on persons in charge of and responsible to the company for the conduct of its business.

14. Once it is held as above, the somewhat dubious argument of Mr, Sahay, the learned Counsel for the petitioners, falls in its place and stands conclusively repelled. It is settled beyond cavil that rules of evidence and deeming fictions are not to be expressly spelt out and pleaded. They are matters, which are for consideration and application in the course of the trial. To require that the complaint itself must plead a rule of evidence or, in terms, spell out a deeming fiction provided by the Statute therein is an argument bordering on hypertechnicality. One must always keep in mind the broader perspective that the administration of criminal law is more a matter of substance than of form and it should not be allowed to be pettifogged by obscure technicality. This argument seems now to be wholly well covered and concluded by the recent Full Bench judgments of this Court in Ram Kripal Prasad and Ors. v. The State of Bihar and Ors. 1985 (33) B.L.J.R. 240; Mahmud AH v. The State of Bihar (supra) and Badri Prasad Gupta v. The State of Bihar, (supra). Therein also in the context of Section 14 of the Employees Provident Funds Scheme, 1952 and Section 47 of the Water (Prevention and Control of Pollution) Act, 1974 and Section 35 of the Bihar Shops and Establishment Act, 1953, it was argued that the petition of complaint must in terms plead each and every relevant fact and, indeed, in terms in pari materia with the respective Statutes. Such a doctrinaire stand, however, was categorically rejected in all the aforesaid three Full Benches. In particular, it was concluded in Mahmud AH v. The State of Bihar as under:

It is held that Section 47 of the Act does not necessarily mandate the incorporation of the words “was in charge of and was responsible to the company for the conduct of the business of the company” in all complaint against the Chairman, Managing Director or the General Manager of the company for the offence in contravention of the Act.

15. In a last ditch attempt to distinguish the present case from the broad sweep of the binding precedents of Full Benches, Mr. A. N. Sahay had attempted to contend that apart from the language of Section 10 (1) of the Act not having been used in the complaint there was no adequate averment to indicate the fact that the four petitioners were in charge of or were responsible to the firm. It was also sought to be argued that in Mahmud Ali’s case (supra) the accused person admittedly was the Managing Director of the company whereas herein the petitioners were not Managing partners but merely ordinary partners of the firm.

16. The aforesaid submission has only to be noticed and rejected. In the opening paragraph 1 of the complaint (Annexure-3) against the petitioners it has been expressly pleaded as follows:

1. That there is one M/s. Nalanda Trading Stores situated at Bakhtiarpur and having its business of cement. His cement licence is No. 103/76 and accused Nos. 1 to 4 are its partners and are interested in the loss and profit of its business and they are all interested in the aforesaid business of cement. The aforesaid business is under the direct control and supervision of the accused aforesaid.

It is manifest from the above that a pleading has expressly been made about the factum of the partnership of all the petitioners, their deep interestedness in the loss and profit of the business of M/s, Nalanda Trading Stores and what is more, it is stated that the business is under the petitioners’ direct control and supervision. To contend that the persons indirect control and directly supervising a business are not in charge thereof or are not responsible to the firm for the same, is in my view, an argument of desperation, which must be rejected at the threshold. Clearly enough these pleadings are ample, if rot even a larger equivalent of the requirement, that such a person must be in charge of or responsible to the firm for the conduct of its business. Once the allegations in paragraph 1 have been clearly laid, the argument that the petitioners are not labelled as Managing Directors or to distinguish their case from the reasoning and rationale of Mahmud All v. State of Bihar (supra) must be rejected. The attempted distinction is one without any difference.

17. To finally conclude on this aspect, on the larger purposes of the Act and the particular language of Section 10(1) thereof, as also on principle, and a series of binding precedents, the answer to question No. (I) posed at the outset is rendered in the negative. Section 10 U) of the Act does not necessarily mandate the incorporation of the words -“was in charge of and was responsible to the firm for the conduct of business of the firm” in all complaints against the partners of the firm for offences in contravention of the Act.

