PARVATI DEVI v. STATE OF UTTER PREDESH — 1990 DIGILAW 734 (ALL)

S. R. BHARGAVA, J. ( 1 ) HEARD Sri V. P. Srivastava for revisionist and Sri P. S. Adhikari for State: This revision against summoning order under Section 319 Cr. P. C. has arisen in the following circumstances: It is not disputed for the purposes of this revision that a partnership firm constituted by partner revisionists Smt. Parvati Devi and Sri Ram Niwas, and one Ashok Kumar, working and carrying on business in the name of M/s. Ram Niwas Ashok Kumar at Mestonganj, Rampur, is whole sale dealer of food-grains. It is alleged by the prosecution that on 19th July 1984 in a raid by a team of Food department headed by the then Regional Food Officer, D. S. Rana, shortage of food-grains as compared to the stock register was detected and it was further found that in the cash memos names and full addresses of the purchasers were not mentioned at the business premises of the said firm. Santosh Kumar son of one of the partners was present at the premises, he was arrested. Ultimately after investigation charge sheet for offences punishable under Section 3 read with Section 7 of the Essentials commodities Act due to alleged contravention of U. P. Foodgrains Dealers (Licencing and Restriction of Hearding) order 1976 and U. P. Essential Commodities (Display of prices and stock and control of supply and Distribution) order 1977 was submitted against said Santosh Kumar in the court of Special Judge (Economic offences), Rampur. During evidence it was discovered that the revisionists and one Ashok Kumar are partners of the firm. Learned Special Judge placed reliance on the proviso of Section 10 (1) of the Essential commodities act and held that prima facie case is made out against the revisionists and they are liable to punishment unless they prove that the contravention took place without their knowledge or they exercised due diligence to prevent such contravention. He was further of the view that the provisions of Section 10 (1) and (2) make out that the partners of the firm are prima facie responsible for the contravention of the Orders unless anyone of them proves that it was without his authority and knowledge and he exercised due diligence to prevent the same. Learned Special Judge observed that burden has been shifted on the partners of the firm to prove their innocence. Learned Special Judge observed that burden has been shifted on the partners of the firm to prove their innocence. Hence the learned Special Judge summoned the revisionists under Section 319 Cr. P. C. ( 2 ) IF during enquiry of trial it appears to a court from, the evidence that some person or persons not being accused in the case committed offence, the court can summon such person or persons for being tried along with the accused already before the court, for such offence he or they appear to have committed. A bare reading of Section 319 Cr. P. C. makes it clear that persons not being prosecuted can be summoned by enquiry or trial court only if the evidence adduced before such court makes out a prima facie case that such persons also committed offence. Hence the essential requirement for summoning under Section 319 Cr. P. C. is a prima facie case constituting an offence. ( 3 ) THEN the only question which requires determination in this case is whether on the basis of evidence that revisionists are partners in the firm can make out a prima facie case of contravention of aforesaid orders punishable under Section 3 read with Section 7 of the Essential Commodities Act. ( 4 ) FOR ascertaining the liability of the partners of a firm for offence punishable under the Essential Commodities Act it would be useful to consider Section 10 of the said Act which runs as under: 10 Offences by companies:- (1) 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 and was responsible to thecompany 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 punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention. (2) Notwithstanding 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 consent or connivance of, or is attributable to any neglect on the part of any director, manager, secretary officer shall also deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.- For the purpose of this Section (a) Company means and body corporate, and includes a firm or other association of individuals; and (b) Directors in relation to a firm means a partner in the firm. Section 10 (1) of the Act makes person, who, at the time of contravention, was incharge and was responsible to the company for the conduct of the business of the company as well as company guilty of contravention and liable to be proceeded against and punished. Explanation to sub-Section (2) makes it clear that company includes a partnership firm and so far as a partnership firm is concerned, a partner stands in the position of a directors of a limited company. All this means that in case of contravention by a firm the person incharge and responsible to the firm for the conduct of the business of the firm as well as the firm can be made liable, proceeded against and punished. Proviso of sub Section (1) gives an exception to this rule and exonerates the persons liable to punishment under Section 10 (1) on his proving that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention. This proviso is not an appendage to sub-Section (2 ). ( 5 ) IN the case of Bala Prasad v. State1, Gyanendra Kumar, J. interpreted Section 10 (1) and came to the conclusion that the word companyt includes a partnership firm, and if there has been any contravention the firm itself could be deemed to be guilty and shall be liable to be proceeded against and punished. There can be no manner of doubt that the firm is only a collective name for its partners. The result would be that if there has been any breach of an order, all the