Hindustan Lever Limited, through its Authorized Signatory v. State of Tripura and Shri Biswa Ranjan Adhikari
2014-02-10
S.C.DAS
body2014
DigiLaw.ai
JUDGMENT S.C. Das, J.:- This is a petition filed under Section 482 of Cr.P.C. praying for quashing order dated 01.09.2006 passed by learned Chief Judicial Magistrate, West Tripura, Agartala in Case No. C.R. 2066/2006 whereunder cognizance has been taken under Section 16(1)(a)(i) of the Prevention of Food Adulteration Act, 1954 (for short, PFA Act). I have heard learned senior counsel, Mr. B.R. Bhattacharji and learned senior counsel, Mr. P.K. Biswas, assisted by learned counsel, Mr. J. Roy Chowdhury and learned counsel, Mr. P. Majumder respectively for the petitioner and learned P.P., Mr. A. Ghosh for the State respondent, i.e. the respondent No. 1 and learned counsel, Mr. K.K. Pal for respondent No. 2, i.e. the complainant. 2. Short fact for disposal of the present petition may be stated thus: 2.1. Respondent No. 2(hereinafter mentioned as complainant) in the capacity of Sr. Inspector(Food) of Agartala Municipal Council visited the shop premises of M/s. Paul Trading at 62/4 Netaji Subhash Road, Agartala, West Tripura on 13.03.2006 and in due course disclosed his identity, and thereafter proposed to purchase Fruit Squash(Trade Name-Orange Squash, Kissan Brand) suspecting that the Fruit Quash might be adulterated and thereafter purchased three bottles of Fruit Squash on payment of usual price and taken receipt thereof and thereafter packed and sealed the samples of Fruit Squash in presence of the witnesses and then sent one part of the sample to the Public Analyst, Government of Tripura for chemical analysis and report and also sent other two samples to the local health authority for appropriate action. The sample sent to the Public Analyst was examined and the report was received by the local health authority and it was found that the sample was adulterated, and thereafter the consent of the consent giving authority was obtained and the complainant, i.e. the Sr. Inspector of Food filed a complaint in writing before the Chief Judicial Magistrate for commission of offence punishable under Section 16(1)(a)(i)of the P.F.A. Act read with Section 7(i)(ii) of the said Act. 2.2. In the complaint, the complainant arrayed three accused, namely, (i) M/s. Paul Trading, Sri Ashis Paul(owner), S/o. Sri Prafulla Ch. Paul, 62/4, N.S. Road, P.S. West Agartala, Tripura, (ii) M/s. Paul Trading, Sri Sandip Kumar Paul, S/o. Sri Nitai Paul, 62/4, N.S. Road, P.S. West Agartala, Tripura West and (iii) The Owner/Manager, Hindustan Lever Limited, 165/166, Beebay Reckmation, Mumbai-400020.
2.2. In the complaint, the complainant arrayed three accused, namely, (i) M/s. Paul Trading, Sri Ashis Paul(owner), S/o. Sri Prafulla Ch. Paul, 62/4, N.S. Road, P.S. West Agartala, Tripura, (ii) M/s. Paul Trading, Sri Sandip Kumar Paul, S/o. Sri Nitai Paul, 62/4, N.S. Road, P.S. West Agartala, Tripura West and (iii) The Owner/Manager, Hindustan Lever Limited, 165/166, Beebay Reckmation, Mumbai-400020. On the basis of that complaint, cognizance was taken by order dated 01.09.2006 and process was issued against the accused persons, arrayed in the complaint including the present petitioner. 3. The present petition under Section 482 of Cr.P.C. is filed by the present petitioner, i.e. M/s. Hindustan Lever Ltd., challenging the order, taking cognizance, on the ground that the complaint does not disclose any offence against the company, i.e. the petitioner and that the complainant in a casual manner made the Owner/Manager of the petitioner-company as a party though according to law the responsible person as prescribed under Section 17 of the P.F.A. Act ought to be made a party in the complaint. 4. Learned senior counsel, Mr. Bhattacharji appearing for the petitioner has submitted that the complainant, i.e. the Sr. Inspector of Food in the complaint only narrated the fact of collection of samples of orange squash from the shop of one M/s. Paul Trading but there is nothing in the complaint to show as to why the company has been made a party in the case. Referring to Section 17 of the P.F.A. Act, Mr. Bhattacharji, learned senior counsel has submitted that the company has already nominated an officer of the company under sub-section (1)(a)(i) of Section 17 of the P.F.A. Act responsible for all actions under the P.F.A. Act but neither that person has been made a party nor any averment has been made in the complaint, whereas, the complainant mechanically made the company as a party without any accusation in the complaint. In support of his contention learned senior counsel referred the cases of (i) S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla reported in (2005) 8 SCC 89 (paras. 17 and 18), (ii) Sabitha Ramamurthy v. R.B.S. Channabasavaradhya reported in (2006) 10 SCC 581 (paras. 8, 9 and 10), (iii) Pepsico India Holdings Private Limited v. Food Inspector reported in (2011) 1 SCC 176 (paras. 2, 46, 47 and 50), (iv) Aneeta Hada v. Godfather Travels & Tours(P) Ltd. reported in (2012) 5 SCC 661 (paras.
