JUDGMENT - N.B. NAIK, J.:---By this Criminal Revision Application the State challenges the order of the learned Additional Chief Metropolitan Magistrate, 19th Court, Esplanade, Bombay, dated 5-9-1974, discharging the respondent who was accused No. 1. In all five persons including accused No. 1, the present respondent were prosecuted for alleged offences under section 5 of the Imports and Exports (Control) Act, 1947 read with section 120-B of the Indian Penal Code and also under section 5 of the Imports and Exports (Control) Act, 1947. 2. The allegations on which the prosecution was founded are briefly these : At Alnia, district Kota in the State of Rajasthan, where was what is known as "M/s. Oriental Power Cables Ltd." (hereinafter referred to as "Cables Ltd.") which was manufacturing cables. Accused No. 1 Shantilal K. Somaiya was one of the Directors of the Cables Ltd. M/s. Somaiya Bharkitya Pvt. Ltd., were the managing agents of the Cables Ltd. and accused No. 1 was a Director of the said Company. M/s. Somaiya Bharkitya Pvt. Ltd. had a sister concern called "Somaiya Organo Chemicals". Because of power shortage the Cables Ltd. decided to import a Skoda Diesel Generating Set. That is why on 30-11-1964, an application was made to the Chief Controller of Imports and Exports (C.C.I.) for the requisite import licence. The Cables Ltd., took on hire a diesel set from Somaiya Organo Chemicals on a hire of Rs. 4000/- per month some time in May 1965 for meeting the power requirements of the Cables Ltd. The import licence Exh. K was actually issued on 12-11-1965. On 12-6-1967, the imported diesel set was received in 8 packages. These packages were sent to Kota in July 1967 and were in the custody of the Cables Ltd. Notwithstanding the arrival of this imported set, the Cables Ltd. continued to use the hired set of Somaiya Organo Chemicals and decided to dispose of the imported set. Two advertisements offering the imported set for sale actually appeared in the Indian Express dated 9th and 13th December, 1967. On reading that advertisement one Puranmal Agarwal (P.W. 2) who was a partner of M/s. Power Plant Corporation, a firm of brokers contacted accused No. 3 who was the Assistant Secretary of the Cables Ltd. and found out that the set was at Alnia, district Kota and it was to be sold for Rs. On reading that advertisement one Puranmal Agarwal (P.W. 2) who was a partner of M/s. Power Plant Corporation, a firm of brokers contacted accused No. 3 who was the Assistant Secretary of the Cables Ltd. and found out that the set was at Alnia, district Kota and it was to be sold for Rs. 5,00,000/-, This broker also told his brother Sanwarlal who was a partner of M/s. Agarwal Corporation a firm of brokers to find out customer. When both the brothers were thus in search of customers, Puranmal learnt through Sanwarlal that M/s. H.J. Leach Co. of which accused No. 5 was alleged to be a partner were interested in the set. 3. It may be mentioned that it appears that meanwhile H.J. Leach and Co. had found out that one J.K. Synthetics, the actual users were interested in the imported set. That is why accused No. 5 went to Alnia. He inspected the set which was shown to him by accused No. 2 to whom he was taken by accused No. 3. It may be mentioned that accused No. 2 was at that time the Chief Executive Officer of the Cables Ltd. whereas accused No. 3, as stated earlier, was the Assistant Secretary. Accused No. 4 was a clerk of the Cables Ltd. Accused No. 5 having asked accused No. 2 to reduce the price of the set, which was quoted at Rs. 5 lacs, accused No. 2 told him that he could not reduce the price and then took accused No. 5 to the residence of accused No. 1 at Bombay. Accused No. 1 declined to reduce the price which was quoted by accused No. 2. As a result of what transpired in that meeting accused No. 4 purporting to act on behalf of accused No. 2 sent in a letter Ex. Z-12, dated March 29, 1968 to M/s. H.J. Leach Co. Since the contents of that letter are important they may be set out here for ready reference :--- "We refer to the discussion our Director Shri Shantilal K. Somaiya (accused No. 1---present respondent) had with your Mr. Ramesh Gandhi (accused No. 5) regarding one 730 KVA Skoda Diesel Generating Set which is required for M/s. J. K. Synthetics Ltd., Kota and for which you are getting the contract for complete erection, installation and putting the set in operation. Ramesh Gandhi (accused No. 5) regarding one 730 KVA Skoda Diesel Generating Set which is required for M/s. J. K. Synthetics Ltd., Kota and for which you are getting the contract for complete erection, installation and putting the set in operation. We have pleasure in offering to you now one 730 KVA Skoda Diesel alternator set complete with switch board and accessories in brand new condition (which was inspected by your Mr. Ramesh Gandhi (Accused No. 5) at our factory at Kota on 28-3-1968) as per details enclosed herewith for a price of Rs. 5,00,000/- (Rupees five lakh) ex-our factory godown at Cablenagar (Kota). Terms : You should pay us 10% advance immediately on your acceptance and the balance of Rs. 4,50.000/- (Rupees four lakhs and fifty thousand) will be paid within one month thereafter, or against delivery, whichever is earlier. Messrs J.K. Synthetic Ltd., Kota should apply as early as possible to the authorities for the necessary permission to purchase this set for their own use. Sales Tax : This is a causal sale for us and we shall not charge you any sales tax. You must send your acceptance for the above order along with your advance of Rs. 50,000/- (Rupees fifty thousand) on or before 6th April, 1968. If your acceptance and advance is not received by 6th April, 1968, our offer will be cancelled automatically." 