18. Adverting now to question No. (ii) it may perhaps be pointed out at the very outset in order to avoid repetition that what has been discussed and held above, in the context of question No. (i), would apply mutatis matandis to Sub-section (2) of Section 10 of the Act as well. Significantly it begins with a non-obstante clause and this would have effect independently and notwithstanding anything contained in the preceding Sub-section (1). In a way, it over-rides the said provision and it is somewhat wider in its application. As against Sub-section (I), which foists the vicarious liability only on person in charge of or responsible to the company for the conduct of its business, Sub-section (2) imposes a somewhat similar liability on a larger class of directors, managers, secretaries or even other officers of the company. In a way, this Sub-section is envisaged to widen the net of a vicarious liability and to bring within its ambit not only the primal officers of the company, partnership or other association of individuals, but even other officers thereof, if the commission of the offences by the company can be established to have been done with the consent, connivance or neglect on their part. Thus, the role and scope of Sub-section (2) are somewhat different to that of Sub-section (1). The former is made applicable only to persons directly in charge of or responsible to the company and the latter having a wider application, though in a somewhat narrower field. They might slightly overlap. Equally the stringency of vicarious liability in the two Sub-sections is variable.

19. When closely viewed, Sub-section (2) is clearly indicative of the fact that it is both a rule of evidence and yet again a deeming fiction for vicarious culpability. Perhaps, the one crucial aspect herein is the use of the word ‘proved’ in the earlier part of the Sub-section. It comes into play only at the stage of the availability of adequate proof that the offence has been committed with the consent, connivance or neglect or the principal or other officers of the company. The usual and the normal rule of criminal law is that the charge must be brought home directly to the offender without any reasonable doubt. However, Sub-section (2) lightens the burden by providing that even if it is proved that the principal officers were guilty of consent or connivance or negligence with regard to the offence committed by the company or a partnership firm, they would be within the net of culpability. This has been effectuated by an express deeming fiction that if any of the aforesaid ingredients is established, then the officials concerned will be held guilty of that offence and be punished accordingly. Sub-section (2) may truly come into play during the course of the trial and even at its conclusion when it is proved that the offence has been committed with the consent, connivance or neglect or the company’s or the firm’s principal officers or partners. Thus, the stringent rule in Sub-section (I) in a way even provide; a second line of defence for the prosecution. Even where the case set up is that the offence has been directly and willfully committed by the company or partnership and its officers or partner, but the same cannot be established to the hilt, this Sub-section provides that such officer, who would still be guilty if the relatively lower culpability of even consent or mere connivance or neglect is laid at his door. This is probably and patently due to the difficulties of proving the charge beyond reasonable doubt in cases of vicarious liability for offences committed by the legal and artificial persons as compared to natural persons. It bears repetition that this Sub-section is also a rule of evidence for fastening the guilt when consent, connivance or neglect is proved against the persons named therein; and a deeming fiction of law for vicarious liability for the crimes committed by the company or partnership firm itself.

20. Now, once it is held as above, it does not need any elaboration that rules of evidence or deeming fictions of law are not to be pleaded as such. No principle warrants that either in a complaint or in a first information report the literal words of the statute must be incorporated or what is even more important the rule of evidence with regard to the burden of proof and a deeming fiction of guilt should be quoted at the foundational stage. Therefore, to require that the complaint or the first information report must inflexibly plead consent, connivance or negligence of the officers at the threshold stage is, to my mind, patently fallacious. Seen broadly, the deeming fiction is primarily one of evidence and proof and not of the literal formalities of pleading, which are foreign to the criminal law. I deed, it must be noticed that in a particular case the prosecution charge maybe one of direct or deliberate or wilful commission of the offence by the company or partnership or its officers or partners. In such a situation to require that they should plead at the outset that it was only by way of connivance or neglect would be an absuraity or indeed, destructive or contrary to the case set up. Again, as has been noticed above, Sub-section (2) applies independently and notwithstanding anything contained in Sub-section (1). Therefore, to require that the pleading of consent, connivance or neglect must be incorporated even in regard to the guilt under Sub-section (1), which is absolute pertaining to the person is charge of and responsible to the company, is in a way rather more fallacious.