17 and 18), (ii) Sabitha Ramamurthy v. R.B.S. Channabasavaradhya reported in (2006) 10 SCC 581 (paras. 8, 9 and 10), (iii) Pepsico India Holdings Private Limited v. Food Inspector reported in (2011) 1 SCC 176 (paras. 2, 46, 47 and 50), (iv) Aneeta Hada v. Godfather Travels & Tours(P) Ltd. reported in (2012) 5 SCC 661 (paras. 58 and 59) and (v) G.H.C.L. Employees Stock Option Trust v. India Infoline Ltd. reported in (2013) 4 SCC 505 (paras. 17 and 19). 5. Learned P.P., Mr. Ghosh appearing on behalf of the State respondent with all his fairness has submitted that there is no accusation made in the complaint against the petitioner-company but the name of the petitioner-company has been disclosed in the report of the Public Analyst, and therefore, the Owner/Manager of the company has been made a party. It is fairly conceded by learned P.P. that the company did not take any step to array the authorized person of the company as required under sub-section (1)(a)(i) of Section 17 of the P.F.A. Act and he has also conceded that the company has not been properly arrayed as an accused in the complaint. He has further contended that the complaint against the other two accused, i.e. the accused Nos. 1 and 2 arrayed in the complaint petition shall continue, and in course of trial, in the event of definite material available, the company or its authorized person may be arrayed as an accused. 6. Learned counsel, Mr. K.K. Pal appearing for respondent No. 2, i.e. the complainant (Sr. Inspector of Food) has adopted the submission of learned P.P. and further submitted that the criminal proceeding as against accused Nos. 1 and 2, arrayed in the complaint petition, should proceed, if it is found that the petitioner-company has not been properly arrayed as a party in the case. 7. Admittedly, there is no accusation made in the complaint against the present petitioner, i.e. M/s. Hindustan Lever Limited, a company registered under the Companies Act.
1 and 2, arrayed in the complaint petition, should proceed, if it is found that the petitioner-company has not been properly arrayed as a party in the case. 7. Admittedly, there is no accusation made in the complaint against the present petitioner, i.e. M/s. Hindustan Lever Limited, a company registered under the Companies Act. Section 17(1) of the P.F.A. Act makes it abundantly clear that where an offence under the P.F.A. Act has been committed by a company, the person, if any, who has been nominated under sub-section (2) may be arrayed as an accused responsible for commission of the offence and if no such person has been nominated, every person who at the time of commission of the offence was in charge of the affairs may be arrayed as an accused and the company itself may be arrayed as an accused. Here, the complainant, as it appears, mechanically made the Owner/Manager, M/s. Hindustan Lever Ltd. as accused No. 3 in the complaint. There is nothing in the complaint to show what offence the Owner/Manager of M/s. Hindustan Lever Ltd. committed. In the complaint petition the allegation is that on 13.03.2006 at about 11.30 am the complainant visited the shop premises of accused Nos.1 and 2 and collected samples of fruits squash (trade name-orange squash, Kissan brand). There is even no mention as to who is the manufacturer of that Fruit Squash. The complaint petition is conspicuously silent about any allegation against the company. There is also no averment/allegation in the complaint petition that the complainant has taken any effort to collect the name of the nominated person of the company by way of issuing any notice to the company or otherwise. There is also no averment/allegation in the complaint that having taken such an attempt the company did not respond, and therefore, the other persons responsible for the company's affairs have been made party. It is not understood how the Owner/Manager of the company has been made a party which makes it evident that the complainant, perhaps, mechanically arrayed accused No. 3 in the complaint petition. 8. In the case of S.M.S. Pharmaceuticals Ltd. (supra) the Supreme Court in paras 17 and 18 of the judgment observed as follows: 17. K.P.G. Nair v. Jindal Menthol India Ltd. (2001) 10 SCC 218 was a case under the Negotiable Instruments Act.
8. In the case of S.M.S. Pharmaceuticals Ltd. (supra) the Supreme Court in paras 17 and 18 of the judgment observed as follows: 17. K.P.G. Nair v. Jindal Menthol India Ltd. (2001) 10 SCC 218 was a case under the Negotiable Instruments Act. It was found that the allegations in the complaint did not in express words or with reference to the allegations contained therein make out a case that at the time of commission of the offence, the appellant was in charge of and was responsible to the company for the conduct of its business. It was held that requirement of Section 141 was not met and the complaint against the accused was quashed. Similar was the position in Katta Sujatha v. Fertilizers & Chemicals Travancore Ltd. (2002) 7 SCC 655 . This was a case of a partnership. It was found that no allegations were contained in the complaint regarding the fact that the accused was a partner in charge of and was responsible to the firm for the conduct of business of the firm nor was there any allegation that the offence was made with the consent and connivance or that it was attributable to any neglect on the part of the accused. It was held that no case was made out against the accused who was a partner and the complaint was quashed. The latest in the line is the judgment of this Court in Monaben Ketanbhai Shah v. State of Gujarat (2004) 7 SCC 15. It was observed as under: (SCC p.17, para. 4) 4. It is not necessary to reproduce the language of Section 141verbatim in the complaint since the complaint is required to be read as a whole. If the substance of the allegations made in the complaint fulfil the requirements of Section 141, the complaint has to proceed and is required to be tried with. It is also true that in construing a complaint a hypertechnical approach should not be adopted so as to quash the same. The laudable object of preventing bouncing of cheques and sustaining the credibility of commercial transactions resulting in enactment of Sections 138 and141 has to be borne in mind. These provisions create a statutory presumption of dishonesty, exposing a person to criminal liability if payment is not made within the statutory period even after issue of notice.
The laudable object of preventing bouncing of cheques and sustaining the credibility of commercial transactions resulting in enactment of Sections 138 and141 has to be borne in mind. These provisions create a statutory presumption of dishonesty, exposing a person to criminal liability if payment is not made within the statutory period even after issue of notice. It is also true that the power of quashing is required to be exercised very sparingly and where, read as a whole, factual foundation for the offence has been laid in the complaint, it should not be quashed. All the same, it is also to be remembered that it is the duty of the court to discharge the accused if taking everything stated in the complaint as correct and construing the allegations made therein liberally in favour of the complainant, the ingredients of the offence are altogether lacking. The present case falls in this category as would be evident from the facts noticed hereinafter. It was further observed: 6. ...The criminal liability has been fastened on those who, at the time of the commission of the offence, were in charge of and were responsible to the firm for the conduct of the business of the firm. These may be sleeping partners who are not required to take any part in the business of the firm; they may be ladies and others who may not know anything about the business of the firm. The primary responsibility is on the complainant to make necessary averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every partner knows about the transaction. The obligation of the appellants to prove that at the time the offence was committed they were not in charge of and were not responsible to the firm for the conduct of the business of the firm, would arise only when first the complainant makes necessary averments in the complaint and establishes that fact. The present case is of total absence of requisite averments in the complaint. 18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself.
