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2007 DIGILAW 899 (AP)

Hindustan Lever Ltd. , Mumbai v. State

2007-09-14

HILAL NAZKI

body2007
ORDER :-A complaint was filed by the Inspector, Legal Metrology, Mehabubabad against the present petitioner for contravention of Section 39 punishable under Section 63 of the Standards of Weights and Measures Act, 1976 (for short 'the Act') and also under Rule 23(i) punishable under Rule 39(2) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 (for short 'the Rules'). 2. Petitioner is the A-1, who has filed this quash petition mainly on the ground that the offence under Section 63 of the Act carries a punishment of fine which may extend to Rs.5,000/- for the first offence and for second or subsequent offences, imprisonment, which may extend to five years. Learned Counsel for petitioner contends that this is the first offence committed by the petitioner and the Court is bared from taking cognizance of the offence after the expiry of the limitation period of six months. He contends that the complaint discloses that the offence was alleged to have been committed on 22.5.2002, but the cognizance by the Magistrate was taken on 10.12.2002, as such, it was beyond the period of limitation that cognizance was taken, which was illegal. 3. Section 468 Cr.P.C. lays down the period of limitation for the purpose of taking cognizance and for the purpose of that section, the period of limitation has to be determined with reference to the offence. The question whether the date of taking of cognizance by the Magistrate or the date on which the complaint is filed has to be taken for computing the period of limitation, had raised some controversies in this Court and one of the Judges of this Court has disagreed with the view expressed earlier in Criminal Petition No.3572 of 2003 that the date of taking cognizance was relevant for computation of the limitation. The present case was referred to a Division Bench, and the Division Bench, by its order dated 31st of January 2007 reported in 2007 (1) ALD (Crl.) 438 (AP) Hindustan Lever Ltd., Mumbai v. State, held- "Whenever a complaint is filed by a public servant authorized under Section 72 of the Act, the date of filing the complaint will be deemed to be the date of taking cognizance of the offence and not the date when the process is ordered for computing limitation under Section 468 Cr.P.C." 4. Following this judgment, one cannot but come to a conclusion that the present complaint was filed within time, as the offence had come to light on 22.5.2002 and the complaint had been filed on 21.11.2002 i.e. within six months and therefore, the complaint cannot be quashed on this ground. 5. The second ground is that in terms of Section 74 of the Act, if an offence committed under the Act was committed by a Company, 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 as well as the Company, shall be deemed to be guilty of the offence and shall be proceeded against and punished accordingly. But, it is nowhere pleaded in the complaint that A-I was in charge of and was responsible for the conduct of the business of the Company and in the absence of such an allegation, the complaint could have not been taken cognizance of as against A-1. 6. The question came directly before the Supreme Court in S.MS. Pharmaceuticals Ltd. v. Neeta Bhalla, 2005 (2) ALD (Cri.) 595 (SC) = 2005 (8) SCC 89 , when it was considering the import of Sections 141 and 138 of the Negotiable Instruments Act, 1881. The Supreme Court, at the outset, framed the following three questions for consideration- "(a) Whether for purposes of Section 141 of the Negotiable Instruments Act, 1881, it is sufficient if the substance of the allegation read as a whole fulfil the requirements of the said section and it is not necessary to specifically state in the complaint that the person accused was in charge of, or responsible for, the conduct of the business of the Company. (b) Whether a Director of a Company would be deemed to be in charge of, and responsible to, the Company for conduct of the business of the Company and, therefore, deemed to be guilty of the offence unless he proves to the contrary. (c) Even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the Managing Directors or Joint Managing Director who admittedly would be in charge of the Company and responsible to the Company for conduct of its business could be proceeded against." 7. (c) Even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the Managing Directors or Joint Managing Director who admittedly would be in charge of the Company and responsible to the Company for conduct of its business could be proceeded against." 7. It may be noted that in terms of Section 141 of the Negotiable Instruments Act, it is laid down that if the person committing an offence under Section 138 was a Company, 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, as well as the Company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. In fact, Section 141 of the Negotiable Instruments Act and Section 74 of the Standards of Weights and Measures Act, 1976 are coached in identical phraseology. Therefore, the judgment of the Supreme Court would be conclusive. The questions framed by the Supreme Court were answered accordingly and it was held- 'The conclusion is inevitable that the liability arises on account of conduct, act or omission on the part of a person and not merely on account of holding an office or a position in a Company. Therefore, in order to bring a case within Section 141 of the Act the complaint must disclose the necessary facts which make a person liable." 