JUDGMENT
P.K. Mohanty, J.
1. The petitioner, Managing Director of I.T.C. Agrotech Ltd. had assailed the order of the learned Sub-Divisional Judicial Magistrate, Bhubaneswar dated 22.12.1995 taking cognizance of offence under Section 16(l)(a)(i) of the Prevention of Food Adulteration Act, 1954 read with Section 7 thereof against the petitioner.
2. The brief facts of the case are that on 26.5.1994 the Food Inspector visited the business premises of M/s. Sanjaya Agency, Eastern Market Building, Unit-II, Bhubaneswar and collected samples of mustard oil, he having suspected the same to be adulterated. On observing the necessary formalities, the Food Inspector collected samples and sent the samples to the Public Analyst, Orissa on the same day. On being questioned the vendor M/s. Sanjaya Agency disclosed that he had purchased the stock of mustard oil from M/s.Sambhukumar Subash Kumar, Malgodown, Cuttack. A consignee agent from I.T.C. Agrotech Ltd. vide Invoice No. 0098 dated 17.5.1994. The Public Analyst reported that the samples of mustard oil of Sudam Brand sent for examination was found to be adulterated. The Food Inspector, on enquiry, ascertained that the manufacturer was M/s. I.T.C. Agrotech Ltd., 31 Sarojini Devi Road, Secundrabad. The Food Inspector having obtained the consent from the Joint Director, Health Services as the local health authority, filed the Prosecution Report on 9.1.1995, 2 (c) C.C. No. 394 of 1995 was registered in,the Court the learned S.D.J.M., Bhubaneswar agaihst one Ramesh Chandra Hans, the Managing Partner and Sri Shyamalal Hans, Partner of M/s. Sanjaya Agency, the Sanjaya Agency itself, the Managing Partner in-charge of M/s. Sambhukumar Subash Kumar and the present petitioner, the Managing Director of I.T.C, Agrotech Ltd. The Learned Magistrate by order dated 22.12.1995 took cognizance of the offence under Section 16(l)(a)(i) read with Section 7 of the Prevention of Food Adulteration Act (hereinafter referred to as ‘P. F. A. Act’) and directed for issuance of summons for appearance of the accused person on 17.1.1996. In the present application under Section 482 Cr. P.C, the petitioner assails the order, taking cognizance of the aforesaid offence against the petitioner on several grounds.
3. Sri Subash Lal, learned counsel for the petitioner, attacks the impugned order mainly on the ground that, impleading the Managing Director as accused No. 5 is contrary to the provisions of Section 17(1) of the P.F.A. Act, in absence of any material against him in the complaint or in the documents filed along with the complaint. It is his contention that in absence of any such material, no vicarious liability can be levelled against the petitioner and as such, the order of cognizance is illegal. It is further contended that the Managing Director is not a person coming within any of the categories contemplated under Section 17(1) (i) and (ii) of the P.F.A. Act and there is absolutely no material placed before the learned Magistrate from which he could have taken cognizance of the offence alleged against the petitioner. Contentions have also been raised that there is nothing on record to show that the Food Inspector had made any effort to ascertain if there was a nominee as required under Section 17(1) of the P.F.A. Act nor did he enquire from the company as to if it had any nominee. In absence of any enquiry to that effect and without ascertaining as to who was in charge of and was responsible for the company for the conduct of the business at the time the offence was committed, the impletion of the Managing Director, the petitioner was bad in law and liable to be quashed. Sir Lai contends that had any notice been issued under Rule 12- B, the Company could have indicated the name of the nominee, inasmuch as, the company as the manufacturer has been impleaded as an accused and without ay material, the Managing Director cannot be construed as the manufacturer. The prayer is therefore made for quashing the order of cognizance taken against the petitioner.