18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That the respondent falls within parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141, he would issue the process. We have seen that merely being described as a director in a company is not sufficient to satisfy the requirement of Section 141. Even a non-director can be liable under Section 141 of the Act. The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial. 8.1. In the case of Sabitha Ramamurthy (supra) the Supreme Court in paras 8, 9 and 10 of the judgment observed as follows: 8. This Court in Monaben Ketanbhai Shah v. State of Gujarat (2004) 7 SCC 15 : 2004 SCC (Cri.) 1857 held as under: (SCC pp. 18-19, para. 6) 6. From the above, it is evident that in the complaint there are no averments against the appellants except stating in the title that they are partners of the firm. Learned counsel for the respondent complainants contended that a copy of the partnership deed was also filed which would show that the appellants were active in the business. No such document was filed with the complaint or made part thereof. The filing of the partnership deed later is of no consequence for determining the point in issue. Section 141 does not make all partners liable for the offence.
No such document was filed with the complaint or made part thereof. The filing of the partnership deed later is of no consequence for determining the point in issue. Section 141 does not make all partners liable for the offence. The criminal liability has been fastened on those who, at the time of the commission of the offence, were in charge of and were responsible to the firm for the conduct of the business of the firm. These may be sleeping partners who are not required to take any part in the business of the firm; they may be ladies and others who may not know anything about the business of the firm. The primary responsibility is on the complainant to make necessary averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every partner knows about the transaction. The obligation of the appellants to prove that at the time the offence was committed they were not in charge of and were not responsible to the firm for the conduct of the business of the firm, would arise only when first the complainant makes necessary averments in the complaint and establishes that fact. The present case is of total absence of requisite averments in the complaint. 9. Yet again in Katta Sujatha (Smt.) v. Fertilizers & Chemicals Travancore Ltd. (2002) 7 SCC 655 : 2003 SCC (Cri.) 151 it was held: (SCC p. 656, para. 4) However, one thing is clear that the appellant was in no way involved in any of the transactions referred to in the complaint and it was not stated that she was in charge of the business and was responsible for the conduct of the business of the firm in terms of Section 141 of the Act nor was there any other allegation made against the appellant that she had connived with any other partner in the matter of issue of cheque. [See also K.P.G. Nair v. Jindal Menthol India Ltd., (2001) 10 SCC 218 ] 10. The question has been set at rest by a three-Judge Bench of this Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 8 SCC 89 wherein the law has been laid down in the following terms: (SCC p. 103, para. 19) 19.
[See also K.P.G. Nair v. Jindal Menthol India Ltd., (2001) 10 SCC 218 ] 10. The question has been set at rest by a three-Judge Bench of this Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 8 SCC 89 wherein the law has been laid down in the following terms: (SCC p. 103, para. 19) 19. In view of the above discussion, our answers to the questions posed in the reference are as under: (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. 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. 8.2. In the case of Pepsico India Holdings Private Limited (supra) the Supreme Court in paras. 2, 46, 47, 50, 51, 52 and 53 of the judgment observed as follows: 2. The Appellants in Criminal Appeal No. 836 of 2010, Pepsico India Holdings Pvt. Ltd., is the manufacturer of sweetened carbonated water and is being prosecuted for the presence of carbofuran in its product.
2, 46, 47, 50, 51, 52 and 53 of the judgment observed as follows: 2. The Appellants in Criminal Appeal No. 836 of 2010, Pepsico India Holdings Pvt. Ltd., is the manufacturer of sweetened carbonated water and is being prosecuted for the presence of carbofuran in its product. These appeals throw up certain questions relating to the maintainability of the criminal prosecutions launched against the appellants, namely: (1) In the absence of any prescribed and validated method of analysis under Section 23(1-A)(hh) of the Prevention of Food Adulteration Act, 1954, hereinafter referred to as "the 1954 Act", could a prosecution have been launched against the appellants based on a report submitted by the public analyst using the method of the Directorate General of Health Services (DGHS)? (2) Could a prosecution have been launched against the appellants in the absence of any validated method of analysis to ascertain the percentage of pesticide residue present in a carbonated beverage, which renders the report of the public analyst unreliable, particularly when it does not indicate that such percentage of the pesticide residue is injurious to health and, therefore, "adulterated" within the meaning of Section 2(i-a)(h) of the aforesaid Act? (3) What is the effect of non-specification of the level of tolerance in respect of the presence of pesticide residue in sweetened carbonated water in the Table appended to Rule 65(2) of the Prevention of Food Adulteration Rules, 1955, hereinafter referred to as "the 1955 Rules"? and (4) What is the liability of the Directors of a company which is said to have committed defaults within the meaning of Section 17 of the 1954 Act, in the light of the decision of this Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 8 SCC 89 , when they were neither in charge of nor responsible for the conduct of the business of the Company? 46. On the question of liability of the Directors of the Company with respect to an offence alleged to have been committed by the Company, the High Court went beyond the ratio of the decision of this Court in S.M.S. Pharmaceuticals Ltd.'s case (S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89 : 2005 SCC (Cri.) 1975) upon holding that the principles set out in the said decision could not be understood in any mechanical or rigid manner.