4. On that very day, the invoice Ex. Z-11 signed by accused No. 3 was handed over to accused No. 5. Although it stands in the name of M/s. H. J. Leach Co., there is an endorsement on it to the following effect : "Required for M/s. J.K. Synthetics Ltd., Kota and for which you are getting the contract for supplying from them." It appears that M/s. J.K. Synthetics being in need of the diesel set, M/s. H.J. Leach Co., had already contacted them and apprised them of the set some time prior to March 22, 1968 and as a result of an arrangement between J.K. Synthetics and the H.J. Leach Co., J.K. Synthetics had agreed to purchase the said set for Rs. 6,25,000/- Rs. 65,000/- were paid as earnest money by Leach Co. to the Cable Ltd., and the balance of Rs. 6,25,000/- Rs. 65,000/- were paid as earnest money by Leach Co. to the Cable Ltd., and the balance of Rs. 4,35,000/- was paid by J.K. Synthetics by a cheque dated April 12, 1968 in favour of the Cables Ltd. Thereafter the set was actually delivered to J.K. Synthetics Ltd., by Hemchand Chhajer (P.W. 8) between 12-4-1968 and 16-4-1908, as directed by accused Nos. 2 and 3, although no steps were in fact taken by J.K. Synthetics to secure the requisite permission of the Chief Controller of Imports as pointed out in Ex. Z-12, the letter of Cables Ltd., dated March 29, 1968. Since then the J.K. Synthetics have been actually using the set in question. 5. It is on these allegations that the prosecution was launched against all the five accused. After the material witnesses were examined for the prosecution, the accused were also examined and they also filed their written statements. All of them denied having committed the offence, although accused No. 2 conceded his responsibility, as a technical lapse. 6. The defence of accused No. 1---the present respondent, is to this effect : Although he was the Director of the Cables Ltd. and also a Director of Somaiya Bharaktya Pvt. Ltd., who were the managing agents of the Cables Ltd., he was in fact not in charge of the day-to-day management of the Company. The registered office of Somaiya Bharaktya Pvt. Ltd. was situate at Fazalbhoy Building, Mahatma Gandhi Road, Bombay and it was this office which the accused used to attend. As against that the office of the Cables Ltd. was at Narang House, Appollo Bunder, Bombay. He was actually Director of about 10 different companies, both at the time of the transaction concerning the set and also when he gave his statement before the learned Magistrate. He contended that the actual management of the company was in the hands of experienced and well placed Senior Executives including accused No. 2. These officers, he stated, were running the day-to-day affairs of the company and had to implement in a legal and efficient manner the policy decisions taken by the Board of Directors of the Managing Agents. He contended that the actual management of the company was in the hands of experienced and well placed Senior Executives including accused No. 2. These officers, he stated, were running the day-to-day affairs of the company and had to implement in a legal and efficient manner the policy decisions taken by the Board of Directors of the Managing Agents. While admitting that the accused No. 2 was the Chief Executive officer of the Cables Ltd. he relied upon the Resolutions of the Board of Directors delegating specific duties particularly in respect of import licences to accused No. 2 and one J.S. Huza who was the General Manager at Kota at the relevant time. It may be mentioned that the reference was to the resolution dated 10-8-1965 in Ex. 2 the Minute Book of the Board of Directors. By this resolution Mr. Huza, the General Manager at Kota and C. A. Mehta---accused No. 2, the Chief Executive Officer were authorised both jointly and severally to do all transactions concerning import licences and to sign, affirm and execute all important licences and matters incidental thereto. The accused went on to state that because there was a serious power shortage at Kota in 1964, the Cables Limited made an application for the import licence in question for the import of diesel Generating Set. After admitting that the set was actually imported in June 1967, he pointed out that by that time the power problem in Rajasthan had ceased to be a problem on account of construction of Ghandi Sagar dam, as was admitted by Mr. Poti (P.W. 9) for the prosecution itself. He contended that thus by the time the set was actually imported in 1967, the set being found to be surplus, a policy decision was taken to dispose it of. He further added that the decision was taken purely on the basis of financial consideration viz. that investments may not be locked up in a surplus machinery. He pointed out that it was for the Executive Officers to implement the decision in a proper and legal manner and at no stage a decision was taken to dispose of the set in violation of the provision of law. that investments may not be locked up in a surplus machinery. He pointed out that it was for the Executive Officers to implement the decision in a proper and legal manner and at no stage a decision was taken to dispose of the set in violation of the provision of law. He also relied upon the rules then prevailing according to the Hand Book of Rules and Procedure issued by the Import Trade Control authorities and stated that it was decided to dispose of the set as per the then standing rules. Having admitted that J.K. Synthetics was interested in buying the set he stated that there being a hitch about the price between accused No. 2, the Chief Executive Officer of the cables Ltd. and accused No. 5 who was negotiating on behalf of J.K. Synthetics Ltd., he was approached for reduction of the price of Rs. 5 lakhs already quoted by accused No. 2. He admits that he declined to reduce the price and submits that is the only evidence against him on record and that evidence does not suggest that