4. Law is fairly well-settled that in a petition under Section 482, Cr. P.C. a proceeding initiated against an accused at the initial stage can only be quashed. If on the face of the complaint or materials accompanying it, no offence is made out. Taking the allegation and the complaint as they are without adding or substracting anything, if no offence is made out, in that event alone, the High Court will be justified in quashing the proceeding in exercise of its power under Section 482 of the Code of Criminal Procedure. Keeping the aforesaid ratio in view, the present case at hand may be examined for a just decision of the case. A perusal of the Prosecution Report filed by the Food Inspector discloses that on 26.5.1994 at about 11 A.M., the Food Inspector inspected the business premises of one M/s. Sanjaya Agency, Bhubaneswar and at that time one Ramesh Chandra Hans, present in the shop was conducting the sale transactions of different food articles. The Inspector disclosed his identity and on examination of different brands of oil kept in the shop for sale for human consumption, he having suspected super-fine mustard oil, mustard oil (Sudam) to be adulterated. The three items of mustard oil were purchased by the Food Inspector and from each, sample was taken and it was divided into three equal parts and each part was kept as it was originally packing conditions separately. Formalities in accordance with the rules were observed in taking the samples and packing and sealing the bottles. However, that is not in dispute. The vendor disclosed that he had purchased food articles (oil) from M/s. Sambhukumar Subash Kumar, Malgodown, Cuttack vide I.T.C. credit invoice No. 0098 dated 17.5.1994, a consignee agent from I.T.C. Agrotech Ltd. on receipt of the Public Analyst’s report and after obtaining the written consent from the local health authority, the authority to accord written consent under Section 20 of the P.F.A. Act, he filed the Prosecution Report. There is no dispute that the three oil sealed packets were manufactured by M/s. I.T.C. Agrotech Ltd. But what has been assailed is that in absence of any specific prima facie finding, as to who was responsible for the business and conduct thereof at the relevant point of time, whether the Managing Director could be made responsible for the alleged adulteration, if any, found in the manufactured oil.
5. It appears from the copy of the notice issued by the Food Inspector in Form VI under Section 11(a) of the P.F.A. Act, 1954 and the Rules made thereunder, to M/s. Sanjaya Agency, copy of which has been forwarded intimating the Managing Director in charge of Manufacturing Unit of I.T.C. Agrotech Ltd. that the articles of food from which samples had been collected were said to have been manufactured in his Firm for sale for human consumption as envisaged from the level and the intimation given by M/s. Sanjay Agency and the Bill C.& F. Agent Sambhu Kumar and Subhas Kumar, Cuttack vide his I.T.C. Invoice No. 0098 dated 17.5.1994, who appears to be a consignee agent for I.T.C. Agrotech Ltd. Undisputedly, I.T.C. Agrotech Ltd. is the manufacturer of the oil, the food articles in question, which is alleged to the adulterated and for which prosecution is launched, but the question is in case of this nature if the manufacturer is a company, who would be held responsible for the adulteration and prosecuted for the purpose. Section 17(1) of the Prevention of Food Adulteration Act, 1954 reads thus :
“17. Offences by companies – (1) Where an offence under this 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 (hereinafter in this section referred to as the person responsible), 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:
Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge and that he exercised all due diligence to prevent the commission of such offence.”
6. A plain reading of Section 17(1) of the Act quoted above makes it clear that when an offence under the Act has been committed by a Company, the person, if any, nominated therein under Sub-section l(a) and also the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished. The word “person” in Section 16 of the Act includes a company. The question that requires consideration is, whether in case where a company is made primarily responsible for the act alleged, all persons connected with the company like the Directors or the Managing Director can be held as vicariously liable or it has to be shown that such persons were in charge of and were responsible to the Company for conduct of its day-to- day business, in absence of any mention in the complaint filed by the prosecution as to how the accused persons were concerned in carrying on of the day-to-day business of the company. In other words, it has to be pointed out specifically that there is any such allegation against the Directors or the salesman of the Company. In absence of such specific allegation or assertion on a general assumption that the Managing Director is supposed to be in overall control of the company, whether he can be held responsible and the Magistrate on a prosecution being lodged against such Managing Director or Director, can take cognizance against, such person. In view of the specific provision in Section 17 of the Act, a general presumption that a Managing Director would be in-charge of all the transactions of a company and responsible for the day to day Management of its business in general cannot be drawn.
In Municipal Corporation of Delhi v. Ram Kishan Rohatagi and Ors., AIR 1983 Supreme Court. 67, the Apex Court while considering the case of vicarious liability of the Directors of a Company in a case of this nature, while agreeing with the finding of the Delhi High Court, observed that in absence of 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 they would also be vicariously liable, no case against the Directors can be said to have been made out ex facie on the allegation made in the complaint and the complaint as against them was held to have been rightly quashed.