Instead, the High Court based its judgment on the decision of this Court in N. Rangachari v. BSNL (2007) 5 SCC 108 which was a case where the complainant clearly and categorically alleged that the named Directors were in charge of and responsible to the Company for the conduct of its business. It is in such circumstances that the prayer for quashing of the proceedings was rejected. 47. Both the questions regarding the failure of the Central Government to frame Rules to define the laboratories, where samples of food could be analysed by the public analyst, or to define the validated methods of analysis and the liability of the Directors, who are the appellants before us, are of great importance for the purpose of bringing home a charge against the accused for violation of the provisions of Rule 65 of the 1955 Rules and Section 2(i-a)(h) of the 1954 Act and for holding that the sweetened carbonated water manufactured by the appellants was adulterated in terms of the said Rules. Since the range indicated as to the limits of tolerance of the presence of pesticides in different articles of food, including sweetened carbonated water, which was included in the Table appended to Rule 65(2) with effect from 17-6-2009, provides very little or practically no margin for error, the selection of laboratories and the prescription of tolerance limits for different articles of food acquires great significance. 50. As mentioned hereinbefore, the High Court erred in giving its own interpretation to the decision of this Court in S.M.S. Pharmaceuticals Ltd.'s case (supra), which was reiterated subsequently in several judgments, some of which have been indicated hereinabove, and relying instead on the decision of Rangachari's case (N. Rangachari v. BSNL, (2007) 5 SCC 108 , the facts of which were entirely different from the facts of this case. It is now well established that in a complaint against a company and its Directors, the complainant has to indicate in the complaint itself as to whether the Directors concerned were either in charge of or responsible to the Company for its day-to-day management, or whether they were responsible to the Company for the conduct of its business.
It is now well established that in a complaint against a company and its Directors, the complainant has to indicate in the complaint itself as to whether the Directors concerned were either in charge of or responsible to the Company for its day-to-day management, or whether they were responsible to the Company for the conduct of its business. A mere bald statement that a person was a Director of the Company against which certain allegations had been made is not sufficient to make such Director liable in the absence of any specific allegations regarding his role in the management of the Company. 51. It has to be kept in mind that although an argument was advanced with regard to the restrictions imposed on the use of insecticides under Rule 65 of the 1955 Rules, it is apparent from the order of the learned Single Judge that such a ground was given up by the respondents and the arguments were confined only with regard to the alleged violation of Section 2(i-a)(h) of the 1954 Act. 52. Having considered the matter in its totality and also having regard to the fact that Somesh Dahale had been nominated under Sub-section (2) of Section 17 of the 1954 Act to be a person in charge of and responsible to the Company for the conduct of its business, we are of the view that the appeals have to be allowed. 53. We, accordingly, allow the appeals and set aside the judgment and order of the learned Single Judge impugned in these proceedings and quash the prosecution of the appellants in respect of the various complaints challenged before the High Court in its inherent jurisdiction. 8.3. In the case of Aneeta Hada (supra) in paras. 58 and 59 of the judgment the Supreme Court observed thus: 58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof.
Thus, the words "as well as the company" appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted. 59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in State of Madras v. C.V. Parekh, (1970) 3 SCC 491 which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal v. State of M.P., (1984) 4 SCC 352 does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada v. Indian Acrylic Ltd., (2000) 1 SCC 1 is overruled with the qualifier as stated in para. 51. The decision in U.P. Pollution Control Board v. Modi Distilleries, (1987) 3 SCC 684 has to be treated to be restricted to its own facts as has been explained by us hereinabove. 8.4. In the case of GHCL Employees Stock Option Trust (supra), the Supreme Court in paras 17 and 19 observed thus: 17. In the case of Maksud Saiyed v. State of Gujarat (2008) 5 SCC 668 : (2008) 2 SCC (Cri.) 692, this Court while discussing vicarious liability observed as under: (SCC p.674, para. 13) 13. Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. The Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company when the accused is the Company.
The Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company when the accused is the Company. The learned Magistrate failed to pose unto himself the correct question viz., as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the respondents herein were personally liable for any offence. The Bank is a body corporate. Vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability. 19. In the order issuing summons, the learned Magistrate has not recorded his satisfaction about the prima facie case as against Respondents 2 to 7 and the role played by them in the capacity of Managing Director, Company Secretary or Directors which is sine qua non for initiating criminal action against them. Recently, in Thermax Ltd. v. K.M. Johny (2011) 11 SCC 412 while dealing with a similar case, this Court held as under: (SCC p.429, paras. 38 & 39) 38. Though Respondent 1 has roped all the appellants in a criminal case without their specific role or participation in the alleged offence with the sole purpose of settling his dispute with appellant Company by initiating the criminal prosecution, it is pointed out that Appellants 2 to 8 are the ex-Chairperson, ex-Directors and senior managerial personnel of Appellant 1 Company, who do not have any personal role in the allegations and claims of Respondent 1. There is also no specific allegation with regard to their role. 39. Apart from the fact that the complaint lacks necessary ingredients of Sections 405, 406, 420 read with Section 34 IPC, it is to be noted that the concept of 'vicarious liability' is unknown to criminal law. As observed earlier, there is no specific allegation made against any person but the members of the Board and senior executives are joined as the persons looking after the management and business of the appellant Company. 9.
As observed earlier, there is no specific allegation made against any person but the members of the Board and senior executives are joined as the persons looking after the management and business of the appellant Company. 9. A reading of the observations made by the Apex Court in the case laws quoted above make it abundantly clear that the complaint petition itself must disclose the offence to array a person as an accused in a criminal case. While arraying the petitioner-company as an accused in the complaint, the complainant would state clearly in the complaint petition the allegations/accusation against the company. There is no allegation in the complaint that the alleged seller produced any warrantee to the complainant-Inspector at the time of purchase of the food samples that those were manufactured by the petitioner-company and that those were purchased by the seller from the company directly or from any other authorized agent or distributor or dealer. In the absence of any such warrantee produced by the seller, arraying the company as an accused, does not legally justify. For all these reasons, I find merit in the petition filed under Section 482 of Cr.P.C. Regarding the submission of learned P.P. that in future the company or its authorized person may be arrayed, does not warrant any order from this Court, at this stage, since it will be highly improper and premature for this Court to give such an observation on that submission. 10. Since there is no accusation against the petitioner-company in the complaint petition and since there is nothing on record regarding any warrantee produced by the dealer to array the company or its officer/director, I think, cognizance taken against the company and process issued consequent thereof is liable to be interfered and quashed. 11. Accordingly, order dated 01.09.2006 to the extent of taking cognizance and issuance of process against the petitioner-company is interfered, set aside and quashed. Learned Magistrate shall proceed against rest of the accused persons according to law. Send back the L.C. record along with a copy of the judgment. S.C. Das, J.:- This is a petition filed under Section 482 of Cr.P.C. praying for quashing order dated 01.09.2006 passed by learned Chief Judicial Magistrate, West Tripura, Agartala in Case No. C.R. 2066/2006 whereunder cognizance has been taken under Section 16(1)(a)(i) of the Prevention of Food Adulteration Act, 1954 (for short, PFA Act).
