JUDGMENT 1. The Chairperson and Director, Managing Director and Directors of a Company incorporated under the Companies Act, in the name and style of M/s. Shree Renuka Sugars Limited are in petition seeking to quash the proceedings on Private Complaint bearing No.4/2009, now converted to C.C.No.309/2009 on the file of the Prl. Civil Judge (Jr. Dn.) and JMFC, Hospet, initiated by the first respondent for the contravention of the provisions of Sugar Cane (Control) Order, 1966, an offence punishable under the provisions of Section 3 of the Essential Commodities Act, 1955 (for short, the ‘E.C. Act’). The Company of which the petitioners are Managing Director and Directors is not in the party array nor the State, even though it is state that the private complaint has now transformed into a criminal prosecution. 2. I have heard Sri Veeresh R. Budihal and Prashant Goudar, learned Counsel for the petitioners and Senior Advocate Sri Shantanu, learned Counsel for respondent No.1, who have at length for and against the relief sought for in the petition and have supplemented their arguments drawing citational support from various decisions of this Court and the Apex Court. 3. Before I advert to the grounds so urged by both sides, a brief reference to the factual matrix, needs reference. 4. The first respondent herein, a Company incorporated under the Companies Act in the name and style of M/s. India Sugars and Refineries Limited, Chittawadigi, Hospet, claims to be in business, claims to be engaged in manufacture of sugar in the State of Karnataka with its factory situate within the territorial limits of the learned jurisdictional Magistrate, before whom the case is now pending. As the sugar cane has been declared as an essential commodity under the provisions of the E.C. Act, in exercise of powers conferred by the Statute on the State Government, several orders have been passed regulating the supply, procurement and production of sugar. In that regard an order called Sugar Cane (control) Order, 1966, is promulgated by the Central Government in exercise of its powers under Section 3 of the E.C. Act restricting discretionary sale by the growers. Under the said order, the minimum price for purchase of sugar cane is fixed taking into account several factors enumerated therein viz., cost of cultivation, the probable income which an agriculturist can expect from growing alternative crops etc. Under the said order, the minimum price for purchase of sugar cane is fixed taking into account several factors enumerated therein viz., cost of cultivation, the probable income which an agriculturist can expect from growing alternative crops etc. The grower is, agriculturist can expect from growing alternative crops etc. The grower is, therefore, viz., cost of cultivation, the probable income which an agriculturist can expect from growing alternative crops etc. The grower is, therefore, bound to sell sugar cane to the notified factories at price specified therein, which is linked to the basic recovery of 9%. 5. In short, the complainant’s a case is that a minimum procurement rate is fixed for sale and purchase of sugar cane. Reference is made to clause 6 of the sale order, which empowers the Central Government to reserve an area for each sugar factory having regard to its crushing capacity and the minimum quantity of sugar cane that is required for the purpose of crushing and thereby, restricting sale or purchase inter alia between any other Factory and the growers except notified factories. Such factory is indicated in the notification. The complainant claims to have such preferential right of procurement under such orders from the cane growers in the notified area. 6. The grievance of the complainant is that despite fixation of such minimum price of sugar cane by order dated 31.03.2008 and fixing the rate at Rs.829.80Ps., per Metric Ton of Sugar, the complainant has not been able to procure sugar cane from the growers within the reserved area because of undue interference. The interference not only from the prospective purchasers, but, resistance from the cane growers which lead to review of the sale price and it has enhanced from Rs.829.80Ps. Per metric Ton to Rs.1,100/- per metric Ton. The complaint was willing to pay the said rate fixed after negotiation. 7. As things stood thus, it is alleged that the petitioners herein, by themselves and through the Company they represent, namely, M/s. Shree Renuka Sugars Limited, dishonestly and fraudulently, induced the farmers / growers of sugar cane to deliver to them the agricultural produce at a rate agreed between them to the detriment of the complaint. Such inducement was deliberately to defraud the complainant and thereby cause loss. Such inducement was deliberately to defraud the complainant and thereby cause loss. Reference is also made to the pivotal role played by Raitara Sangha with the petitioners herein for supply of sugar cane from the reserved area in contravention of the standing orders issued by the Central Government and also the State Government. Thus, it is alleged that the Company namely, M/s. Shree Shree Renuka Sugars Ltd., in contravention of the control order and in active connivance with the Raitara Sangha, thereby, committed the offence of criminal breach of trust punishable under Sections 403 and 405 of IPC. It is further alleged that forewarning issued by the complainant to the accused to desist from such act, through a notice was of no avail. 