he was a party to the sale of the set without completing the legal formalities. After setting down the details of the costs incurred by the Cables Ltd., which amounted to Rs. 5,07,454/- he pointed out that when the set was in fact sold for only Rs. 5,00,000/- the Cables Ltd. actually sustained a loss and, therefore, the sale was not in violation of the rules then governing such sales. In particular this accused contended that by Ex. Z-12 the letter dated March 29, 1968 sent by the Cables Ltd., to H.J. Leach and Co. who were negotiating this transaction for and on behalf of J.K. Synthetics, it was perfectly made clear that J.K. Synthetics should take steps to secure the requisite permission of the Chief Controller of Imports and that they should apply for the necessary permission to purchase the said set. It is pointed out that was the procedure which was prevailing at the relevant time as per the procedure and policy laid down in the Hand Book. He submitted that the contents of the letter Ex. It is pointed out that was the procedure which was prevailing at the relevant time as per the procedure and policy laid down in the Hand Book. He submitted that the contents of the letter Ex. Z-12 would fully substantiate his contention that the decision was to sell the surplus Diesel Generating Set in conformity with the provisions of law only inasmuch as the decision was to sell it to another actual user for a price not exceeding the landed cost and that too with the permission of the C.C.I. He also contended that after all there is nothing suspicious about the transaction inasmuch as after the policy decision, to dispose of the set was taken, the sale was in fact openly advertised in the press and the amount of the price was also received by cheque. He maintained that he is not a party to any contract concerning the actual sale and/or delivery of the set and that work was done by the Companys executives as part of their routine duties. He, therefore, contended that there was not even a title of evidence to suggest that he was a party to the sale and delivery of the said set before the purchaser J.K. Synthetics had obtained the permission of the C.C.I. 7. As regards accused No. 2, the Chief Executive, he conceded that he had negotiated the sale as desired by the Board of Directors and he further pointed out that it is because he is working at Bombay whereas the set was at Kota and there is another General Manager at Kota and by letter Ex. Z-12, the J.K. Synthetics were already requested to apply to the C.C.I. for permission to transfer, and, because he was assured by the authorities of the J.K. Synthetics that because of their connections at Delhi they could easily secure such permission, he believed that was being done, and that because of pressure of work he, not being in a position to pursue the matter, may be held to be technically responsible, and also I pleaded guilty and having regard to the fact that he, highly qualified respectable man aged 69 years, should be leniently dealt with. 8. The other accused, viz. accused Nos. 8. The other accused, viz. accused Nos. 3 and 4 stated that they, being subordinates, only signed certain documents at the instance of accused No. 2 and they are not at all concerned with the transaction as such. 9. Accused No. 5 stated that he is not a partner but in fact an employee of H.J. Leach and Co., and that he has only carried out the directions of the firm who have entered into a transaction on behalf of J.K. Synthetics. 10. The learned Magistrate after hearing the arguments of both the sides, held that so far as accused Nos. 1, 3, 4 and 5 are concerned, no case was made out for framing a charge and he, therefore, passed an order of discharge in their favour. He framed a charge only against accused No. 2 and since accused No. 2 pleaded guilty to the charge and made out an elaborate case for leniency, he accepted that plea and sentenced him to S. I. till the rising of the Court and fine of Rs. 15,000/-. 11. It may be mentioned that so far as accused No. 1 the respondent is concerned, the learned Magistrate fully accepted the version of accused No. 1 for discharging him. 12. Aggrieved by the above order, the State has preferred this revision application. 13. Mr. Sawant, learned Public Prosecutor who has appeared in support of the revision application has assailed the order of discharge. First, he contends that accused No. I is an active Director of the Cables Ltd. and he is also a Director of Somaiya Bharkitya who were the Managing Agents of the Oriental Power Cables as stated by S.H. Chowdhari (P.W. 12). Secondly, he submits that accused No. 1 was consulted at the time of indenting regarding the quotation as stated by S.K. Raja (P.W. 7). Thirdly, he submits that as stated by Puranmal Agarwal (P.W. 2) the broker and admitted by accused No. 1 himself, at the instance of accused No. 5 who wanted a reduction of the price of Rs. 5 lakhs quoted by accused No. 2, accused No. 5 being taken by accused No. 2 to accused No. 1, accused No. 1 declined to reduce the price. He, therefore, argues that the learned Magistrate was in error in holding that accused No. 1 is not guilty of the offence for which he was prosecuted. 5 lakhs quoted by accused No. 2, accused No. 5 being taken by accused No. 2 to accused No. 1, accused No. 1 declined to reduce the price. He, therefore, argues that the learned Magistrate was in error in holding that accused No. 1 is not guilty of the offence for which he was prosecuted. In support of his contention Mr. Sawant has relied upon the cases reported in (Abdul Aziz v. The State of Maharashtra)1, 65 Bom.L.R. 669. (The State of West Bengal v. Moti Lal Kanoria)2, A.I.R. 1966 S.C. 1586 and (Deputy Chief Controller of Imports and Exports, New Delhi v. K.T. Salram)3, A.I.R. 1971 S.C. 1283. 