21. On this aspect again the dice is heavily loaded against the learned Counsel for the petitioners in view of the contrary decision of the Full Bench in Mahmud Ali v. State of fij/w(supra). Indeed, faced with the uphill task, learned Counsel for the petitioners was somewhat half-hearted on this aspect of the case. Nevertheless, as the point was raised, it has to be necessarily met

22. To conclude on this aspect the answer to question No. (ii) is rendered in the negative, it is held that Sub-section (2) of Section 10 does not mandate the incorporation of the allegation that the offence was committed with the consent or connivance or was attributable to the neglect on the part of the Director of a company or a partner of a firm in the complaint itself.

23. Before parting with this judgment it seems apt to recall that undoubtedly there did appear to be a divergent stream of judicial thought within this jurisdiction on the aforesaid issues. This, however, has now been authoritatively given the quitus by the Full Bench in Mahmud Alt v. The State of Bihar(supra), It is unnecessary to traverse the same ground again and it suffices to mention that in paragraphs 16 to 21 of the report it was held after exhaustive discussions that R.N. Dutta and Ors. v. State of Bihar 1971 B.L.J.R. 1005. and a number of other judgments taking the same view did not lay down the law correctly and were over-ruled. Similarly, the contrary view directly or by way of analogy in J. S. Mm and Ors. v. The State of Bihar 1976 B. B. C. J. 213.; V. Poddar and Ors. v. The State of Bihar and Ors. 1978 B.B.C 498. and Mis. Krishna Trading Co. and Ors. v. The State of Bihar. 1979 B. B. C. J. 94. and other unreported judgments either following or taking similar views, were expressly considered and over-ruled in Badri Prasad Gupta v. State of Bihar(supra).

24. Relying on paragraph 66 of the report in Deena alias Deen Dayal and Ors. v. Union of India and Ors. learned Counsel for the petitioners had canvassed for the acceptance of the minority view in Mahmud AH v. The State of Bihar(supra.) and in Badri Prasad Gupta v. State of Bihar(supra). It was contended that the opinion being contained in a minority judgment is not adequate justification for altogether ignoring the same. There is no quarrel with such a proposition. Indeed in view of the great esteem, in which I find my learned brother S. Shamsul Hasan, J. I have given a deeply fresh consideration to what fell from his pen in the dissenting judgment. It is with the deepest deference and regret that I am unable to find any reason to deviate from what is now the consistent law of the majority view both is Mahmud AH v. State of Bihar, and Badri Prasad Gupta and Ors. v. State of Bihar.

25. learned Counsel for the petitioners in the end had made a vain attempt to entrap us into the merits of the case and the correctness or other- wise of the pleadings and the merits of the prosecution case. It suffices to mention that it is not the province of the High Court Under Section 482, when considering the issue o: quashing, to delve into evidence or attempt to convert itself into a trial Court. That is the role wholly prescribed for the Magistracy in which I find no adequate reason to intrude.

26. Once the two significant questions posed at the very outset have been answered in the terms above, it would be plain that there remains not the least merit in the criminal miscellaneous petition. The same has, therefore, to be dismissed. There has already been a delay of well about 8 years in the trial of the case from the date of the commission of the offence because of the regretful pendency of the present petition. The court below shall now expeditiously proceed to conclude the trial.

P.S. Sahay, J.

27. I entirely agree. The point of law stands concluded by Full Bench decision of this Court referred to above. Even on facts, there are clear allegations against the petitioners and they have to face the trial.

S.S. Hasan, J.

28. I have had the privilege of going through the decision of Hon’ble the Chief Justice and the note of agreement of P. S. Sahay, J. broadly reiterating the views expressed by them in the case of Mahmud All. The State of Bihar (supra) and in the case of Shri Badri Prasad Gupta and Ors. v. The State of Bihar and Anr. (supra). With the greatest of deference for Hon’ble the Chief Justice and P. S. Sahay, J., I have once again to sound a discordant note reiterating my own views in the aforesaid two cases.

29. The two questions that fall for ultimate decision of the Full Bench have been formulated by Hon’ble the Chief Justice in the very first paragraph of this judgment and need not be re-stated here. Other points being concluded by the mandate of the Supreme Court were neither passed nor fall, for determination. I will now deal with the two points in my own humble way cumulatively adding to the discussion the consideration of the effect of Section 11 of the Act.

