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2010 DIGILAW 2461 (ALL)

YOGENDRA SINGH @ JOGENDRA SINGH v. RANBIR SHARMA

2010-08-12

KANT TRIPATHI

body2010
JUDGMENT Hon'ble Shri Kant Tripathi,J. 1. Heard Mr. G.S. Chaturvedi, learned senior counsel for the petitioners and Mr. R.S. Tiwari and Mr. Syed Ali Murtaza for the respondent no.1 and 2 and perused the record. 2. These two petitions under section 482 Cr.P.C. have been filed by the petitioners for quashing the proceedings of criminal case no. 11 of 1991, State vs. Yogendra Singh alias Jogendra Singh & others, pending in the court of Additional Chief Judicial Magistrate, Hapur, Ghaziabad under section 7/16 of the Prevention of Food Adulteration Act, 1954 (hereinafter referred to as 'the Act'). 3. In both the petitions, the question of the maintainability of the aforesaid criminal case is involved, therefore, both the petitions have been heard together and are being disposed of by this common order. 4. The Food Inspector has filed the complaint against the petitioners on the ground that the sample of sugar taken from Simbhaoli Sugar Mills Ltd., Simbhaoli, district Ghaziabad, a company incorporated under the Companies Act (hereinafter referred to as the 'Mill'), was found adulterated by the Public Analyst, therefore, the offence under section 7/16 of the Act was made out against the company. 5. Mr. Yogendra Singh alias Jogendra Singh was Sugar Superintendent of the Mill. Sardar Gurmit Singh Man was the Managing Director and remaining other accused were directors of the Mill. The Administrative Officer of the Mill has also been impleaded as an accused. 6. Mr. G.S. Chaturvedi submitted that the prosecution against the Mill could be instituted in accordance with the provisions of section 17 of the Act. According to that section, complaint could be filed against the person who was authorised under section 17(2) of the Act to exercise powers on behalf of the Mill. In this case there was no such authorisation, therefore, the complaint could be filed against the person who was incharge of, and responsible to, the Mill for the conduct of its business. All the directors of the Mill could not be made accused because there is no averment in the complaint that they were incharge of, and responsible, to the Mill. They could not be prosecuted for the aforesaid offence merely because they were directors of the Mill. 7. Mr. Syed Ali Murtaza, on the other hand, submitted that the directors were responsible for the Mill, therefore, the complaint was maintainable against them. 8. They could not be prosecuted for the aforesaid offence merely because they were directors of the Mill. 7. Mr. Syed Ali Murtaza, on the other hand, submitted that the directors were responsible for the Mill, therefore, the complaint was maintainable against them. 8. The short question which arises for determination in these two petitions is whether it was permissible to launch a prosecution under sub-section (1) of section 17 of the Act against the Directors of the Mill for the commission of the alleged offence. In order to appreciate contention raised on behalf of the s it is necessary to understand the true import of section 17 of the Act, which is as follows: "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 (hereinafter 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. (3) The person nominated under sub-section (2) shall, until- (i)further notice cancelling such nomination is received from the company by the Local (Health) Authority; or (ii) he ceases to be a director or, as the case may be, manager of the company; or (iii) he makes a request in writing to the Local (Health) Authority, under intimation to the company, to cancel the nomination (which request shall be complied with by the Local (Health) Authority.) whichever is the earliest, continue to be the person responsible. Provided that where such person ceases to be a director or, as the case may be, manager of the company, he shall intimate the fact of such cesser to the Local (Health) Authority. Provided further that where such person makes a request under clause (iii), the Local (Health) Authority shall not cancel such nomination with effect from a date earlier than the date on which the request is made. (4) Notwithstanding anything contained in the foregoing sub-sections, 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, [not being a person nominated under sub-section (2)] 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. Explanation - For the purposes of this section - (a) "Company" means any body corporate and includes a firm or other association of individuals; (b) "director", in relation to a firm, means a partner in the firm; and (c) "manager", in relation to a company engaged in hotel industry, includes the person in charge of the catering department of any hotel managed or run by it." 9. It is clear from the plain reading of section 17 of the Act that where an offence under the Act is alleged to have been committed by a company, and the company has nominated any person to be in charge of, and responsible to, the Company for the conduct of its business, the person so nominated will be liable to be proceeded against and punished for the commission of the offence. Where, however, no person has been nominated under section 17(2) of the Act 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 offence. The scheme of sub-section (1) of section 17, therefore, clearly provides that cases where a person has been nominated under sub-section (2) of section 17, he alone can be proceeded against and punished for the offence in question. In absence of such nomination, 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. Sub-section (4) of section 17 of the Act 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 (4), 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 Mill, 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. 