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2001 DIGILAW 964 (BOM)

Kishore Vallabhdas Laddha & others v. Food Inspector

2001-11-28

J.N.PATEL

body2001
JUDGMENT - J.N. PATEL, J.:---Heard Mr. De for the applicants and Mr. Yengal, A.P.P., for the respondent. 2. The applicants are the original accused and partners of accused No. 6 M/s. Laddha Brothers, Sakkarsath, Amravati. On 6-3-1992 at about 11.30 a.m. Food Inspector Sau. Jaunjal-Patil visited the establishment of the firm and found the accused No. 1 Kamal Jugolkishor Laddha present in the premises looking to the business of the firm. On disclosing her identity as Food Inspector, she drew samples of food articles viz. Badishep (Fennel) which was stored in open gunny bag weighing approximately 30 Kg. The complainant purchased 45 gms. of Badishep from the said gunny bag for Rs. 18/- in presence of the witnesses. After such sample was collected, it was sealed in three parts and one part was forwarded to the Public Analyst, Public Health Laboratory, Pune, for analysis. The two remaining sealed parts were delivered to the Local (Health) Authority and Health Officer, Municipal Corporation, Amravati. The report of the Public Health Laboratory, Pune revealed that the sample was adulterated and, therefore, a complaint case came to be filed against the accused persons who are admittedly partners of the firm M/s. Laddha Brothers. 3. It is the contention of the applicants who are original accused Nos. 3, 4 and 5 that they are not liable to be prosecuted as they were neither in charge nor responsible for conducting the business of the firm as they were sleeping partners and as such by virtue of provision of section 17 of the Food Adulteration Act, they cannot be prosecuted as deemed to be guilty of the offence and liable to be proceeded and punished accordingly. They, therefore, filed an application vide Exhibit 38 for their discharge. The learned C.J.M. vide order dated 17-9-1998 rejected the application, against which the applicants have preferred the instant revision application. 4. Mr. De, the learned Counsel for the applicants submits that it is settled law that if persons who are directors of the company or partners of the firm, are not, at the time when the offence was committed, were in charge or responsible of the company or the conduct of the business of the company, then they cannot be prosecuted. Mr. De, the learned Counsel for the applicants submits that it is settled law that if persons who are directors of the company or partners of the firm, are not, at the time when the offence was committed, were in charge or responsible of the company or the conduct of the business of the company, then they cannot be prosecuted. It is further contended that the complaint itself should disclose that such directors or partners of the firm were actually in-charge of and were responsible for the company or firm for the conduct of the business and then only the case can be made out against them otherwise they deserve to be discharged. Mr. De has placed reliance on the case of (Delhi Municipality v. Ramkisan)1, 1983(1) S.C.C. 1 and (State of Haryana v. Brij Lal Mittal and others)2, A.I.R. 1998 Supreme Court 2327 in support of his contention. 5. Mr. Yengal, the learned A.P.P. submits that there is a specific provision under section 17(a)(i) which clearly gives an option to persons who are the directors or partners of a company or partnership firm to nominate such person as in-charge of and was responsible to the company for the conduct and business of the company as provided under sub-section (2) and in absence of any such nomination, Clause (a)(ii) of sub-section (1) states that 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, therefore, all the partners of the firm are liable to be prosecuted. It is submitted that in the present case, though the original accused No. 2 is shown to be the Managing Partner, at the relevant time, when the Food Inspector visited the establishment and drew the samples, the business was being looked after by the accused No. 1 i.e. son of accused No. 2 and, therefore, it cannot be said that the other partners were not engaged in the business of the firm and, therefore, the impugned order does not call for any interference. 6. Section 17(1) and section 17(2) read as under: 17. 6. Section 17(1) and section 17(2) read as under: 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 (hereafter 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. (2) Any company may, by order in writing, authorise any of its directors or managers (such manager being employed mainly in a managerial or supervisory capacity) to exercise all such powers and take all such steps as may be necessary or expedient to prevent the commission by the company of any offence under this Act and may give notice to the Local (Health) Authority, in such form and in such manner as may be prescribed, that it has nominated such director or manager as the person responsible, along with the written consent of such director or manager for being so nominated. Explanation.---Where a company has different establishments or branches or different units in any establishment or branch, different persons may be nominated under this sub-section in relation to different establishments or branches or units and the person nominated in relation to any establishment, branch or unit shall be deemed to be the person responsible in respect of such establishment, branch or unit.” In the case of (R. Banerjee and others v. H.D. Dubey and others)3, A.I.R. 1992 Supreme Court 1168, the Supreme Court, after taking into consideration the case of Delhi Municipal Corporation v. Ramkishan (cited supra) examined the implications of section 17 and observed in para 4 of the judgment as under: “It is clear from the plain reading of section 17 that where an offence under the Act is alleged to have been committed by a company, where the company has nominated any person to be in-charge of, and responsible to, the company for the conduct of its business that person will be liable to be proceeded against and punished for the commission of the offence. Where, however, no person has been so nominated, every person who at the time of the commission of the offence was in-charge of, and responsible to, the company for the conduct of its business shall be proceeded against and punished for the said crime. Even in such cases the proviso offers a defence, in that, the accused can prove his innocence by showing that the offence was committed without his knowledge and notwithstanding the exercise of due diligence to prevent it. The scheme of sub-section (1) of section 17 is, therefore, clear that the cases where a person has been nominated under sub-section (2) of section 17, he alone can be proceeded against and punished for the crime in question. It is only where no such person has been nominated that every person who at the time the offence was committed was in-charge of, and was responsible to, the company for the conduct of its business can be proceeded against and punished. The proviso, however, lays down an exception