S.C. Das, J.:- This is a petition filed under Section 482 of Cr.P.C. praying for quashing order dated 01.09.2006 passed by learned Chief Judicial Magistrate, West Tripura, Agartala in Case No. C.R. 2066/2006 whereunder cognizance has been taken under Section 16(1)(a)(i) of the Prevention of Food Adulteration Act, 1954 (for short, PFA Act). I have heard learned senior counsel, Mr. B.R. Bhattacharji and learned senior counsel, Mr. P.K. Biswas, assisted by learned counsel, Mr. J. Roy Chowdhury and learned counsel, Mr. P. Majumder respectively for the petitioner and learned P.P., Mr. A. Ghosh for the State respondent, i.e. the respondent No. 1 and learned counsel, Mr. K.K. Pal for respondent No. 2, i.e. the complainant. 2. Short fact for disposal of the present petition may be stated thus: 2.1. Respondent No. 2(hereinafter mentioned as complainant) in the capacity of Sr. Inspector(Food) of Agartala Municipal Council visited the shop premises of M/s. Paul Trading at 62/4 Netaji Subhash Road, Agartala, West Tripura on 13.03.2006 and in due course disclosed his identity, and thereafter proposed to purchase Fruit Squash(Trade Name-Orange Squash, Kissan Brand) suspecting that the Fruit Quash might be adulterated and thereafter purchased three bottles of Fruit Squash on payment of usual price and taken receipt thereof and thereafter packed and sealed the samples of Fruit Squash in presence of the witnesses and then sent one part of the sample to the Public Analyst, Government of Tripura for chemical analysis and report and also sent other two samples to the local health authority for appropriate action. The sample sent to the Public Analyst was examined and the report was received by the local health authority and it was found that the sample was adulterated, and thereafter the consent of the consent giving authority was obtained and the complainant, i.e. the Sr. Inspector of Food filed a complaint in writing before the Chief Judicial Magistrate for commission of offence punishable under Section 16(1)(a)(i)of the P.F.A. Act read with Section 7(i)(ii) of the said Act. 2.2. In the complaint, the complainant arrayed three accused, namely, (i) M/s. Paul Trading, Sri Ashis Paul(owner), S/o. Sri Prafulla Ch. Paul, 62/4, N.S. Road, P.S. West Agartala, Tripura, (ii) M/s. Paul Trading, Sri Sandip Kumar Paul, S/o. Sri Nitai Paul, 62/4, N.S. Road, P.S. West Agartala, Tripura West and (iii) The Owner/Manager, Hindustan Lever Limited, 165/166, Beebay Reckmation, Mumbai-400020.
2.2. In the complaint, the complainant arrayed three accused, namely, (i) M/s. Paul Trading, Sri Ashis Paul(owner), S/o. Sri Prafulla Ch. Paul, 62/4, N.S. Road, P.S. West Agartala, Tripura, (ii) M/s. Paul Trading, Sri Sandip Kumar Paul, S/o. Sri Nitai Paul, 62/4, N.S. Road, P.S. West Agartala, Tripura West and (iii) The Owner/Manager, Hindustan Lever Limited, 165/166, Beebay Reckmation, Mumbai-400020. On the basis of that complaint, cognizance was taken by order dated 01.09.2006 and process was issued against the accused persons, arrayed in the complaint including the present petitioner. 3. The present petition under Section 482 of Cr.P.C. is filed by the present petitioner, i.e. M/s. Hindustan Lever Ltd., challenging the order, taking cognizance, on the ground that the complaint does not disclose any offence against the company, i.e. the petitioner and that the complainant in a casual manner made the Owner/Manager of the petitioner-company as a party though according to law the responsible person as prescribed under Section 17 of the P.F.A. Act ought to be made a party in the complaint. 4. Learned senior counsel, Mr. Bhattacharji appearing for the petitioner has submitted that the complainant, i.e. the Sr. Inspector of Food in the complaint only narrated the fact of collection of samples of orange squash from the shop of one M/s. Paul Trading but there is nothing in the complaint to show as to why the company has been made a party in the case. Referring to Section 17 of the P.F.A. Act, Mr. Bhattacharji, learned senior counsel has submitted that the company has already nominated an officer of the company under sub-section (1)(a)(i) of Section 17 of the P.F.A. Act responsible for all actions under the P.F.A. Act but neither that person has been made a party nor any averment has been made in the complaint, whereas, the complainant mechanically made the company as a party without any accusation in the complaint. In support of his contention learned senior counsel referred the cases of (i) S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla reported in (2005) 8 SCC 89 (paras. 17 and 18), (ii) Sabitha Ramamurthy v. R.B.S. Channabasavaradhya reported in (2006) 10 SCC 581 (paras. 8, 9 and 10), (iii) Pepsico India Holdings Private Limited v. Food Inspector reported in (2011) 1 SCC 176 (paras. 2, 46, 47 and 50), (iv) Aneeta Hada v. Godfather Travels & Tours(P) Ltd. reported in (2012) 5 SCC 661 (paras.