14. Mr. Porus Mehta, learned Counsel for the respondent, has submitted that the only order which could be passed under the circumstances and from the material on record, is the order of discharge which is passed by the learned Magistrate and that no other order is possible. He has also drawn my attention to the grounds in revision application filed by the State wherein it is alleged, that it ought to have been held that the opponent-accused is guilty of the offence under section 5 of the Import and Export (Control) Act, 1947 by reason of his failure to take steps at least to see as to whether the necessary permission was obtained, and submits that if the Directors are held criminally responsible for such alleged omissions they would have nothing else to do but to be defending themselves in Criminal Courts. In support of his submission that a Director could not be held to be responsible for the negligence of his subordinates or for trusting his subordinates, he has relied upon the cases reported in (Dovey and The Metropolitan Band Ltd. v. John Cory)4, 1901 Appeal Cases 477 and (Huckerby v. Elliott)5, 1970(1) All.E.R. 189. 15. Before considering the rival contentions, it would be convenient to refer to the provisions of the Imports and Exports (Control) Act, 1947 and the relevant Rules. 15. Before considering the rival contentions, it would be convenient to refer to the provisions of the Imports and Exports (Control) Act, 1947 and the relevant Rules. Section 5 of that Act reads thus : "If any person contravenes or attempts to contravene, or abets a contravention of, any order made or deemed to have been made under this Act or any condition of a licence granted under any such order, he shall, without prejudice to any confiscation or penalty to which he may be liable under the provisions of the Customs Act, 1962 (Act 52 of 1962) be punishable with imprisonment for a term which may extend to two years and also with fine : provided that in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the Court, such imprisonment shall not be for less than six months." 16. Rule 91 of the Hand Book of Rules and Procedure then in force which corresponds to Rule 94(1) of the Hand Book of Rules and Procedure, 1968, is to this effect :--- 94(1) Where, after importing goods against an actual users licence, the actual user licensee finds that, for any reasons, he is not in a position to utilise the goods in accordance with the conditions of the licence under which the goods were imported, he should find another actual user and transfer the goods to the latter with the permission of the licencing authority who had issued the licence. The buyer of the goods in such cases should be an actual user requiring the goods in question for use in his industrial unit. (2) If the actual user is not able to find a suitable buyer for the goods, he should approach the State Director of Industries or the sponsoring authority concerned, who may be in a position to suggest a buyer." 17. Sub-rule (3) provides as to how the sale price of the goods in question should be settled between the seller and the buyer taking into account the C.I.F. value of the imported goods, customs duty paid, landing and clearing charges paid, transportation charge and other reasonable incidental charges. 18. Sub- rule (4) provides :--- "After settling the price, the buyer should make an application for permission to purchase the goods in question to the licensing authority who had issued the licence under which the goods were imported. 18. Sub- rule (4) provides :--- "After settling the price, the buyer should make an application for permission to purchase the goods in question to the licensing authority who had issued the licence under which the goods were imported. Such application should be made through the sponsoring authority of the buyer actual user. The application should be made in the prescribed form, i.e., the form which the applicant had used if he had to apply for an import licence for such goods. No application fee will be required to be on such applications. The application should be supported by a letter of consent of the seller to transfer the goods in question on the price settled between the parties. In the consent letter, the break-up of the sale price as indicated in sub-para (3) above should also be given. 19. It may be also mentioned that one of the conditions being Condition No. (iii)(b) subject to which the licence Ex. K in this case was issued provides--- "The goods imported under this licence will be utilised in the licence holders factory and that no portion thereof will be sold to or be permitted to be utilised by any other party or pledged with any financier other than Banks authorised to deal in the foreign exchange and State Financial Corporation provided that particulars of goods so pledged are reported by the licensee in advance to licensing authority." 20. Now since the sale was effected without the requisite permission it is needless to say that Cables Ltd. would be prima facie liable. But then the question for consideration is as to whether on the facts of this case accused No. 1 could be said to be prima facie liable. 21. I have already set out the defence of the accused No. 1 in great detail. It remains only to refer to the resolution relied upon by accused No. 1. That Resolution dated 10-8-1965 in the Minute Book, Ex. 21. I have already set out the defence of the accused No. 1 in great detail. It remains only to refer to the resolution relied upon by accused No. 1. That Resolution dated 10-8-1965 in the Minute Book, Ex. 2, is to this effect : "Resolved further that Shri J.S. Huja (the then General Manager of the Cables Ltd. at Kota) and Shri C.A. Mehra (the Chief Executive Officer original accused No. 2) be and they are hereby authorised jointly and each of them severally to sign, affirm and execute on behalf of the Company all import applications, import licences, permits, vouchers, correspondence, applications for renewals of import licences and all other papers and documents including declarations, affidavits and undertakings as are pertaining or incidental to import matters." 