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2014 DIGILAW 907 (GUJ)

ROHITBHAI JAYARAMBHAI PATEL v. STATE OF GUJARAT

2014-08-12

Z.K.SAIYED

body2014
ORAL JUDGMENT Z.K.SAIYED, J. 1. This petition is filed by original accused No.11. The prayer is for quashing criminal complaint No.3213 of 2001 filed qua him. The complaint contains allegations for offences punishable under Sections 11 and 12 of the Bureau of Indian Standards Act, 1986 ('The Act' for short). The case of the petitioner is that merely by virtue of being Director of the Company accused of said offence, petitioner do not carry the vicarious liability of such offence. 2. Briefly stated, the allegations in the said compliant are that during an inspection by the authorities, under the said Act, at the premises of one M/s. Chemet Chemical Ltd. (accused No.1 company), it was found that labels showing ISI mark of one Sabero Organics Gujarat Limited (accused No.6 company) were being pasted on the containers in which different chemical products of respondent No.6Company were being packed by the employees of accused No.1Company. The license of accused No.6 Company to use such mark had expired. As per the compliant, the said act was, therefore, in breach of Sections 11 and 12 of the said Act and would make the company punishable under Section 33 of the said Act. The Directors of both the companies are also shown as accused in terms of Section 35 of the said Act. 3. Learned counsel, Mr.Nanavati, for the petitioner vehemently contended that there are no allegations against the present petitioner of having committed any breach of Sections 11 and 12 of the said Act. Even if any offences are committed by accused No.1 or accused No.6Company, the present petitioner cannot be made answerable for such actions by virtue of his being Director of the accused No.6Company. In this respect, he relied on the decision of the Supreme Court in the case of 'S.M.S. Pharmaceuticals Ltd. V/s. Neeta Bhalla and another' reported in (2005) 8 SCC 89 . He submitted that the view taken in the said decision is consistently followed in later decisions. 4. On the other hand, learned counsel, Mr. Dave, for the original complainant authority under the said Act, opposed the petition contending that the petitioner was Director of accused No.6Company at the relevant time. During visit, at the site of accused No.1Company, it was found that ISI mark of accused No.6Company whose validity had expired was being used on the products of said company. Dave, for the original complainant authority under the said Act, opposed the petition contending that the petitioner was Director of accused No.6Company at the relevant time. During visit, at the site of accused No.1Company, it was found that ISI mark of accused No.6Company whose validity had expired was being used on the products of said company. This would be clearly in breach of Sections 11 and 12 of the Act. Such actions would be punishable under Section 33 and the same being against a Company any person who is responsible for the affairs of the Company would be answerable under Section 35 of the Act. 5. In so far as allegations of accused Companies are concerned, they undoubtedly disclosed, primafacie, offences of breach of Sections 11 and 12 of the Act. Section 11 pertains to prohibition of improper use of Standard Mark. Such section provides that no person shall use, in relation to any article or process, or in the title of any patent, or in any trade mark or design the Standard Mark or any colourable imitation thereof, except under a license. Section 12 of the Act pertains to prohibition of use of certain names, etc. Such section provides that no person shall, except in such cases and under such conditions as may be prescribed, use without the previous permission of the Bureau of Indian Standard. Clause (b) provides that, any mark or trade mark in relation to any article or process containing the expressions Indian Standard or Indian Standard Specification or any abbreviation of such expression. If respondent No.6Company used expired ISI mark on its product, any action on part of the said company or its job worker who may have done so, may be in breach of such provision. Section 33 of the Act makes any such action punishable with fine which may extend to Rs.50,000/or with imprisonment which may extend to one year or both. 6. Question, however, is whether the present petitioner answerable to such charges. Section 33 of the Act makes any such action punishable with fine which may extend to Rs.50,000/or with imprisonment which may extend to one year or both. 6. Question, however, is whether the present petitioner answerable to such charges. Section 35 of the said Act pertains to offences by companies and reads as under: “(1) of Section 35 provides that where an offence under this Act has been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against the punished accordingly. Provided that nothing contained in this subsection shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding anything contained in subsection (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. Explanation: For the purpose 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. In terms of Subsection (1) of Section 35 provides that where an offence under this Act has been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against the punished accordingly. This expression used in SubSection (1) of Section 35 often occur in cases where offence could be punished by companies. This expression used in SubSection (1) of Section 35 often occur in cases where offence could be punished by companies. Similar expression have been used under Section 141 of Negotiable Instrument Act in context of offence of dishonour of cheque under Section 138 thereof. 