8. To sustain its charge against the petitioners and the company they represent it is alleged that on 28.11.2008, the complainant did its best to stop the illegal transportation of sugar cane from the reserved area of the complainant through a representation to the Deputy Commissioner, (the competent authority under the provisions of the Sugar Control Order), but, he also failed to take appropriate action, which encouraged the petitioners. 9. Reference is made to Writ Petition No. 31532/2008 filed by the complainant seeking restraint upon the accused and for issuance of appropriate writ against the Deputy Commissioner, in which it is alleged that the first accused-Company sought to be impleaded as a party. In the subsequent event, the Deputy Commissioner is said to have passed an order on 22.12.2008 directing the petitioners herein the Company not to transport / purchase / receive sugar cane from the reserved area in favour of the Company. That order is also alleged to have been contravened, though they had full knowledge of the impact of their activity and the consequences for its violation. 10. So urging the complainant sought prosecution of the petitioners individually holding them vicariously liable for the acts of the Company, of which they are Directors. Charges are raised against them for the offences punishable under Sections 403, 405, 424 and 420 of the IPC., based on the allegations, which I have referred to above. 11. Learned jurisdictional Magistrate by order dated 11.03.2009, entertained the complaint and issued process in C.C. to secure presence of the petitioners as also the Company, which they represented. The petitioners are aggrieved by the said order. 12. 11. Learned jurisdictional Magistrate by order dated 11.03.2009, entertained the complaint and issued process in C.C. to secure presence of the petitioners as also the Company, which they represented. The petitioners are aggrieved by the said order. 12. Learned Counsel for the petitioners, having referred to these circumstances would contend that no cause is made out to initiate any action for the offences punishable under Sections 403, 405, 424 and 420 of IPC., and would contend that in order to maintain such an action, the must be allegations which attract the ingredients of the charges raised. It is alleged the complainant has suppressed material facts while initiating action and in this regard, they contend the respondent is a sick industry and has approached Board For Industrial and Financial Re-construction, which issue is pending consideration. The respondent had committed default in making payment of statutory minimum price (SMP) to the sugar cane growers, consequent to which, several litigations germinated creating its liability to the tune of Rs.6.5 Crores. The Commissioner for Cane Development and Director of Sugar in Karnataka by order dated 26.04.2008, had ordered recovery of the sugar cane arrears under the provisions of the Sugar Cane (Control) Order, 1966, copies of which are made available vide Annexures ‘A’, ‘B’ and ‘C’ respectively. It is alleged the only intention of the complainant is to block the sugar cane growers of its reserved area from supplying the sugar cane to the factory of their choice and had filed writ petition in W.P. No.31532/2008, in which writ petition, interim order as seen from the order dated 05.12.2008. The writ appeal against the said order dated 05.12.2008 in W.A. No.5139/2008 is also another attempt of the complainant to prevent the sugar cane growers from disposing off the yield. Dismissal of the said Writ Appeal is pointed out as a circumstance to show that the conduct of the complainant was not fair and its interest was only to prevent sale and produce of the sugar cane by such litigations. 13. As regards allegation of contravention of the Sugar Cane (Control) Order is concerned, the petitioners vehemently deny having indulged in any act, within the mischief of the said Order and they would also contend that there is no illegal procurement of sugar cane by the Company – M/s: Shree Renuka Sugars and there is no violation of any standing orders. 14. 14. Apart from denial of charge leveled against the Company of having indulged in illegal procurement of sugar cane in contravention of the standing orders, the petitioners seek to contend that the allegations so made, if any, are confined to the Company, which is a juristic person and no case is made out to initiate or sustain prosecution against them on the principle of vicarious liability incidentally, reference is made to the order of this Court in Crl.P.No.7354/2009 filed by M/s. Shree Renuka Sugars Limited questioning the impugned order and the order and remanding the case back to the Trial Court for consideration of grounds afresh and to pass appropriate order. 15. The legal issues raised in this petition are that under the provisions of Section 10 of the E.C. Act, even if there is a ground to initiate prosecution against a Company, every person who, at the time the contravention 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, would be liable and not all the Directors. With reference to sub-section (2) of Section 10, it is urged that no doubt, Directors would also be liable along with the principal offender i.e., the Company, but, such action can be sustained only when there is a proof that by consent or connivance crime was committed or are attributable to any neglect on their part. In other words, what is urged is as regards petitioner Nos. 3 to 11 are concerned, the prosecution cannot be sustained for want of material particulars about the alleged overt acts, to constitute the offence. As regards petitioner No.1, the Chairman and petitioner No.2, the Managing Director is concerned, it is urged that even against them, if action is to be sustained, there must be sufficient material to show that they at the relevant time, when the offence was committed, were responsible, in charge of or answerable for the business of the Company to the Company. 