30. At the outset I may state the well settled proposition of law crystalised by numerous decisions that except for abetment etc. only a licensee can be indicated for the violation of an order passed Under Section 3 of the Act. The licensee could be an individual or a company which includes firm etc. The problem posed in this application arises only where the licensee is a company or firm and thus punishable under the Act. Being an inanimate object, some animate individual has to face the vicarious prosecution and the consequent punishment. This sort of provision is not found only in the Essential Commodities Act but can be discovered in the Indian Companies Act, where companies are prosecuted and punished, and the Factories Act. In the Factories Act specific individuals have been designated who alone will be the persons required to face the trial and punishment, for example, an occupier and the General Manager of the factory. Such an occupier has to be designated by the company for this purpose and that occupier or General Manager is the only authority who could be indicated. In the Essential Commodities Act, however, Under Section 10 (1) the concept of vicarious liability has brought within its embrace several classes of individuals but is in a way restrictive also. It is the provisions of Section 10 (1) of the Act that has to be pointedly interpreted.

31. I may state straightway that I am in one with the proposition that the absence of the four words in charge of and responsible to in the indictment will not justify the quashing of a criminal prosecution. These words may or may not be there but the Police report or the complaint must always contain facts to indicate how an accused involved by the prosecution is in charge of and responsible to the affairs of the company. If these facts are missing merely the description of an individual, unless the description is ex facie indicative of the role that is being played by the individual, will not justify the involvement of a person in a criminal trial. In my view, the words in charge of and responsible to describe the individual who could be held responsible vicariously for an offence committed by a company or a firm. The words are purely descriptive and, if I may say so, excludes all others except those who are actually in charge of and responsible to the affairs of the company from being arraigned as an accused in the criminal prosecution under the Act. It is incumbent on the prosecution to give sufficient material in the complaint or the report that would bring the persons involved in the prosecution within the description of in charge of and responsible to the affairs of the company. Taking the facts of this case as a telling instance, all four partners of the firm have been arraigned as accused only on the basis of their position in the firm but without indicating the facts as to how all of them were in charge of and responsible to the affairs of the company. In other words, their being incharge of and responsible to the affairs of the company is inferencial from the fact that only they are partners. I may quote here the relevant paragraph of the complaint which is as follows:

1. That there is one M/s. Nalanda Trading Stores situated at Bakhtiarpur and having its business of cement His cement licence No. 103/76 and accused Nos. 1 to 4 are its partners and are interested in the loss and profit of its business and they are all interested in the aforesaid business of cement. The aforesaid business is under the direct control and supervision of the accused aforesaid.

32. In the mercantile world of trades and commerce partners are of various types and hues. They could be financing partners, sleeping partners and, if I may say, sentimental partners, like a minor son or an ignorant wife of a partner. But there may also be partners who are working partners running the business of the firm continuously and regularly. Can they all be endowed with the description of being in charge of and responsible to the affairs of the company ? In my view, certainly not. No law or custom of trade practice has ever laid down that the status of a partner actually running the business of the company whether it be continuously and regularly is the same as of a partner who has no connection with the working at all. In the case of Municipal Corporation of Delhi v. Ram Kishan Rohtagi and Ors. it was held that the General Manager by the fact that his designation indicates his duty, can be held to be a person in charge of and responsible to without saying anything more than that. But the prosecution of other directors was quashed due to absence of material and it was directed that they could be prosecuted if sufficient evidence comes on the record Under Section 319 of the Code of Criminal Procedure. In other words, like the partners, the fact that an individual is a director of a company w 11 not make him in charge of and responsible to the affairs of the company, the General Manager being in a different category altogether. Similarly, in the case of Municipal Corporation of Delhi v. Purshottam Das Jhunjhunwala the Supreme Court ordered the prosecution of the directors because there was sufficient material against them in paragraph 5 of the complaint to indicate their being in charge of and responsible to the affairs of the Company. The relevant passages o(the decision of the Supreme Court in the aforesaid case may be usefully cited:

4. Unlike the other case, para 5 of the complaint of this case gives complete details of the role played by the respondents and the extent of their liability, it is clearly mentioned that Ram Kishan Bajaj is the Chairman and R. P. Nevatia is the Managing Director and respondents 7 to 11 are the directors of the Mill and were in charge of and responsible for the conduct of its business at the time of the commission of the offence whereas in the other case the complaint has merely drawn a presumption without any averment.