17 and 18), (ii) Sabitha Ramamurthy v. R.B.S. Channabasavaradhya reported in (2006) 10 SCC 581 (paras. 8, 9 and 10), (iii) Pepsico India Holdings Private Limited v. Food Inspector reported in (2011) 1 SCC 176 (paras. 2, 46, 47 and 50), (iv) Aneeta Hada v. Godfather Travels & Tours(P) Ltd. reported in (2012) 5 SCC 661 (paras. 58 and 59) and (v) G.H.C.L. Employees Stock Option Trust v. India Infoline Ltd. reported in (2013) 4 SCC 505 (paras. 17 and 19). 5. Learned P.P., Mr. Ghosh appearing on behalf of the State respondent with all his fairness has submitted that there is no accusation made in the complaint against the petitioner-company but the name of the petitioner-company has been disclosed in the report of the Public Analyst, and therefore, the Owner/Manager of the company has been made a party. It is fairly conceded by learned P.P. that the company did not take any step to array the authorized person of the company as required under sub-section (1)(a)(i) of Section 17 of the P.F.A. Act and he has also conceded that the company has not been properly arrayed as an accused in the complaint. He has further contended that the complaint against the other two accused, i.e. the accused Nos. 1 and 2 arrayed in the complaint petition shall continue, and in course of trial, in the event of definite material available, the company or its authorized person may be arrayed as an accused. 6. Learned counsel, Mr. K.K. Pal appearing for respondent No. 2, i.e. the complainant (Sr. Inspector of Food) has adopted the submission of learned P.P. and further submitted that the criminal proceeding as against accused Nos. 1 and 2, arrayed in the complaint petition, should proceed, if it is found that the petitioner-company has not been properly arrayed as a party in the case. 7. Admittedly, there is no accusation made in the complaint against the present petitioner, i.e. M/s. Hindustan Lever Limited, a company registered under the Companies Act.
1 and 2, arrayed in the complaint petition, should proceed, if it is found that the petitioner-company has not been properly arrayed as a party in the case. 7. Admittedly, there is no accusation made in the complaint against the present petitioner, i.e. M/s. Hindustan Lever Limited, a company registered under the Companies Act. Section 17(1) of the P.F.A. Act makes it abundantly clear that where an offence under the P.F.A. Act has been committed by a company, the person, if any, who has been nominated under sub-section (2) may be arrayed as an accused responsible for commission of the offence and if no such person has been nominated, every person who at the time of commission of the offence was in charge of the affairs may be arrayed as an accused and the company itself may be arrayed as an accused. Here, the complainant, as it appears, mechanically made the Owner/Manager, M/s. Hindustan Lever Ltd. as accused No. 3 in the complaint. There is nothing in the complaint to show what offence the Owner/Manager of M/s. Hindustan Lever Ltd. committed. In the complaint petition the allegation is that on 13.03.2006 at about 11.30 am the complainant visited the shop premises of accused Nos.1 and 2 and collected samples of fruits squash (trade name-orange squash, Kissan brand). There is even no mention as to who is the manufacturer of that Fruit Squash. The complaint petition is conspicuously silent about any allegation against the company. There is also no averment/allegation in the complaint petition that the complainant has taken any effort to collect the name of the nominated person of the company by way of issuing any notice to the company or otherwise. There is also no averment/allegation in the complaint that having taken such an attempt the company did not respond, and therefore, the other persons responsible for the company's affairs have been made party. It is not understood how the Owner/Manager of the company has been made a party which makes it evident that the complainant, perhaps, mechanically arrayed accused No. 3 in the complaint petition. 8. In the case of S.M.S. Pharmaceuticals Ltd. (supra) the Supreme Court in paras 17 and 18 of the judgment observed as follows: 17. K.P.G. Nair v. Jindal Menthol India Ltd. (2001) 10 SCC 218 was a case under the Negotiable Instruments Act.
8. In the case of S.M.S. Pharmaceuticals Ltd. (supra) the Supreme Court in paras 17 and 18 of the judgment observed as follows: 17. K.P.G. Nair v. Jindal Menthol India Ltd. (2001) 10 SCC 218 was a case under the Negotiable Instruments Act. It was found that the allegations in the complaint did not in express words or with reference to the allegations contained therein make out a case that at the time of commission of the offence, the appellant was in charge of and was responsible to the company for the conduct of its business. It was held that requirement of Section 141 was not met and the complaint against the accused was quashed. Similar was the position in Katta Sujatha v. Fertilizers & Chemicals Travancore Ltd. (2002) 7 SCC 655 . This was a case of a partnership. It was found that no allegations were contained in the complaint regarding the fact that the accused was a partner in charge of and was responsible to the firm for the conduct of business of the firm nor was there any allegation that the offence was made with the consent and connivance or that it was attributable to any neglect on the part of the accused. It was held that no case was made out against the accused who was a partner and the complaint was quashed. The latest in the line is the judgment of this Court in Monaben Ketanbhai Shah v. State of Gujarat (2004) 7 SCC 15. It was observed as under: (SCC p.17, para. 4) 4. It is not necessary to reproduce the language of Section 141verbatim in the complaint since the complaint is required to be read as a whole. If the substance of the allegations made in the complaint fulfil the requirements of Section 141, the complaint has to proceed and is required to be tried with. It is also true that in construing a complaint a hypertechnical approach should not be adopted so as to quash the same. The laudable object of preventing bouncing of cheques and sustaining the credibility of commercial transactions resulting in enactment of Sections 138 and141 has to be borne in mind. These provisions create a statutory presumption of dishonesty, exposing a person to criminal liability if payment is not made within the statutory period even after issue of notice.
The laudable object of preventing bouncing of cheques and sustaining the credibility of commercial transactions resulting in enactment of Sections 138 and141 has to be borne in mind. These provisions create a statutory presumption of dishonesty, exposing a person to criminal liability if payment is not made within the statutory period even after issue of notice. It is also true that the power of quashing is required to be exercised very sparingly and where, read as a whole, factual foundation for the offence has been laid in the complaint, it should not be quashed. All the same, it is also to be remembered that it is the duty of the court to discharge the accused if taking everything stated in the complaint as correct and construing the allegations made therein liberally in favour of the complainant, the ingredients of the offence are altogether lacking. The present case falls in this category as would be evident from the facts noticed hereinafter. It was further observed: 6. ...The criminal liability has been fastened on those who, at the time of the commission of the offence, were in charge of and were responsible to the firm for the conduct of the business of the firm. These may be sleeping partners who are not required to take any part in the business of the firm; they may be ladies and others who may not know anything about the business of the firm. The primary responsibility is on the complainant to make necessary averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every partner knows about the transaction. The obligation of the appellants to prove that at the time the offence was committed they were not in charge of and were not responsible to the firm for the conduct of the business of the firm, would arise only when first the complainant makes necessary averments in the complaint and establishes that fact. The present case is of total absence of requisite averments in the complaint. 18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself.