16. Per contra, the learned senior Advocate, Sri. 16. Per contra, the learned senior Advocate, Sri. Shanthanu appearing for respondent No.1 – Company reiterates the substance of the allegation from the complaint to show that the petitioners’ undisputedly were the Managing Director and Directors of M/s. Shree Renuka Sugars Ltd., and they indulged in purchase of sugar cane from the area reserved for the complainant in contravention of the Sugar Cane (Control) order, 1966 and undisputedly, they had knowledge of the things. It is alleged that each one of the petitioner had actively participated in the process of procurement of the sugar cane in contravention of the standing order and had also been a party to prevent sale of sugar cane from the reserved area by the sugar cane growers to the complainant. Reference is made to the notice issued by the complainant to the petitioners informing them of their misdeeds and calling upon them to desist from such indulgence holding threat of legal action. Learned Counsel would further contend that each one of the petitioner had by himself or herself participated in negotiation for purchase of sugar cane from the sugar cane growers directly, which was done by them in their personal capacities for the benefit of the Company they represent and to the detriment of the complainant. Therefore, they have to answer the charge against their overt act. He would submit that presumption of guilt is available against the person, who at the time of commission of offence was the Managing Director or the Principal Offence was the Managing Director or the Principal Officer of the Company and that presumption would continue to apply even to the category of persons shown in sub-section (2) of Section 10 of E.C. Act, unless it is proved otherwise. Therefore, it is urged that at this stage, when the proceedings are in the initial stage of securing the presence of the accused, rowing enquiry is not permissible to decide whether the allegations made against the petitioners would stand proved or not. He submits that when the accusation is made, indicating commission of the alleged offence, it is enough to proceed against them and also to frame charge. Only during trial upon proof led by the complainant of their involvement and participation, petitioners can urge defence to rebut the presumption of guilt and to show that they had not either connived or been a party to the alleged offence. 17. Only during trial upon proof led by the complainant of their involvement and participation, petitioners can urge defence to rebut the presumption of guilt and to show that they had not either connived or been a party to the alleged offence. 17. When the provisions of Section 10 of the E.C. Act was brought to his notice to elicit whether the petitioners could also be proceeded against along with the principal offender in the absence of direct allegations against them of commission of the alleged offence, learned Counsel would contend that the petitioners apart from being liable for prosecution under Section 10 of the E.C. Act are liable for action under Section 8 of the E.C. Act for abetment. In view of what is urged by both sides, it will be appropriate to raise the following questions for decision: 1. Whether under the provisions of Sections 10 of the E.C. Act, Director and other officers of the Company, who was not either Principal Officer or in charge of day to day administration be proceeded against on the principle of vicarious liability? 2. Whether under the provisions of sub-section (1) of Section 10 of the E.C. Act, merely because a particular individual is designated as a Principal Officer of the Company, is liable to be proceeded against in the absence of any material to show that he had indulged or, was responsible to the Company for conduct of business? 18. As a regards the first question is concerned, though it has to be considered as a legal issue, brief reference to the nature of allegation would also be necessary. – 19. There is no dispute between the parties that petitioners Nos.3 to 10 are shown as the Directors of M/s. Shree Renuka Sugars and that no other role is assigned to them in the administration or day to day functioning of the Company, namely, M/s. Shree Renuka Sugars. M/s. Shree Renuka Sugars is shown to be the principal offender. It is juristic person. Undoubtedly, the provisions of Section 10 of the E.C. Act permits prosecution against the Company, if offence is said to have been committed by it. The Company, being a juristic person, to prosecute it,’ necessarily the provisions of Section 305 of the Code of Criminal Procedure has to be invoked. Section 305 of the Cr.P.C., reads thus: “305. Undoubtedly, the provisions of Section 10 of the E.C. Act permits prosecution against the Company, if offence is said to have been committed by it. The Company, being a juristic person, to prosecute it,’ necessarily the provisions of Section 305 of the Code of Criminal Procedure has to be invoked. Section 305 of the Cr.P.C., reads thus: “305. Procedure when corporation or registered Society is an accused.