10. Mr. 10. Mr. G.S. Chaturvedi further submitted that in regard to the offence or offences committed by a Company, almost a similar provision has been made in most of the enactments. According to him, section 141 of the Negotiable Instruments Act,1881, is pari materia with the provisions of section 17 of the Act. Mr. Chaturvedi relied on the cases of K.K. Ahuja vs. V.K. Vora and another (2010) 2 SCC (Cri) 1181 and National Small Industries Corporation Limited vs. Harmeet Singh Paintal and another (2010) 2 SCC (Cri) 1113, which were under the Negotiable Instruments Act, 1981 and contended that except the Managing Director and Chini Adhikshak Yogendra Singh @ Jogendra Singh, all other s were merely directors and were not in charge of, and responsible to, the Mill and there is also no averment in the complaint that those persons were in any way responsible to and in charge of the Mill. In absence of such averment, the prosecution launched against them is liable to be quashed. 11. In the case of K.K. Ahuja (supra) the Apex Court after referring to various decisions of the Apex Court made the following observations in para 15: "15. The prevailing trend appears to require the complainant to state how a Director who is sought to be made an accused, was in charge of the business of the company, as every Director need not be and is not in charge of the business of the company. If that is the position in regard to a Director, it is needless to emphasise that in the case of non-Director officers, there is all the more the need to state what his part is with regard to conduct of business of the company and how and in what manner he is liable." 12. In the case of National Small Industries (supra) the Apex Court has reiterated the aforesaid principles after placing reliance on various decisions and propounded the following principles in para 39: "39. From the above discussion, the following principles emerge : (i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction. (ii) Section 141 does not make all the Directors liable for the offence. For fastening the criminal liability, there is no presumption that every Director knows about the transaction. (ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company. (iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make the accused therein vicariously liable for offence committed by company along with averments in the petition containing that accused were in-charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with. (iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred. (v) If the accused is Managing Director or Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with. (vi) If the accused is a Director or an Officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in the complaint. (vii) 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." 13. In the backdrop of the aforesaid principles, it seems to be just and expedient to examine the complaint filed by the Food Inspector. According to the averments made in the complaint, the petitioner no.1 of Petition no. 1724/1995 Mr. Yogendra Singh @ Jogendra Singh Chini Adhikshak was present at the time of taking the sample of the sugar. He had stated that the licence of the Mill was in the name of Administrative Officer but surprisingly the name of the Administrative Officer has not been disclosed in the complaint or elsewhere. 1724/1995 Mr. Yogendra Singh @ Jogendra Singh Chini Adhikshak was present at the time of taking the sample of the sugar. He had stated that the licence of the Mill was in the name of Administrative Officer but surprisingly the name of the Administrative Officer has not been disclosed in the complaint or elsewhere. It is stated in the complaint that said Yogendra Singh @ Jogendra Singh and the Administrative Officer are employees of the firm, therefore, in my opinion they can not be held as the person in charge of, and responsible to the Mill. The petitioner no.4 Sardar Gurmit Singh Man was admittedly the Managing Director of the Mill and this fact was not disputed during the course of hearing. In view of the principles laid down in the cases K.K. Ahuja (supra) and National Small Industries (supra) the Managing Director of the company is the person in charge of, and responsible to the company (Mill) for the conduct of its business and can be prosecuted for any offence committed by the company without authorisation as contemplated by sub-section (2) of section 17 of the Act. Therefore, the complaint lodged against Sardar Gurmit Singh Man, the Managing Director of the Mill is maintainable against him. Admittedly the other petitioners of both the petitions are directors of the mill and there is no averment in the complaint that they were in any way in charge of, and responsible to the mill for conduct of its business. There is also no averment that the offence disclosed in the complaint was committed with their knowledge and they failed to prevent commission of the offence by exercising all due diligence. It is also nowhere alleged in the complaint that the offence was committed with the consent or connivance of, or is attributable to any neglect on the part of the Directors of the Mill (other petitioners) and they have been made accused merely on the ground that they were Directors. In absence of these allegations the complaint against the other petitioners (directors of the mill) is not maintainable and is liable to be quashed. 14. Petition No. 1725/1995 is allowed. The petition no. 1724/1995 is partly allowed. Consequently the proceedings of the complaint case no. In absence of these allegations the complaint against the other petitioners (directors of the mill) is not maintainable and is liable to be quashed. 14. Petition No. 1725/1995 is allowed. The petition no. 1724/1995 is partly allowed. Consequently the proceedings of the complaint case no. 11 of 1991 State vs. Yogendra alias Jogendra and others, pending in the court of Additional Chief Judicial Magistrate, Hapur (Ghaziabad) against the petitioners of petition no.1725/1995 and also against the petitioners no.1,2 and 5 to 13 of the petition no.1724/1995 are quashed. However, the proceedings of the complaint case shall continue against the Mill and its Managing Director Sardar Gurmit Singh Man. Interim order, if any, is vacated. 15. The original judgment shall be kept on the file of Criminal Misc. Application (482 CrPC) No. 1724 of 1995. ——————