that any such person proceeded against shall not be liable to be punished if he proves that the offence was committed without his knowledge and that he had exercised all due diligence to prevent the commission thereof. The proviso, however, lays down an exception that any such person proceeded against shall not be liable to be punished if he proves that the offence was committed without his knowledge and that he had exercised all due diligence to prevent the commission thereof. Sub-section (2) of section 17 empowers the company to authorise any of its directors or Managers to exercise all such powers and take all such steps as may be necessary or expedient to prevent the commission by the company of any offence under the Act. It further empowers the company to give notice to the Local (Health) Authority in the prescribed from that it has nominated a Director or Manager as the person responsible to the company for the conduct of its business. This has to be done with the written consent of the nominated Director or Manager. Where a company has different establishments or branches or units, different persons may be nominated in relation to the different establishment/branches/units and the person so nominated shall be deemed to be the person responsible in respect of such establishment, branch or unit. Sub-section (4) of section 17 overrides the preceding sub-sections and posits that where an offence has been committed by a company and it is proved that the offence was 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, other than the one nominated, such Director, Manager, Secretary or other officer shall also be deemed guilty and be liable to be proceeded against and punished for the same. This sub-section, therefore, makes it clear that notwithstanding the nomination under sub-section (2) of section 17 and notwithstanding Clause (a)(i) of sub-section (1) of section 17, any Director, Manager, Secretary or other officer of the company, other than the nominated person, can be proceeded against and punished if it is shown that the offence was committed with his consent or connivance or negligence. It is crystal clear from the scheme of section 17 that were a company has committed an offence under the Act, the person nominated under sub-section (2) to be in-charge of, and responsible to, the company for the conduct of its business shall be proceeded against unless it is shown that the offence was committed with the consent/connivance/negligence of any other Director, Manager, Secretary or Officer of the company in which case the said person can also be proceeded against and punished for the commission of the said offence. It is only where no person has been nominated under sub-section (2) of section 17 that every person, who at the time of the commission of the offence was in-charge of and was responsible to the company for the conduct of its business can be proceeded against and punished under the law.” 7. There has been specific averments in the complaint that the accused persons are doing business of selling of various kind of edible articles at the above said premises. The very fact that though the deed of partnership describes the original accused No. 2 as the Managing Partner, at the relevant time when the Food Inspector visited the establishment, it was accused No. 1 who was found to be managing the affairs of the business of the firm. Therefore, there is nothing on the record to show that the other partners particularly the applicants are the sleeping partners and were not in charge of and were responsible to for the firm for the conduct of its business and, therefore, the complainant was justified in arraigning the applicants as accused along with the other accused persons. 8. In order to ascertain the liability of the partners, reference to the relevant provision of the Indian Partnership Act can be conveniently made. Section 11 of the Indian Partnership Act lays down determination of rights and duties of partners by contract between the partners. It contemplates that the mutual rights and duties of the partners of the firm may be determined by contract between the partners and such contract may be expressed or implied by course of dealing and such terms may be varied by consent of all the partners. It contemplates that the mutual rights and duties of the partners of the firm may be determined by contract between the partners and such contract may be expressed or implied by course of dealing and such terms may be varied by consent of all the partners. Section 12 of the said Act provides for the conduct of the business of the firm by the partners which clearly says that subject to contract between the partners--- (a) Every partner has a right to take part in the conduct of the business; (b) Every partner is bound to attend diligently to his duties in the conduct of the business. (Emphasis supplied). In the present case, it has been tried to be urged before this Court that as per the deed of partnership, it has been agreed that the original accused No. 2 will be the Managing Partner and will be responsible for managing the affairs of the business of the said partnership and that he is only responsible for all the legal liabilities and that for complying with all the legal formalities. But, that does not appear to be so for the simple reason that when the Food Inspector visited the establishment, she found the accused No. 1-Kamal Jugalkishore Laddha present in the premises looking to the business of the firm. That itself shows that though the original accused No. 2 has been stated to be Managing Partner, other partners were also dealing with the business of the firm. Therefore, the defence now proposed to be raised by the other partners that they are not liable for being prosecuted, will be available to them during trial and their prosecution cannot be faulted with. 9. The reliance placed by the learned Counsel for the applicants on the case of State of Haryana v. Brij Lal Mittal and others, A.I.R. 1998 Supreme Court 2327, does not come to the rescue of the applicants for two reasons; firstly, the Supreme Court was not dealing with the situation where inter se rights and liabilities of the parties or the directors of the company was crystallised. On the other hand in R. Banerjee's case, the Supreme Court has made the position clear as to how the liability can be ascertained in order to prosecute the partners of the firm and particularly when there is no nomination under sub-section (2) of section 17 of the Act, filed by the firm. Then it is quite clear that every person who, at the time the offence was committed, was in-charge and responsible for the business and the conduct of the company, shall be deemed to be guilty of the offence and shall be liable to be prosecuted against and punished accordingly along with the company/partnership firm. 10. This Court, therefore, does not find any error or illegality on the part of the learned C.J.M. in dismissing the application filed by the applicants for their discharge. The revision application is, therefore, dismissed. Revision application dismissed. -----