—(1) in this Section, corporation means an incorporated Company or other body Corporate, and includes a Society registered under the Societies Registration Act, 1860 (2) of 1860). (2) Where a Corporation is the accused person or one of the accused persons in an enquiry or trial, it may appoint a representative for the purpose of the inquiry or trial and such appointment need not be under the seal of the Corporation. (3) When a representative of a Corporation appears, any requirement of this Code that anything shall be done in the presence of the accused or shall be read or stated or explained to the accused, shall be construed as a requirement that thing shall be done in the presence of the representative or read or stated or explained to the representative, and any requirement that the accused shall be examined shall be construed as a requirement that the representative shall be examined. (4) Where a representative of a corporation does not appear, any such requirement as is referred to in sub-section (3) shall not apply. (5) Where a statement in writing purporting to be signed by the managing director of the Corporation or by any person (by whatever name called) having, or being one of the persons having the management of the affairs of the corporation to the effect that the person named in the statement has been appointed as the representative of the corporation for the purposes of this section, is filed, the Court shall, unless the contrary is proved, presume that such person has been so appointed. (6) If a question, arises as to whether any person, appearing as the representative of a Corporation in an enquiry or trial before a Court is or is not such a representative, the question shall be determined by the Court.” Therefore, the statute also describes a particular mode of representation of accused when it is a Company or a Corporation i.e., a juristic person. If such accused on its own volition indicates any one to represent the Company, then for all purposes including the trial, such person would be representing the Company. In other words, the Company being a juristic person would be a de jure offender and its designate representative would be a de facto offender. This is so far as action under the Criminal Procedure Code is concerned to put a Company to trial, but, when it comes to provisions of Section 10 of E.C. Act, apart from the Company, its principal officers are also made liable. In the instant case, we are concerned with Section 10 of the E.C. Act for prosecution of the offence punishable under Section 3 of the E.C. Act. Section 10 of the E.C. Act reads thus: “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 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 contravention 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 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 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, such director, manager, secretary or other official shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.—For the purposes of this Section, (a) “Company” means any body corporate, and includes a firm or other association of individuals; and (b) “director” in relation to a firm means a partner in the firm.” From the Phraseology of sub-section (1) of Section 10, it is clear that there is element of presumption of guilt against the person, who at the time the contravention was committed, was in charge of and was responsible to the Company for the conduct of the business of the Company. In other words, such a person, who was in charge or responsible to the Company for the conduct of business would be deemed to be guilty of contravention along with the principal offender i.e., the juristic person – company. This element of presumption of guilt available under sub-section (1) of Section 10 is conspicuous by its absence when we read sub-section (2) of Section 10. Sub-section (2) envisages ‘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 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, such Director, Manager, Secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly”. The tenor of sub-section (2) of Section 10 makes it clear that it is only on proof that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of any other officer of the Company, he would be liable. There is clear distinction between sub-section (1) and sub-section (2). While in sub-section (1) the provision itself brings within its mischief any person, who at the time of commission of the offence was in charge of and was responsible to the Company for the business of the Company shall be deemed to be liable, same is not so in the category of persons described in sub-section (2). While in sub-section (1) the provision itself brings within its mischief any person, who at the time of commission of the offence was in charge of and was responsible to the Company for the business of the Company shall be deemed to be liable, same is not so in the category of persons described in sub-section (2). For clarity, reference could also be made to proviso to subsection (1) of Section 10, which reads thus: “Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.” If the legislative intent was to cast such burden also upon the