7. Interpreting such perimateria provision contained in Section 141 of Negotiable Instrument Act, the Supreme Court in case of S.M.S. Pharmaceuticals Ltd.(supra) held and observed as under: 4. In the present case, we are concerned with criminal liability on account of dishonour of cheque. It primarily falls on the drawer company and is extended to officers of the Company. The normal rule in the cases involving criminal liability is against vicarious liability, that is, no one is to be held criminally liable for an act of another. This normal rule is, however, subject to exception on account of specific provision being made in statutes extending liability to others. Section 141 of the Act is an instance of specific provision which in case an offence under Section 138 is committed by a Company, extends criminal liability for dishonour of cheque to officers of the Company. Section 141 contains conditions which have to be satisfied before the liability can be extended to officers of a company. Since the provision creates criminal liability, the conditions have to be strictly complied with. The conditions are intended to ensure that a person who is sought to be made vicariously liable for an offence of which the principal accused is the Company, had a role to play in relation to the incriminating act and further that such a person should know what is attributed to him to make him liable. In other words, persons who had nothing to do with the matter need not be roped in. A company being a juristic person, all its deeds and functions are result of acts of others. Therefore, officers of a Company who are responsible for acts done in the name of the Company are sought to be made personally liable for acts which result in criminal action being taken against the Company. It makes every person who, at the time the offence was committed, was incharge of, and was responsible to the Company for the conduct of business of the Company, as well as the Company, liable for the offence. It makes every person who, at the time the offence was committed, was incharge of, and was responsible to the Company for the conduct of business of the Company, as well as the Company, liable for the offence. The proviso to the subsection contains an escape route for persons who are able to prove that the offence was committed without their knowledge or that they had exercised all due diligence to prevent commission of the offence. 18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a persons 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 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. In the present case, I have perused the entire complaint and also read the same with the assistance of the learned counsel for the complainant. In the entire complaint to rope in this petition that has been stated are as under: 2. This will enable him to meet the case at the trial. 8. In the present case, I have perused the entire complaint and also read the same with the assistance of the learned counsel for the complainant. In the entire complaint to rope in this petition that has been stated are as under: 2. That the Accused No.1 is a Limited Company and registered as per the provisions of Indian Companies Act whereas Accused No.2 is Manager and Incharge of the said accused No.1 Company and whereas Accused Nos.3 to 5 are the directors of the accused No.1 Company and whereas Accused No.6 is a Limited Company and registered as per the provisions of Indian Companies Act and whereas Accused No.7 is General Manager or a Director and Incharge of the said accused No.1 company and whereas Accused No.8 to 16 are the Directors of the said accused No.6 Company. 9. The sole statement through which the petitioner is sought to be linked with the offences allegedly committed by the company is that petitioner was Director of the respondent No.6company at the relevant time. There is no other averment or allegations as to such Directors being responsible were in charge of and were responsible for the company and the conduct of the business. Quite apart from that, no description, the manner in which they were so responsible, that is, not even a simple assertion to this effect merely be described them as Director of the company. I am of the opinion that he cannot be correctly proceeded against on the premises that in terms of Section 35 of the Act, he would be also vicariously responsible for the offence alleged to have been committed by the Company. Admittedly, the inspection was carried out at the site of accused No.1Company where present petitioner was alleged to have been present or was allegedly participating in the actual commission of the offence. Considering all these aspects of the matter, Criminal Complaint No.3213 of 2001 qua present petitioner is quashed. Rule is made absolute.