18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That the respondent falls within parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141, he would issue the process. We have seen that merely being described as a director in a company is not sufficient to satisfy the requirement of Section 141. Even a non-director can be liable under Section 141 of the Act. The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial. 8.1. In the case of Sabitha Ramamurthy (supra) the Supreme Court in paras 8, 9 and 10 of the judgment observed as follows: 8. This Court in Monaben Ketanbhai Shah v. State of Gujarat (2004) 7 SCC 15 : 2004 SCC (Cri.) 1857 held as under: (SCC pp. 18-19, para. 6) 6. From the above, it is evident that in the complaint there are no averments against the appellants except stating in the title that they are partners of the firm. Learned counsel for the respondent complainants contended that a copy of the partnership deed was also filed which would show that the appellants were active in the business. No such document was filed with the complaint or made part thereof. The filing of the partnership deed later is of no consequence for determining the point in issue. Section 141 does not make all partners liable for the offence.
No such document was filed with the complaint or made part thereof. The filing of the partnership deed later is of no consequence for determining the point in issue. Section 141 does not make all partners liable for the offence. The criminal liability has been fastened on those who, at the time of the commission of the offence, were in charge of and were responsible to the firm for the conduct of the business of the firm. These may be sleeping partners who are not required to take any part in the business of the firm; they may be ladies and others who may not know anything about the business of the firm. The primary responsibility is on the complainant to make necessary averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every partner knows about the transaction. The obligation of the appellants to prove that at the time the offence was committed they were not in charge of and were not responsible to the firm for the conduct of the business of the firm, would arise only when first the complainant makes necessary averments in the complaint and establishes that fact. The present case is of total absence of requisite averments in the complaint. 9. Yet again in Katta Sujatha (Smt.) v. Fertilizers & Chemicals Travancore Ltd. (2002) 7 SCC 655 : 2003 SCC (Cri.) 151 it was held: (SCC p. 656, para. 4) However, one thing is clear that the appellant was in no way involved in any of the transactions referred to in the complaint and it was not stated that she was in charge of the business and was responsible for the conduct of the business of the firm in terms of Section 141 of the Act nor was there any other allegation made against the appellant that she had connived with any other partner in the matter of issue of cheque. [See also K.P.G. Nair v. Jindal Menthol India Ltd., (2001) 10 SCC 218 ] 10. The question has been set at rest by a three-Judge Bench of this Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 8 SCC 89 wherein the law has been laid down in the following terms: (SCC p. 103, para. 19) 19.
[See also K.P.G. Nair v. Jindal Menthol India Ltd., (2001) 10 SCC 218 ] 10. The question has been set at rest by a three-Judge Bench of this Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 8 SCC 89 wherein the law has been laid down in the following terms: (SCC p. 103, para. 19) 19. In view of the above discussion, our answers to the questions posed in the reference are as under: (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. 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. 8.2. In the case of Pepsico India Holdings Private Limited (supra) the Supreme Court in paras. 2, 46, 47, 50, 51, 52 and 53 of the judgment observed as follows: 2. The Appellants in Criminal Appeal No. 836 of 2010, Pepsico India Holdings Pvt. Ltd., is the manufacturer of sweetened carbonated water and is being prosecuted for the presence of carbofuran in its product.
2, 46, 47, 50, 51, 52 and 53 of the judgment observed as follows: 2. The Appellants in Criminal Appeal No. 836 of 2010, Pepsico India Holdings Pvt. Ltd., is the manufacturer of sweetened carbonated water and is being prosecuted for the presence of carbofuran in its product. These appeals throw up certain questions relating to the maintainability of the criminal prosecutions launched against the appellants, namely: (1) In the absence of any prescribed and validated method of analysis under Section 23(1-A)(hh) of the Prevention of Food Adulteration Act, 1954, hereinafter referred to as "the 1954 Act", could a prosecution have been launched against the appellants based on a report submitted by the public analyst using the method of the Directorate General of Health Services (DGHS)? (2) Could a prosecution have been launched against the appellants in the absence of any validated method of analysis to ascertain the percentage of pesticide residue present in a carbonated beverage, which renders the report of the public analyst unreliable, particularly when it does not indicate that such percentage of the pesticide residue is injurious to health and, therefore, "adulterated" within the meaning of Section 2(i-a)(h) of the aforesaid Act? (3) What is the effect of non-specification of the level of tolerance in respect of the presence of pesticide residue in sweetened carbonated water in the Table appended to Rule 65(2) of the Prevention of Food Adulteration Rules, 1955, hereinafter referred to as "the 1955 Rules"? and (4) What is the liability of the Directors of a company which is said to have committed defaults within the meaning of Section 17 of the 1954 Act, in the light of the decision of this Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 8 SCC 89 , when they were neither in charge of nor responsible for the conduct of the business of the Company? 46. On the question of liability of the Directors of the Company with respect to an offence alleged to have been committed by the Company, the High Court went beyond the ratio of the decision of this Court in S.M.S. Pharmaceuticals Ltd.'s case (S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89 : 2005 SCC (Cri.) 1975) upon holding that the principles set out in the said decision could not be understood in any mechanical or rigid manner.