category of persons in sub-section (2) also, but, such proviso is conspicuous by its absence in sub-section (2) of Section 10. Therefore, it makes it clear that the element of presumption against the principal officer of the Company is rebuttable casting burden upon such officer, whereas in sub-section (2), there is no such burden cast on the category of persons to prove their innocence or to prove that they were not responsible for the contravention. Pertinently, it is to be noticed that the words used in sub-section (2) is if proved, which pre-supposes sufficient material proof to establish that such person (covered by subsection (2) by his or their consent, connivance or attributable negligence, indulged in the crime. If we keep this definition in mind and examine the fact situation in this case, it was imperative the complainant should have made statement on fact, to indicate with clarity “over act” of each of the persons arraigned as accused to establish a prima facie case to proceed against them. But, perusal of complaint shows the allegations are general in nature. It will be appropriate to refer to the nature of allegations in the complaint, which sets to rest any doubt on this point. “11. The complainant states that while they were undergoing turbulent times with their business, particularly with ryots growing sugarcane in the reserved areas of the complainant company, the accused Nos.1 to 11 named above, with dishonest and fraudulent intention, induced the said ryots to remove and deliver to them, the sugarcane earmarked for the complainant as per law. “11. The complainant states that while they were undergoing turbulent times with their business, particularly with ryots growing sugarcane in the reserved areas of the complainant company, the accused Nos.1 to 11 named above, with dishonest and fraudulent intention, induced the said ryots to remove and deliver to them, the sugarcane earmarked for the complainant as per law. Upon the dishonest inducement of the Accused Nos.1 to 11, and immediately thereafter, the office bearers of Hosper Raithara Sangha negotiated with the accused No.1 whereby they agreed to supply and the first accused. Company agreed to purchase the sugarcane from the reserved area of the complainant, which is contrary to the provisions of the Essential Commodities Act, 1955 and the Sugarcane (Control) Order, 1966. The complainant states that this action of the accused Nos.1 to 11 amounts to an offence of ‘Dishonest or fraudulent removal of property’ punishable under Section 424 of IPC. The complainant further states that the accused Nos.1 to 11 have dishonestly misappropriated and have converted for their own use, the said property i.e., sugarcane in violation of law and have committed the offence of criminal breach of trust punishable under Sections Accused Nos.1 to 11 in this manner, with a criminal intention right from the inception induced the above said ryots to deliver to them, the property i.e., sugarcane grown in the area reserved in favour of the complainant and deliverable to the complainant, in order to make illegal gains and cause further losses and harm to the complainant, thus have committed offence of cheating punishable under Section 420 IPC. 12. In fact, earlier to this other companies by name M/s. Sadashiva Sugars Ltd., Alamatti, M/s. Sirugappa Sugars and Chemicals Ltd., Deshanur and others had also started illegally purchasing the sugarcane grown in the reserved area of the complainant Company and as such it was obliged to complain the same to the Deputy Commissioner, Bellary by a complaint dated 28.11.2008 to stop the illegal transportation of the sugarcane from the reserved area of the complainant. The Deputy Commissioner, Bellary, who is the competent authority under the Sugarcane (Control) Order, 1966, failed to take action against the concerned and prevent illegal transportation of sugarcane from the reserved area of the complainant sugar factory. Then the complainant approached the Hon’ble High Court of Karnataka in filing W.P. No.31532/2008. The Deputy Commissioner, Bellary, who is the competent authority under the Sugarcane (Control) Order, 1966, failed to take action against the concerned and prevent illegal transportation of sugarcane from the reserved area of the complainant sugar factory. Then the complainant approached the Hon’ble High Court of Karnataka in filing W.P. No.31532/2008. However, the prayer in the writ petition is mainly against the Deputy Commissioner and others. Therefore, the present complaint is maintainable. In pursuance of the same, the Deputy Commissioner, Bellary, has issued a general Order dated 22.12.2008 prohibiting sale and supply of sugarcane grown in the reserved area to any other factory other than the complainant-company. In view of the said order of the Deputy Commissioner, Bellary the accused No.1 Company is not supposed to purchase/receive any sugarcane from the said reserved area and any violation thereof would amount to an offence under Section 7 of the Essential Commodities Act and thereby, they are liable for prosecution under the provisions of the Essential Commodities Act, 1955. Despite the said order when the illegal lifting of sugarcane from the reserved area continued unabatedly, then the Deputy Commissioner, Bellary, issued another Order dated 24.12.2008 whereby he directed the Assistance Commissioner, Tahsildar and Deputy Superintendent of Police of Hospet to prevent