22. It would, therefore, appear that although policy decision was in fact taken by the Board of Directors of Management to dispose of the set, as per the resolution of the Board of Directors, the details were to be attended to by Mr. Huja, General Manager at Kota and by Mr. Mehta the Chief Executive Officer. There is no dispute that accused No. 1 was an active Director and that he was consulted at the time of the indenting regarding the quotation and that he was approached by accused No. 5 along with accused No. 2 for reducing the price Rs. 5 lakhs and that he declined to reduce the price. But from these circumstances alone it could not be said that he is in any way responsible for the sale of imported set in breach of the conditions of the licence or the rules governing the same. Far from that as rightly contended by him, he saw to it at the time of the very negotiations that the intending purchasers J.K. Synthetics should apply to the Chief Controller of Imports for the requisite permission. That fact is by no means an after-thought but is evidenced by the letter Ex. Z-12 which is the evidence for the prosecution itself. There could not be any dispute having regard to Rule No. 91 in the Hand book of Rules then prevailing, corresponding to Rule 94(4) of the Hand Book of 1968 that the procedure suggested in the letter Ex. Z.12 was the correct procedure and what is more, there was nothing wrong in negotiating a transaction and settling a transaction as such. Z.12 was the correct procedure and what is more, there was nothing wrong in negotiating a transaction and settling a transaction as such. What is prohibited is the actual delivery of the goods and the completion of the transaction of sale, without the requisite permission of the C.C.I. for which the buyer has to make an application accompanied by a letter of consent of the seller mentioning the details of the price. Now surely a mere policy decision to dispose of an imported set for whatever reason in the best interest of the importing concern, would by no stretch of imagination be an offence under the Act. Moreover publicizing a sale or an agreement to sell provided the agreement is to sell to an actual user and for the price mentioned in Rule 94(3) would not be an offence, or even an attempt to commit an offence under section 5 of the Import and Export (Control) Act, 1947. The unchallenged evidence led for the prosecution itself shows that the property was being sold to J.K. Synthetics an actual user and that it was in fact being sold at a loss through Leach and Co. True, that Leach and Co. having arranged to purchase the set for Rs. 5 lacs from Cables Ltd. for J.K. Synthetics have, however, on the ground that they were to erect and instal, that set charged J.K. Synthetics with a price of Rs. 6,50,000/-. But it is not the case for the prosecution either in the Court below or before me that the Cables Ltd. themselves have made any profit out of this transaction. The invoice Ex. Z-ll and letter Z-12 both dated 29-3-1968 would show that the buyers were the J.K. Synthetics although the deal was being effected through Leach and Co. There is no suggestion or even a whisper that this was a shady transaction or a subterfuge, either in the Court below or before me for the evidence for the prosecution itself in the form of invoice Ex. Z-l1 and letter Ex. Z-12 dated 29-3-1968 would show that the transaction was for and on behalf of J.K. Synthetics who it is not disputed are the actual users. 23. Mr. Z-l1 and letter Ex. Z-12 dated 29-3-1968 would show that the transaction was for and on behalf of J.K. Synthetics who it is not disputed are the actual users. 23. Mr. Sawant has submitted that the defence of accused No. 1 that by the time the set was actually imported in June 1967, the power shortage in Rajasthan having ceased to be a problem on account of construction of Gandhi Sagar Dam and the imported set having been found surplus, a decision was taken to dispose it of, a decision which was purely on the basis of financial considerations, viz., that investments may not be locked up in a surplus machinery, as contended in paragraphs 4 and 5 of the written statement of accused No. 1, is not correct. Developing this argument Mr. Sawant has drawn my attention to the evidence of Shantilal Chaudhari (P.W. 12) and Ex. Z-32 the annual reports and accounts of Cables Ltd. for 1968-69. Mr. Chaudhari has stated that he was working as an accountant of the Cables Ltd. from 1962 to 1973 and that a diesel generating set was taken on hire from Somaiya Organo Chemicals at a hire charges of Rs. 4000/- per month from the year 1965-66 to 1968-69 and he his further stated that hire charges at that rate were in fact paid. He has also stated that as per Ex. Z-32, Rs. 48,000/- being the hire charges of the hired diesel generating set for 1968-69 were also paid by the Cables Ltd. By relying on this piece of evidence, Mr. Sawant says that the grounds mentioned by accused No. 1 as the reasons for the policy decision to sell the set are incorrect. I am not impressed with this submission. Apart from the fact that such a submission could not be allowed to be made in a revision application, there may be several reasons why a concern may be required to dispose of an imported set. Chief among them appears to be the financial implications of the Company. It is needless to say that had they used the set and then proceeded to dispose it of it would have been a record hand set and may not have fetched the price it did. Therefore, nothing sinister could be inferred for the policy