Instead, the High Court based its judgment on the decision of this Court in N. Rangachari v. BSNL (2007) 5 SCC 108 which was a case where the complainant clearly and categorically alleged that the named Directors were in charge of and responsible to the Company for the conduct of its business. It is in such circumstances that the prayer for quashing of the proceedings was rejected. 47. Both the questions regarding the failure of the Central Government to frame Rules to define the laboratories, where samples of food could be analysed by the public analyst, or to define the validated methods of analysis and the liability of the Directors, who are the appellants before us, are of great importance for the purpose of bringing home a charge against the accused for violation of the provisions of Rule 65 of the 1955 Rules and Section 2(i-a)(h) of the 1954 Act and for holding that the sweetened carbonated water manufactured by the appellants was adulterated in terms of the said Rules. Since the range indicated as to the limits of tolerance of the presence of pesticides in different articles of food, including sweetened carbonated water, which was included in the Table appended to Rule 65(2) with effect from 17-6-2009, provides very little or practically no margin for error, the selection of laboratories and the prescription of tolerance limits for different articles of food acquires great significance. 50. As mentioned hereinbefore, the High Court erred in giving its own interpretation to the decision of this Court in S.M.S. Pharmaceuticals Ltd.'s case (supra), which was reiterated subsequently in several judgments, some of which have been indicated hereinabove, and relying instead on the decision of Rangachari's case (N. Rangachari v. BSNL, (2007) 5 SCC 108 , the facts of which were entirely different from the facts of this case. It is now well established that in a complaint against a company and its Directors, the complainant has to indicate in the complaint itself as to whether the Directors concerned were either in charge of or responsible to the Company for its day-to-day management, or whether they were responsible to the Company for the conduct of its business.
It is now well established that in a complaint against a company and its Directors, the complainant has to indicate in the complaint itself as to whether the Directors concerned were either in charge of or responsible to the Company for its day-to-day management, or whether they were responsible to the Company for the conduct of its business. A mere bald statement that a person was a Director of the Company against which certain allegations had been made is not sufficient to make such Director liable in the absence of any specific allegations regarding his role in the management of the Company. 51. It has to be kept in mind that although an argument was advanced with regard to the restrictions imposed on the use of insecticides under Rule 65 of the 1955 Rules, it is apparent from the order of the learned Single Judge that such a ground was given up by the respondents and the arguments were confined only with regard to the alleged violation of Section 2(i-a)(h) of the 1954 Act. 52. Having considered the matter in its totality and also having regard to the fact that Somesh Dahale had been nominated under Sub-section (2) of Section 17 of the 1954 Act to be a person in charge of and responsible to the Company for the conduct of its business, we are of the view that the appeals have to be allowed. 53. We, accordingly, allow the appeals and set aside the judgment and order of the learned Single Judge impugned in these proceedings and quash the prosecution of the appellants in respect of the various complaints challenged before the High Court in its inherent jurisdiction. 8.3. In the case of Aneeta Hada (supra) in paras. 58 and 59 of the judgment the Supreme Court observed thus: 58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof.
Thus, the words "as well as the company" appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted. 59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in State of Madras v. C.V. Parekh, (1970) 3 SCC 491 which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal v. State of M.P., (1984) 4 SCC 352 does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada v. Indian Acrylic Ltd., (2000) 1 SCC 1 is overruled with the qualifier as stated in para. 51. The decision in U.P. Pollution Control Board v. Modi Distilleries, (1987) 3 SCC 684 has to be treated to be restricted to its own facts as has been explained by us hereinabove. 8.4. In the case of GHCL Employees Stock Option Trust (supra), the Supreme Court in paras 17 and 19 observed thus: 17. In the case of Maksud Saiyed v. State of Gujarat (2008) 5 SCC 668 : (2008) 2 SCC (Cri.) 692, this Court while discussing vicarious liability observed as under: (SCC p.674, para. 13) 13. Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. The Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company when the accused is the Company.
The Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company when the accused is the Company. The learned Magistrate failed to pose unto himself the correct question viz., as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the respondents herein were personally liable for any offence. The Bank is a body corporate. Vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability. 19. In the order issuing summons, the learned Magistrate has not recorded his satisfaction about the prima facie case as against Respondents 2 to 7 and the role played by them in the capacity of Managing Director, Company Secretary or Directors which is sine qua non for initiating criminal action against them. Recently, in Thermax Ltd. v. K.M. Johny (2011) 11 SCC 412 while dealing with a similar case, this Court held as under: (SCC p.429, paras. 38 & 39) 38. Though Respondent 1 has roped all the appellants in a criminal case without their specific role or participation in the alleged offence with the sole purpose of settling his dispute with appellant Company by initiating the criminal prosecution, it is pointed out that Appellants 2 to 8 are the ex-Chairperson, ex-Directors and senior managerial personnel of Appellant 1 Company, who do not have any personal role in the allegations and claims of Respondent 1. There is also no specific allegation with regard to their role. 39. Apart from the fact that the complaint lacks necessary ingredients of Sections 405, 406, 420 read with Section 34 IPC, it is to be noted that the concept of 'vicarious liability' is unknown to criminal law. As observed earlier, there is no specific allegation made against any person but the members of the Board and senior executives are joined as the persons looking after the management and business of the appellant Company. 9.
As observed earlier, there is no specific allegation made against any person but the members of the Board and senior executives are joined as the persons looking after the management and business of the appellant Company. 9. A reading of the observations made by the Apex Court in the case laws quoted above make it abundantly clear that the complaint petition itself must disclose the offence to array a person as an accused in a criminal case. While arraying the petitioner-company as an accused in the complaint, the complainant would state clearly in the complaint petition the allegations/accusation against the company. There is no allegation in the complaint that the alleged seller produced any warrantee to the complainant-Inspector at the time of purchase of the food samples that those were manufactured by the petitioner-company and that those were purchased by the seller from the company directly or from any other authorized agent or distributor or dealer. In the absence of any such warrantee produced by the seller, arraying the company as an accused, does not legally justify. For all these reasons, I find merit in the petition filed under Section 482 of Cr.P.C. Regarding the submission of learned P.P. that in future the company or its authorized person may be arrayed, does not warrant any order from this Court, at this stage, since it will be highly improper and premature for this Court to give such an observation on that submission. 10. Since there is no accusation against the petitioner-company in the complaint petition and since there is nothing on record regarding any warrantee produced by the dealer to array the company or its officer/director, I think, cognizance taken against the company and process issued consequent thereof is liable to be interfered and quashed. 11. Accordingly, order dated 01.09.2006 to the extent of taking cognizance and issuance of process against the petitioner-company is interfered, set aside and quashed. Learned Magistrate shall proceed against rest of the accused persons according to law. Send back the L.C. record along with a copy of the judgment.