the said illegal transportation of sugarcane and also to seize the vehicles involved in such illegal transportation. It would also be pertinent to state herein that in the case of M/s. Siruguppa Sugars and Chemicals Ltd., named above, which was also illegally lifting the sugarcane from the reserved area, the Deputy Commissioner, Bellary, has issued totally four orders dated 04.01.2009, 05.01.2009, 15.01.2009 and 17.01.2009 clearly prohibiting them from receiving the sugarcane from the reserved area and also directing the taluka level officers to strictly implement the orders by seizing the transport vehicles.” From the extracted portion of the complaint, it is noticed that there is to allegation spelling out what was the role played by each of the petitioners herein (who fall in the categories of persons in sub-section (2) of Section 10 of E.C. Act) to hold them responsible for the alleged contravention. Allegations are: “accused Nos.1 to 11 named above, with dishonest and fraudulent intention, induced the said ryots to remove and deliver to them, the sugar cane earmarked for the complainant as per law. Allegations are: “accused Nos.1 to 11 named above, with dishonest and fraudulent intention, induced the said ryots to remove and deliver to them, the sugar cane earmarked for the complainant as per law. Upon the dishonest inducement of accused Nos.1 to 11 and immediately thereafter, the office bearers of Hospet Raithra Sangha negotiated with accused No.1, whereby, they agreed to supply and 1st accused-Company agreed to purchase the sugarcane from the reserved area of the complainant, which is contrary to the provisions of the Essential Commodities Act, 1955 and the Sugarcane (Control) Order, 1966”. On this basis, the complainant presumes that the purchase of sugar cane by the first accused i.e., the Company was result of inducement by the accused (petitioners herein) upon sugar cane growers. If that be so, who did what must necessarily be spelled out for ascertainment as to whether the alleged overt acts come within the mischief of Sections 403, 405 and 424 of IPC. The provisions of Sections 403 and 405 of IPC, would be available if the allegations even remotely suggest that the accused dishonestly misappropriated or converted to their own use that property, or dishonestly used or disposed of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged. 20. The allegations are that the accused induced the sugar cane growers to sell the sugar cane to them for a price, higher than the price, which the complainant was liable to pay for procurement. The purchase is undoubtedly from the growers by the Company and the same may be in contravention of the standing orders under the Sugar Cane (Control) Order, but, for the purpose of bringing the offence under the mischief of Section 403 of IPC, dishonesty in the transaction must have affected the owner there of namely, the sugar cane growers. Even under Section 405 of IPC, it is necessary to prove that the accused (petitioners herein) were in any manner entrusted with the property or with any dominion over the property, had converted to their own use that property dishonestly or disposed of the same in violation of any direction of law to the detriment of the actual owner. Even under Section 405 of IPC, it is necessary to prove that the accused (petitioners herein) were in any manner entrusted with the property or with any dominion over the property, had converted to their own use that property dishonestly or disposed of the same in violation of any direction of law to the detriment of the actual owner. How far these provisions would be available to prosecute the Company is a different matter, but, as far as the petitioners are concerned, we expect at least a statement on fact as to how the property was entrusted to or in what manner there is dishonesty in its appropriation. 21. Learned Counsel for the petitioners has further referred to para 13, wherein the complainant has averred that it had issued a legal notice dated 31.01.2009 to all the accused (petitioners herein) informing them that the act of purchasing sugar cane from the reserved area would amount to offence under Section 7 of the E.C. Act. The averments in the said para are also of no avail for the reasons explained above. If at all there was caution to the accused about the provisions of Section 7 of the E.C. Act and no warning is given regarding launching of prosecution for the offence defined under the Indian Penal Code. 22. I do not wish to examine the nature of the allegations for the purpose of deciding whether the allegations make out constitute any of the offences alleged. What we are now attempting to see is whether there is any material to show that for the alleged offences committed by the Company, whether the petitioners herein were party in any way. The question is about their vicarious liability be prosecuted. Undoubtedly, the procurement of sugar cane is by the Company and the petitioners, being Directors are being roped in to be prosecuted, without disclosing their over acts. 23. This issue had come up for consideration before the Bombay High Court (Aurangabad Bench) in the case of Umesh Sharma and another Vs. S.G. Bhakta and others (2002 Crl. L.J. 4843) and the Bombay High Court considering the scope of Section 34 of the Drugs and Cosmetics Act, observed in paras 15 and 16 of the judgment as under. “15. In the matter of Ram Kishan Rohatagi (1983 