decision to sell the set. 24. It is needless to say that had they used the set and then proceeded to dispose it of it would have been a record hand set and may not have fetched the price it did. Therefore, nothing sinister could be inferred for the policy decision to sell the set. 24. There is no dispute that as it appears from the evidence for the prosecution itself, accused No. 1 was a Director of as many as 10 companies both at the relevant time and at the time when his statement came to be recorded. It is also admitted by the witnesses for the prosecution that he was not attending the office of the Cables Ltd. which was situated at Narang House, Appollo Bunder, Bombay and that in fact he used to attend his office of Somaiya Bharkitya Pvt. Ltd., at Fazalbhoi Building, Mahatma Gandhi Road, Bombay. It is evident that a policy decision being taken to sell the set it was the duty of the Chief Executive Officer including accused No. 2 who was a very highly qualified and educated officer, to look to the details of the execution as is evident from the resolution of 1965 in Ex. 2 to which attention is drawn. What is more, the nature of the discussion which accused No. 1 had with accused No. 5 when he had called on him along with accused No. 2 for reducing the price as it appears from the contents of the letter Ex. Z-12, would clearly show that accused No. 5 was given to understand that J.K. Synthetics should in fact apply for the requisite permission. It would thus appear that what remained was to pursue the matter and to work up the details which, in my opinion, as rightly contended by accused No. 1 could not be expected of accused No. 1 and he could not also be punished criminally for any negligence on the part of the Chief Executive Officer whose duty it was to look to such details. Accused No. 1 was certainly entitled to trust and believe that the highly qualified executive officers including accused No. 2 would certainly discharge their duties in the normal course. It would, therefore, appear that it would be hazardous to hold a Director of a Company criminally liable either for the inadvertence or negligence of a highly qualified Chief Executive Officer. 25. It would, therefore, appear that it would be hazardous to hold a Director of a Company criminally liable either for the inadvertence or negligence of a highly qualified Chief Executive Officer. 25. In this connection I may refer to the cases relied upon by the learned Counsel for the respondent accused. In Doven and The Metropolitan Bank v. John Cory the facts were these : The appellant as liquidator of the National Bank of Wales, Limited, in the voluntary winding up took out a summons for a declaration that the respondent John Cory was guilty of misfeasance or breach of trust as a director in respect of (1) dividends paid out of capital; (2) improper advances to directors; (3) improper advances to customers, and an order for repayment to the appellant of the losses thereby caused. Wright J. held that the last two heads of claim were not made out, but that dividends were paid out of capital and made an order for the repayment of certain sums of money. The Court of Appeal held that none of the claims were made out and reversed the decision of Wright J. on the first head. The liquidator appealed Lord Chancellor Earl of Halsbury while dismissing the appeal observed as under at page 483 : "My Lords, I think it is idle to talk in general terms of the duty of a director to look after the concerns of the company of which he is one of the managers without seeing what in the ordinary course of business he ought to do or to have done. Now, there are some things which, of course, must be, or at all events ought to be, apparent to anyone responsible for the conduct of a commercial business, and one may apply that observation to the business of which we are speaking, namely, a banking business; but I do not understand that anyone has suggested that there was neglect or default by reason of the absence of some system under which, if honestly carried out, the interests of the Bank would have been in that respect secured. ... ... Further on at page 485, it is observed--- "In the view I take, the whole of the evidence which is relevant and important to the question, did Mr. ... ... Further on at page 485, it is observed--- "In the view I take, the whole of the evidence which is relevant and important to the question, did Mr. Cory knowingly permit the things to be done which were done, becomes to my mind entirely immaterial if one is to start with the assumption that he knew nothing about them. Dealing with the several heads of charge as they have been formulated in the judgment of Wright J., namely, negligence, breaches of trust in respect of advances made contrary to the said articles of association, and payment of dividends out of capital, I think each and all of them may be disposed of by the proposition that Mr. Gory was not himself conscious of any one of these things being done, and that unless he can be made responsible for not knowing these things, and, as Wright J. put it, he is shown to have exhibited a complete neglect of the duties he had undertaken, the charges are not made out," Thereafter follow the most important observations--- "The charge of neglect appears to rest on the assertion that Mr. Gory, like the other directors, did not attend to any details of business not brought before them by the general manager or the chairman, and the argument raises a serious question as to the responsibility of all persons holding positions like that of directors, how far they are called upon to distrust and be on their guard-against the possibility of fraud being committed by their subordinates of every degree. It is obvious if there is such a duty it must render anything like an intelligent devolution of labour