In State of Haryana, v. Brij Lal Mittal and Ors. (1998) 5 S.C.C. 343, the Apex Court observed that simply because a person is a Director of the Company, it does not necessarily mean that he fulfils the requirements so as to make him liable for all of its day to day business. The Apex Court having observed from the complaint in question that except the bald statements that the respondents 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, it took the view that in such circumstances, the quashing of the complaint/prosecution against such Directors was justified.
7. Thus, taking a conspectus of the decisions referred to above, it can safely be held that there can be no general presumption that only because a person’is a Director or a Managing Director of a Company, it does not necessarily mean that, he fulfils the requirements so as to make him liable. Vicarious liability of a person for being prosecuted for an offence committed under the Food Adulteration Act, by a Company arises, if at the material point of time, he was in charge of and was also responsible to the Company for the conduct of its business. The prosecution has to prima facie show that on enquiry, it found materials to indicate that the person prosecuted was in charge of and was responsible to the Company for its day to day business at. the material time the offence was said to have been committed and not on a presumption, that a Managing Director must be in charge and responsible to the Company for its business. A perusal of the prosecution report it appears, there is absolutely no mention that the petitioner- Managing Director of the Company was so responsible, to hold him liable for the offence committed by the Company. What was available before the Food Inspector, the prosecutant was that the Edible oil seized and found to have been adulterated was manufactured by the said Company. The complaint/prosecution report must disclose the person responsible to the accused Company who is alleged to have committed the offence.
8. It is the settled position of law that in absence of any material or any credible information derived from enquiry as to the person or persons in charge of and responsible to the Company for manufacturing or producing the material alleged to be adulterated or the person nominated by the Company under Section 17(l)(a)(i) of the Prevention of Food Adulteration Act, merely on the assumption that the Managing Director or the Director are responsible for such act, a prosecution cannot be launched against any such person. In the case at hand, it has been found on enquiry that M/s. I.T.C. Agrotech Ltd. is the manufacturer of the alleged adulterated oil, but the Food Inspector has not taken any pains to find out as to who was the person or persons in-charge of and responsible to the Company for conduct of the business of manufacturing of the oil in question at the material point of time, the offence was committed, or as to if any one has been nominated by it for the purpose. It appears that only on the information that the petitioner was the Managing Director of the manufacturing Company the prosecution has been launched as against him, which is impermissible in law. Merely because, someone is a Managing Director or a Director of a manufacturing Company, a presumption cannot be drawn to the extent that he must be in charge of and responsible for conduct of its day-to-day business, so as to rope him for the alleged adulteration found in the manufactured product. There is no allegation or even a whipser in the complaint petition/ prosecution report that the petitioner was in charge and responsible for conduct of the day-to-day business of M/s. I.T.C. Agrotech Ltd. which undisputedly manufactured/produced the edible oil. In absence of any such material, the cognizance taken against the petitioner in the impugned order cannot be sustained in law and has to be quashed. But, however, there seems to be no dispute that the accused-Company M/s. I.T.C. Agrotech Ltd. is the manufacturer of the edible oil found adulterated and as such, there can be no legal impediment in prosecuting the Company for the alleged offence. The Food Inspector is always at liberty to enquire into and find out if the Company has a nominee in terms of Section 17(1) of the Act and if not, the persons responsible to the Company for conduct of its day-to-day business in manufacturing the oil in question and shall be free to proceed as against such persons along with the Company. If the Food Inspector makes a requisition or an enquiry from the Company as to who was the person in-charge of and responsible to it for conduct of its business in manufacturing the edible oil in question, the Company is obliged under law to provide such information.
9. In the circumstances of the case, when the Company is an accused, the prosecution can always be at liberty in any stage of the proceeding to produce the material which, if satisfies the trial Court that the other accused, who has not been arrayed as accused or the present accused against whom prosecution and cognizance have been quashed, have also committed the alleged offence, the learned trial Court can take cognizance as against them and try them along with the remaining accused persons along with the Company. However, it is for the learned trial Court to take the decision in accordance with the law on the basis of materials placed before it. It is specifically made clear that the fact that the prosecution as against the petitioner has been quashed by this Court, will not stand on the way of the Court below from exercising its discretion, if it is satisfied from materials placed before it that a case for taking cognizance against him is made out.
10. In the result, this petition is allowed to the extent indicated subject, to the observations made herein.
The lower Court records be transmitted promptly.