Crl. S.G. Bhakta and others (2002 Crl. L.J. 4843) and the Bombay High Court considering the scope of Section 34 of the Drugs and Cosmetics Act, observed in paras 15 and 16 of the judgment as under. “15. In the matter of Ram Kishan Rohatagi (1983 Crl. L.J. 159 (supra), the Apex Court was concerned with the case of Manager and not that of Managing Director. For the purpose of finding out distinction in the roles played by these two authorities in the life of a Company, I have referred to the definitions of these terms from the Companies Act, 1956. Section 2(24) defines the word “Manager” as follows:- “2(24): Manager means an individual (not being the managing agent) who, subject to the superintendence, control and directions of the Board of Directors, has the management of the whole or substantially the whole of the affairs of the company, and includes a Director or any other person occupying the position of Manager by whatever name called and whether under the contract of service or not.” Section 2(26) defines, “Managing Director” thus” “2(26): Managing Director means a Director, who by virtue of an agreement with the company or a resolution passed by the company in the general meeting or by its Board of Directors or by virtue of its memorandum or articles, of association is entrusted with substantial powers of the management, which would not otherwise be exercisable by him and includes the Director, occupying the position of Managing Director by whatever name called.” The distinction between Manager and Managing Director is that, while the Manager by virtue of his office has the management of whole or substantially whole of the affairs of the company, the Managing Director has to be entrusted with such powers of the management as may be thought fit. The powers of management are required to be delegated upon the Managing Director, either by an agreement with the company or by a resolution passed by the Board of Directors in its general meeting or by virtue of its memorandum or article of association. It is not the name by which the person is called but the position, he occupies and the functions and duties which he discharges that determines whether in fact, he is in charge of and responsible to the company or not. It is not the name by which the person is called but the position, he occupies and the functions and duties which he discharges that determines whether in fact, he is in charge of and responsible to the company or not. Taking this distinction into consideration, there need not be a presumption of accused No.3 being in-charge of or responsible to the company for production of objectional drug. Although food Inspector has obtained information from the company itself that the respondent No.3 is he Managing Director, further details such as agreement between him and the company or resolution passed by the Board of Directors etc., by which substantial powers of management are conferred upon accused No.3 are neither obtained nor incorporated in the complaint. 16. On reference to Section 34 as a whole, there is a presumption of being guilty against the person, who is in-charge of and responsible to the company, and such a person is liable to be punished unless he proves that offence was committed, without his knowledge or inspite of exercise of due diligence to prevent the commission of offence. By virtue of sub-section (1) by non-obstante clause in its opening part, the prosecution is oblige to prove that the offence has been 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 before drawing a presumption of guilt against such individual. Taking into consideration the overriding effect given to sub-section (2) it will be responsibility of the prosecution to first indicate and prove that objectionable drug was manufactured with the consent or in connivance of the Managing Director or production of the said drug is attributable to any neglect on the part of the Managing Director, only thereafter he would be presumed to be the person in charge of and is responsible to the company for conduct of business and will be obliged to establish absence of knowledge or exercise of due diligence in order to seek exoneration.” Learned single Judge while dealing with this issue has referred to case of Ram Kishan Rohatagi (1983 Crl. L.J. 159), where the Apex Court considering the case of indictment of a Manager held that there must be element of guilt manifestly appearing from the allegations made. L.J. 159), where the Apex Court considering the case of indictment of a Manager held that there must be element of guilt manifestly appearing from the allegations made. Then referring to Section 2(26) where the Managing Director is defined, the Court observed thus: “17. In the recent judgment in the case of U.P. Pollution Control board Vs. Mohan Meakins Ltd., (2000) 3 SCC 745 : (2000 Crl. L.J. 1799), the order issuing process passed by the Chief Judicial Magistrate against the Directors of M/s. Mohan Meakins for the offence under the Water (Prevention and Control of Pollution) Act, 1974 was quashed by the Sessions Judge. The Pollution Control Board moved the High Court in revision, which was dismissed by the High Court. While dismissing the appeal preferred by the Pollution Control Board and directing the Trial Court to proceed with the case, Supreme Court observed in para No.12: “In the above context what is to be looked at during the stage of issuing process is whether there are allegations