impossible. Was Mr. Gory to turn himself into an auditor, a managing director, a chairman, and find out whether auditors, managing directors and chairmen were all alike deceiving him ? That the letters of the auditors were kept from him is clear." Further on at page 486, it is observed--- "I cannot think that it can be expected of a director that he should be watching either the inferior officers of the Bank or verifying the calculations of the auditors himself. The business of life could not go on if people could not trust who are put into a position of trust for the express purpose of attending to details of management. If Mr. The business of life could not go on if people could not trust who are put into a position of trust for the express purpose of attending to details of management. If Mr. Gory was deceived by his own officers--- and the theory of his being free from moral fraud assumes under the circumstances that he was---there appears to me to be no case against him at all." 26. In Huckerby v. Elliott the facts were these : Miss Huckerby was a co-director with one Frank Selwyn Lunn. They had together started a gaming club called Windmill Clubs Ltd. Frank Lunn was a director of Windmill Club Ltd. and also the secretary. One John Beveridge was in fact the manager. An offence under section 305 of the Customs and Excise Act 1952 being committed, inasmuch as without a licence a gaming was arranged in the New Embassy Club, the directors and the manager were prosecuted. Frank Lunn the director secretary and the manager John Beveridge pleaded guilty and were convicted. Miss Huckerby, however, did not plead guilty of the charge. The stipendiary Magistrate, however, convicted her by observing that to escape liability by saying, "I have delegated all my duties to a servant" seems to make nonsense of the position of a director. An appeal being preferred against that order of conviction Lord Parker C.J. did not agree with the above observations and observed as under at page 193-194 :--- "...I cannot think that in general at any rate it is the duty of each director of a company to exercise some degree of control, to use the words in the oral judgment, over what is going on, or there is no point in being a director; nor do I think it is right to say that there is a duty to supervise the running of the company and in particular a co-director who is the secretary. Counsel for the respondent concedes that these words attributable to any neglect on the part of the directors refer to the omission to do something which the director was under a duty to do. Counsel for the respondent concedes that these words attributable to any neglect on the part of the directors refer to the omission to do something which the director was under a duty to do. It is unnecessary to go through the cases which deal with what in different circumstances may or may not be the duty of a director, but I know of no authority for the proposition that it is the duty of a director to, as it were, supervise his co-directors or to acquaint himself with all the details of the running of the company. Indeed it has been said by Romer J. in (Re City Equitable Fire Insurance Co. Ltd.)6, 1925 Ch. 407 that amongst other things it is perfectly proper for a director to leave matters to another director or to an official of the company, and that he is under no obligation to test the accuracy of anything that he is told by such a person, or even to make certain that he is complying with the law." 27. Having regard to the above observations of Lord Halsbury and Lord Parker, it would appear that on the facts of this case as appears from the evidence for the prosecution itself, there is no prima facie material to frame a charge for an offence under section 5 of the Import and Export (Control) Act, against accused No. 1. 28. There is no analogy between the facts of our case and the three cases relied upon by Mr. Sawant. In Abdul Azizs case the facts were these : The appellant was the chairman of the Malegaon Powerloom Sadi Manufacturers Co-operative Association Ltd. There were six other members of the Association. All the members were power-loom weavers. Abdul Aziz, as Chairman of the Association, applied for and obtained the licence dated January 2, 1956, for the import of certain quantity of art silk yarn by the Association. The licence was issued subject to the condition that the goods would be utilised only for consumption as raw material or accessories in the licence-holders factory and that no portion thereof would be sold to any party. The Association could not arrange for the necessary finances and, therefore, had the goods imported through Warden Co., who financed the transaction. The licence was issued subject to the condition that the goods would be utilised only for consumption as raw material or accessories in the licence-holders factory and that no portion thereof would be sold to any party. The Association could not arrange for the necessary finances and, therefore, had the goods imported through Warden Co., who financed the transaction. Part of the goods received was utilised in accordance with the condition of the licence, the rest was however sold by the said Warden Co., as a result of the correspondence ending by a letter dated November 13, 1956, written by the appellant Abdul Aziz himself to Warden Co. The Supreme Court observed on these facts that the High Court had rightly convicted Abdul Aziz of the offence under section 5 of the Act as he had intentionally aided the Association in committing the offence under section 5 of the Act and he had thus abetted the offence by the Association. After all that was a case of a small Association consisting of only 7 members of which Abdul Aziz was the Chairman and he was solely responsible for the sale of the imported silk yarn in contravention of the