5. In the instant case, a clear averment has been made regarding the active role played by’the respondents and the extent of their liability. In this view of the matter, it cannot be said that para 5 of the complaint is vague and does not implicate respondents 1 to 11. As to what would be the evidence against the respondents is not a matter to be considered at this stage and would have to be proved at the trial. We have already held that for the purpose of quashing the proceedings only the allegations set forth in the complaint have to be seen and nothing further.

6. From a perusal of the various clauses of the complaint, including para 5, it is quite clear that a prima facie case for summoning the accused has been made out and the High Court was absolutely wrong in holding that the allegations made in para 5 are vague. The High Court failed to consider that the allegations were quite clear and explicit so as to be sufficient for taking cognizance of the offence against the accused.

7. Further details would have to be given in the shape of evidence when the trial proceeds and in view of the clear allegations made in para 5 of the complaint, we are not in a position to agree with the High Court that it is a fit case in which it should have exercised its discretion Under Section 482 of the Criminal Procedure Code 1973 in order to quash the proceedings against the accused-respondents.

In the case of Municipal Corporation of Delhi v. Ram Kishan Rohtagi and Ors. (supra) it is stated as follows:

15. So far as the Manager is concerned, we are satisfied that from the very nature of his duties it can be safely 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 are concerned, there is not even a whisper nor a shred of evidence nor anything 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 could also be vicariously liable…

In my view, therefore, it is not correct to hold, if I may say so with the greatest of respect, that merely stating the designation of an accused, unless the designation patently indicates of his being in charge of and responsible to the affairs of the company will bring the individual within the mischief of the description and justify prosecution.

32. In regard to Section 10 (?) of the Act, a distinct class of officers of a company have been brought into the dragnet of the prosecution but only if the offence by the company has been committed by their connivance and negligence. Here the involvement is not vicarious but direct. The officers described in Section 10 (2) of the Act can only be involved under this Sub-clause if they have contributed to the commission of the offence by the company. The two Sub-clauses are entirely severable operating under two different situations the state of affairs being highlighted by the use of the non-obstante clause in Sub-clause (2) of Section 10 of the Act. It is true that the person described in Sub-clause (2) may also be liable vicariously if he is in charge of and responsible to the affairs of the company under Sub-clause (1) but that person can also be arraigned for his direct act of connivance and negligence. To complete the picture Under Section 10 (1) of the Act, a person incharge of and responsible to the affairs of the company or a firm apart from being the General Manager, may be a smaller functionary like a munshi, a head clerk, an accountant or even a salesman and not necessarily a partner or a director. Under Section 10 (2) of the Act only the person mentioned therein and on the ground contained therein are and can be liable. Needless to say that under Sub-clause (H of Section 10 of the Act, the person to be indicated must be incharge of and responsible to the affairs of the company and the complaint or the Police report must contain sufficient and specific facts.

33. Concluding, therefore, if a complaint or a Police report does not contain facts which would indicate the manner in which the individual is actually in charge of and responsible to the affairs of the company, except when his duties can be determined by his designation, then the prosecution has to be quashed. My view is fortified also by the provisions of Section 11 of the Act which require that facts constituting the offence must be contained in the complaint or the Police report. One of the essential facts in either case will be the manner or involvement of the accused. Having held this, in my view no case is made out against the petitioners to indicate their being in charge of and responsible to the affairs of the company as stated in the complaint which fact was required to be stated in proper detail as I have stated above. In absence of the required facts, as I have held above, a partner by a designation is not a person having the same connection as a General Manager and cannot by merely being a partner be treated to be a person in charge of and responsible to the affairs of the company like the General Manager. In this prosecution, the offence alleged was directly against the company and the connection of the petitioners has already been set out above. Which is purely inferential.

34. In the result the application has to be allowed and the prosecution against the petitioners has to be quashed and is accordingly done.

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