in the complaint by which the Managers or Directors of the Company can also be proceeded against, when the Company is alleged to be guilty of the offence.” (Emphasis added) The complaint contained averments that accused persons i.e., Directors / Managers / Partners of M/s. Mohan Meakins were responsible for constructing the proper works and plant for the treatment of their highly polluting trade effluent so as to conform to the standard laid down by the Board. It also alleged that accused persons were deliberately avoiding to abide by the provisions of the said Act. It was in the light of factual averments in the complaint, the Supreme Court was of the view that the Directors and Managing Directors of the company were liable to be proceeded against according to law. In the matter at hands, except the bare statement that accused Nos.3 and 4 are the Directors of the company, there are no averments that they are in charge of or responsible to the company, not even in the form of bald statement.” From the said judgment, it is clear that where a Company was sought to be prosecuted for contravention of the Drugs Control Act, it was noticed that the Managing Director was not bestowed with any responsibility for manufacture of drugs, which was actually the duty of a separate officer in the Company. In that context, it was held that merely by designation, the Managing Director would not be liable for prosecution unless it is shown that he was in charge of and responsible to the Company for its “business”. Reference could also be made to decision of the Apex Court in the case of U.P. Pollution Control Board Vs. Mohan Meakins Limited, (2000) 3 SCC 745 . 24. In the case of R.K. Khandelwala and another Vs. State (1965(2) Crl. L.J. 439), Allahabad High Court, with reference to the liability of the Managing Director held that the Director cannot be equated to the position of Managing Director for the purpose of prosecution as also the Managers. 25. From the case laws, it is clear that the statute has to be read and interpreted in its nakedness and when we do that we find clear distinction between the pedestal on which the principal officers of the company and other Directors and the person in-charge of the business are placed. I am, therefore, satisfied that in the instant case the position of the petitioners in the Company must be taken into consideration to decide whether the action is justified. As far as petitioners 3 to 11 are concerned, they fall in the category of persons referred to in sub-section (2) of Section 10 of the E.C. Act and in the absence of any material allegations showing their overt acts revealing active connivance, consent or attributable negligence, it will be improper to sustain any prosecution against them. As regards petitioners 1 and 2 are concerned, first petitioner claims to be the Chairman and Director, while, second petitioner is described as a Managing Director, they stand on a different footing and would come in the category of persons referred to in sub-section (1) of Section 10 of the E.C. Act. It is also noticed that by virtue of their office, they could be termed as persons being in charge or responsible to the Company for its business. An element of presumption being available against them, generally they would also be proceeded against along with the Company till they rebut the presumption of guilt raised statutorily against them. However, in the instant case, there appears to be no dispute as far as petitioners 1 and 2 are concerned, who have themselves described their designations. An element of presumption being available against them, generally they would also be proceeded against along with the Company till they rebut the presumption of guilt raised statutorily against them. However, in the instant case, there appears to be no dispute as far as petitioners 1 and 2 are concerned, who have themselves described their designations. As far as petitioner No.1 is concerned, she claims to be the Chairman and Director while the second petitioner claims to be the Managing Director. 26. For the reasons discussed in the paras supra, petitioners shall succeed in their legal pursuit. The proceedings initiates against petitioners 3 to 11 in PCR No.4/2009 now converted into CC No.309/2009 on the file of Principal Civil Judge (Jr.Dn.), JMFC, Hospet for the offences punishable under Sections 403, 405, 424 and 421 of IPC and also for the offences punishable under Sections 7 and 8 of Essential Commodities Act, 1955, are quashed. Consequently, the order dated 11.3.2009 summoning them to answer the charges is also quashed. 27. As this Court by its order dated 11.6.2009 in Crl.P.No.7354/2009 has set aside the impugned order against the principal offender M/s. Shree Renuka Sugars Limited (accused No.1) and has remanded the matter to the Trial Court for reconsideration, the impugned order in CC No.309/2009 (PCR No.4/2009) in so far as it relates to petitioners 1 and 2 (accused Nos.2 and 3) is also set aside. The matter is remanded to the Trial Court directing it to reconsider the averments in the complaint, sworn statement and other relevant documents to ascertain whether it makes out a prima facie case to proceed against them for the offences punishable under Section 403, 405, 424, 420 of IPC and Sections 7 and 8 with reference to sub-section (1) of Section 10 of the Essential Commodities Act, 1955. 28. Petition stands disposed of in terms of this order.