provisions of the Imports and Exports (Control) Act. 29. In the case of State of West Bengal v. Moti Lal., the facts were these :---Moti Lal was the Director of the company in question. The Company was managed by a firm called Mukhram Lachminarayan and Moti Lal Kanoria was one of the partners of the firm. The Company and the Managing Agents had a common address in Calcutta. Moti Lal Kanoria used to sign on behalf of the Managing Agents and also generally to deal with the affairs of the Company. All transactions in the case before the Supreme Court were by Moti Lal Kanoria and he had signed all the relevant documents. The Supreme Court observed at page 1592 as under :--- "...Kanoria was responsible for the issuance of the licence and for the transfer of the goods covered by the licence. He wrote every document connected with these two matters. He was, therefore, responsible principally alone with the Company. In fact the Company could not have committed the offence of contravention if Kanoria had not acted as he did." 30. In Dy. Chief Controller v. K.T. Kosalram the facts were these : Accused Nos. He wrote every document connected with these two matters. He was, therefore, responsible principally alone with the Company. In fact the Company could not have committed the offence of contravention if Kanoria had not acted as he did." 30. In Dy. Chief Controller v. K.T. Kosalram the facts were these : Accused Nos. 1 and 2 who were brothers were both Directors of the company, accused No. 1 being the Director-in-charge attending to its day-to-day management and administration. He was also authorised to operate its accounts with the banks. The primary object of the company was publication of a Tamil daily newspaper "Dina Seithi". Accused No. 3 was the Manager of Messrs Mohan Ram Press located in the same building in which the company was located. Srimati Gomati Devi, wife of accused No. 1 was the sole proprietress of this Press. She had given power of attorney to her husband for operating the Bank account of her Press. Accused No. 5 was a broker engaged in the business of negotiating sale and purchase of printing machinery. On May 5, 1960 accused No. 1 applied on behalf of the Company to the Chief Controller of Imports and Exports New Delhi, for the grant of an import licence in favour of the Company for importing two second-hand rotary printing presses in the category of "Actual Users". The import licence was issued for Rs. 1,50,000/-. Later, on the request of accused No. 2 on behalf of the Company, the value of this licence was raised to Rs. 3 lakhs. The period of validity of the licence having expired, at the request of accused No. 2, the period was extended upto March 19, 1962. Some time in April or May 1961 accused Nos. 2 and 5 contacted one Dr. Thomas by visiting Kottayam and they told him that the accused No. 1 had an import licence for two rotary printing presses and since he, however, needed only one, he was in a position to dispose of the other. The terms of the transaction of sale of rotary press was actually settled between Dr. Thomas and accused Nos. 2 and 5 on July 17, 1961, in respect of which negotiations were going on since April-May 1961. The terms of the transaction of sale of rotary press was actually settled between Dr. Thomas and accused Nos. 2 and 5 on July 17, 1961, in respect of which negotiations were going on since April-May 1961. It was under such circumstances that on July 2, 1961, accused No. 1 sought permission of the licencing authority on behalf of the Company to import two second-hand rotary presses instead of one already permitted within the licence value of Rs. 3 lakhs on the ground that one more printing press was required for their proposed office at Madurai. The additional machine thus imported by a false representation was transferred to Dr. Thomas. The prosecution was launched under these circumstances. On these facts the Supreme Court set aside the order of the High Court and convicted accused Nos. 1, 2, 3 and 5 for the offence under section 120-B of the Indian Penal Code and section 5 of the Imports and Exports (Control) Act, 1947. Mr. Sawant argued that where as there is enough material on record to show at accused Nos. 1, 2 and 5 had actual participated in the commission of the offence, since there is no material against accused No. 3, the manager of the press who was also convicted, on the basis, of this authority, a prima facie case is made out for framing a charge against the respondent accused. I am not impressed with this submission. In para 12 of the judgment. Their Lordships have observed :- "The suggestion faintly thrown that the company was the holder of the licence and, therefore, the other respondents (accused persons) should not be held liable is also without merit. On the facts found and on the authority of State of West Bengal v. Motilal Kanoria all the respondents (the individual accused persons along with the Company) are guilty." (Emphasis supplied.) 31. It would, therefore, appear that it is on the facts found that Their Lordships held all the accused guilty, although we do not find the details of the facts concerning accused No. 3 in the reported judgment. I am, therefore, of the view that on the facts of this case there could be no analogy between the case of accused No. 1---respondent, and that of either Abdual Azizs case or Motilal Kanorias case on which reliance is placed by Mr. Sawant. 32. I am, therefore, of the view that on the facts of this case there could be no analogy between the case of accused No. 1---respondent, and that of either Abdual Azizs case or Motilal Kanorias case on which reliance is placed by Mr. Sawant. 32. In the result, I see no reason to interfere with the order passed by the learned Magistrate. The revision application is, therefore, rejected and the rule is discharged. ------