partners should be deemed to be guilty of contravention and should be liable to be proceeded against. There can be no manner of doubt that the firm is only a collective name for its partners. The result would be that if there has been any breach of an order, all the partners should be deemed to be guilty of contravention and should be liable to be proceeded against. ( 6 ) I have given serious thought to this interpretation and I am of the view that looking to the Criminal Procedure Code of 1908 this interpretation is not altogether untenable but requires explanation in view of the new Code, Undoubtedly under Section 10 (1) of the Act both the persons incharge and the firm can be made liable and punished for contravention of an order. Firm is not a juristic person. In the Criminal Procedure Code of 1908 there was no provision for representation of a corporate body of association of persons liable to be prosecuted and punished. This lacuna was removed by introducing Section 305 in the Criminal Procedure Code of 1973. Even for fastening liability upon the company there must be accusation that the contravention was by the company. In absence of such an accusation only the person who, at the time the contravention as committed, was incharge and was responsible to the company for conduct of the business of the company can be liable, prosecuted and punished. In this connection reference can be made to the case of State of Madras v. C. V. Parikh. ( 7 ) IN the cases of M. R. Shervaniv. State, Manmohan and another v. State of U. P. and an other and Shyam Sunder and others v. State of Haryana, Provisions of Section 10 (2) of the Essential Commodities Act were interpreted. It was held that directors of a company or partners of a firm cannot be made liable for contravention unless such contravention is attributable to any neglect on their part or the contravention has been committed with their consent or connivance. Neglect must be willful and not inadvertent It was further held that provisions of Section 10 (2) do not create vicarious liability. Then it is evident that directors or the partners can be made liable only if the contravention i. e. the offence has been committed by the company. Neglect must be willful and not inadvertent It was further held that provisions of Section 10 (2) do not create vicarious liability. Then it is evident that directors or the partners can be made liable only if the contravention i. e. the offence has been committed by the company. Looking to all this law and carefullyt perusing the provisions of sub-Section (1) and (2) of Section 10 of the Act, it becomes clear that sub Section (2) is an explanation to sub Section (1 ). It makes it clear that even if the contravention i. e. the offence was committed by the company and a partner represents the company in the criminal case against it, the partner can be made personally liable only if it is proved that the offence has been committed with his consent or connivance or is, attributable to any neglect on his part. If the contravention i. e. the offence was committed by the firm in the criminal case, and the, partner represents the firm, firm being only an association of persons or collective names of the partners cannot be punished with jail sentence but can be punished with fine and such fine shall be liability of the firm and not the individual liability of the partner. Such fine shall be recoverable from the assets of the firm not the individual property of the partner representing the firm in the criminal case. ( 8 ) NOW reverting back to the facts of the case there was no case that the contravention was by the firm. It does not also appear that the firm was being prosecuted. It does not also appear that the revisionists being partners were required to represent the firm. The evidence led afore the Special Judge did not prima facie show that the contravention i. e. the offence has been committed with the consent or connivance of the revisionists or is attributable to any neglect on their part. For making the partners of a firm liable to be prosecuted, burden of proof lies upon the prosecution to show that the contravention i. e. the offence has been committed with their consent or connivance or is attributable to any neglect on their part. For making the partners of a firm liable to be prosecuted, burden of proof lies upon the prosecution to show that the contravention i. e. the offence has been committed with their consent or connivance or is attributable to any neglect on their part. Question that contravention took place without the knowledge or despite exercise of all due diligence to prevent such contravention is relevant only with respect to the person incharge and responsible to the firm (company) for the conduct of the business and where the firm is being prosecuted. The firm, for absolving themselves from the liability partners need not prove that contravention took place without their knowledge or despite exercise of all due diligence to prevent such contravention. If the partners can show that there is no evidence that the contravention i. e. the offence has been committed with their consent or connivance or is attributable to any neglect on their part, they can successfully asserts that there is no prima facie case against them. When the evidence in the instant case does not show that the contravention of the order has been committed with the consent or connivance of, or is attributable to any neglect on the part of the revisionist partners, there is absolutely lack of prima facie case and the learned special Judge had no jurisdiction to summon the revisionists under Section 319 Cr. P. C. ( 9 ) IN result this revision succeeds and the impugned order summoning the revisionists is liable to be quashed. ( 10 ) REVISION is allowed. Impugned order summoning the revisionists is quashed. .