8. In Para 19 of the judgment, specifically the three questions, which were framed, were answered by the Supreme Court in the following terms- "(a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the Company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied. (b) The answer to the question posed in sub-para (b) has to be in the negative. Merely being a Director of a Company is not sufficient to make the person liable under Section 141 of the Act. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied. (b) The answer to the question posed in sub-para (b) has to be in the negative. Merely being a Director of a Company is not sufficient to make the person liable under Section 141 of the Act. A Director in a Company cannot be deemed to be in charge of and responsible to the Company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the Company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases. (c) The answer to Question (c) has to be in the affirmative. The question notes that the Managing Director or Joint Managing Director would be admittedly in charge of the Company and responsible to the Company for the conduct of its business. When that is so, holders of such positions in a Company become liable under Section 141 of the Act. By virtue of the office they hold as Managing Director or Joint Managing Director, these persons are in charge of and responsible for the conduct of business of the Company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141." 9. In terms of answer to question (a), cognizance could not have been taken against 1e petitioner. But the answer to question ;) requires some mention, as the question framed by the Supreme Court was answered 1 the affirmative and it was held that 1anaging Director or Joint Managing director would be admittedly in charge of 1e Company and responsible to the company for the conduct of its business therefore, by virtue of the office they hold Managing Director or Joint Managing director, these persons would be in charge f and responsible for the conduct of its business of the Company and they would covered under Section 141 of the Negotiable Instruments Act. In the present case, it is merely stated in the complaint lat petitioner was the Chairman of the Company and Chairman is not equivalent to a Managing Director in terms of the Company Law, therefore, I do not think the Court should have taken cognizance against the petitioner. Even in sub-section (2) of Section 74 of the Companies Act, there is no reference to the Chairman of the Company. A reference is made to "such Director, Manager, Secretary or other Officer". Under the Companies Act, 'Director' is defined under sub-section (13) of Section 2 as, "Including any person occupying the position of Director, by whatever name called", but Chairman is not defined. Only a reference could be found to it in Section 175 of the Companies Act, which lays down- "175. Chairman of meeting.-(1) Unless the articles of the Company otherwise provide, the members personally present at the meeting shall elect one of themselves to be the Chairman thereof on a show of hands. (2) If a poll is demanded on the election of the Chairman, it shall be taken forthwith in accordance with the provisions of this Act, the Chairman elected on a show of hands exercising all the powers of the Chairman under the said provisions. (3) If some other person is elected Chairman as a result of the poll, he shall be Chairman for the rest of the meeting." Therefore, unless the Articles of the Company provide otherwise, the members personally present in the meeting of the Board, shall elect one of them as Chairman and he would be chairing the meetings of the Board. As such, there are no administrative powers with the Chairman and therefore, unless it is alleged that the Chairman was in charge of and was responsible to the Company for the conduct of the business of the Company at the time the offence was committed, he could not be prosecuted merely because he was Chairman of the Company. 10. Therefore, without pleading as to what was the nature of the duties of the petitioner as a Chairman of the Company, I do not think the cognizance against the petitioner could have been taken. 11. Reference has also been made to a judgment reported in State of Haryana v. Brijlal Mittal, 1998 (1) ALD (Crl.) 883 (SC) = (1998) 5 SCC 343 . 11. Reference has also been made to a judgment reported in State of Haryana v. Brijlal Mittal, 1998 (1) ALD (Crl.) 883 (SC) = (1998) 5 SCC 343 . In Para 8 of this judgment, while considering a similar provision under Section 34 of the Drugs and Cosmetics Act, 1940, the Supreme Court held- "It is thus seen that the vicarious liability of a person for being prosecuted for an offence committed under the Act by a Company arises if at the material time he was in charge of and was also responsible to the Company for the conduct of its business. Simply because a person is a Director of the Company, it does not necessarily mean that he fulfils both the above requirements so as to make him liable. Conversely, without being a Director a person can be in charge of and responsible to the Company for the conduct of its business. From the complaint in question we, however, find that except a bald statement that the respondents: were Directors of the manufacturers, there is 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." 12. For these reasons, I allow this petition and quash the proceedings against the petitioner in S.T.C. No.489 of 2002 on the file of the Judicial Magistrate of First Class, Mahabubabad.