Madras High Court
K.S. Chandrasekharan vs Inspector Of Police, Civil Supplies ... on 27 September, 1988
ORDER
1. These petitions are filed by the second accused in S.T.C. 1 of 1988 and S.T.C. 2 of 1988 on the file of the Special Court for Essential Commodities Act Offences, Madurai, for quashing the proceedings against him under S. 482, Cr.P.C.
2. The facts which are necessary for the disposal of these petitions are briefly as follows : The respondent (Inspector of Police, Civil Supplies, C.I.D. Madurai Rural at Theni) filed charge-sheets in S.T.C. 1 and 2 of 1988 against the petitioner herein and three others under Clause 6(2) read with Clause 14 of the Tamil Nadu Scheduled Commodities (Regulations of Distribution by Card System) O. 1982, read with Sections 3 and 7(1)(a)(ii) read with S. 10 of the Essential Commodities Act, 1955. The allegations in both the cases against the petitioner was that he was the Special Officer of the first accused, namely, Agricultural Service Co-operative Society, M.D. Special, 95, Jayamangalam, Periakulam Taluk, during May, 1987. His duties and responsibilities are to have over all control of the day-to-day affairs of the first accused Society including taking action against erring officials. The third accused was the Secretary of the first accused - Society during the relevant period. The fourth accused was the salesman of the fair price shop in question where the contravention of the clauses of the Order were committed. In S.T.C. 1 of 1988, the allegation is that on 27-5-1987 Fair Price Shop No. 1 was checked at about 12 hours by the Tahsildar, Periakulam and it was found that no proper accounts were maintained in respect of stock and sales of essential commodities, like rice, sugar and wheat. It was also found that the stock was either excess or short. 420 Kgs. of palmol in oil was received by the salesman (fourth accused) to be distributed to the cardholders at the rate of 1/2 kg. per card. Without supplying oil, bills were prepared as though oil was supplied in May, 1987 and there were no entries in the cards, Further, several bills were prepared for the same cards and the same was done for selling the oil in black market and making wrongful gain. This omission and commission was done by the fourth accused with the knowledge and connivance of accused 2 and 3. Accused 2 and 3 did not take steps to prevent the fourth accused to do the offence in spite of representation by public. In S.T.C. 2 of 1988, similar allegations were made. That was in respect of Fair Price shop No. 2 where the salesman was one K. P. Manavalan.
3. The contentions raised on behalf of the petitioner (second accused) in both the cases are that he was appointed as Special Officer in the proceedings of the Deputy Registrar of Co-operative Societies, Madurai, in respect of three Agricultural Service Co-operative Societies, out of which Jayamangalam Agriculture Service, Co-operative Society is one, for the period from 27-12-1985 to 27-6-1986. He took charge as Special Officer of the Jayamangalam Agricultural Service Co-operative Societies only on 4-1-1986. Ever since the date of assuming charge, he has been discharging his functions as Special Officer in respect of the said three Societies to the best satisfaction of his superiors. Further, immediately after taking charge, in his capacity as Special Officer, he fixed duties and responsibilities of the Secretary, salesman, watch man and the attender in respect of the two fair price shops and he was having only the over all control of the said societies. The Tahsildar, Periakulam, gave a complaint to the Sub-Inspector of Police, Madurai Rural, regarding certain irregularities of sale of palmolin in Jayamangalam Agricultural Service Co-operative Society fair Price Shops 1 and 2 on 2-5-1987 wherein it was alleged that he received petitions from number of persons regarding sale of palmolin oil, that he verified the stock of essential commodities in shops 1 and 2 and that he found shortage in the stock in the shops. Further, the concerned salesman in both the fair price shops admitted their responsibility for the commission and omission in the shortage of essential commodities. The Tahsildar found that palmolin oil had been sold in black-market to one Nallammal. On a complaint given by the Tahsildar, a case was registered by the Sub-Inspector of Police, Civil Supplies, C.I.D. Madurai Rural at Theni in Crime No. 16 of 1987. The case was registered against Nallammal, namely, the person who transported the palmolin oil and also against the two salesmen John Kennedy and Manavalan. In the above complaint, the Special Officer i.e., the petitioner herein, was not implicated. Equally the salesman in their statements did not implicate the Special Officer, but, on the other hand, they admitted that they are liable for the commission and omission. But only in charge-sheets Nos. 4 of 1987 and 5 of 1987, the Special Officer was included as an accused for the first time, solely on the ground that he had the over all control of the day-to-day affairs of the Society. According to him, on 24-3-1986 in a meeting held in the Society, the duties and responsibilities of the salesmen were fixed and they alone are responsible for any irregularity regarding the sales and discrepancies in the stock. Further, certain guidelines and conditions were also issued. The concerned salesman of the fair price shops Nos. 1 and 2 accepted the said condition. According to him, even in the complaint, no allegations were made against him. None of the witnesses has implicated him. According to him, he is not directly incharge of the fair price shops and the day-to-day sales conducted therein. Mainly because he was having the over all in-charge, he cannot be charged for violation of the Tamil Nadu Scheduled Commodities (Regulation of Distribution by Card System) Order for the omission and commission by any of the salesmen. According to him, the prosecution against him is nothing but an abuse of process of law undergoing the ordeal of trial in respect of charge made against him and that he would be put to irreparable loss and hardship. The petitioner has stated that the trial of the case has not yet begun.
4. It is seen from the proceedings of the Deputy Registrar of Co-operative Societies, Madurai Zone, that this petitioner was appointed as the Special Officer for three Agricultural Service Co-operative Societies at Jayamangalam, Melmangalam and Kullapuram from 27-12-1985 to 27-4-1986. As per minutes of the meeting of the Society held on 4-1-1986, the duties and responsibilities of various employees were fixed. As far as salesman is concerned, regarding his duties and responsibilities, 14 conditions were imposed. As per condition No. 6, if any commission and omission in the accounts relating to distribution of commodities, were found by the Inspecting staff, the salesman alone is solely responsible for the same. Condition No. 8 is that the salesman has to maintain a personal register and submit the same once in a month to the Special Officer. Another condition is that the salesman alone is responsible for any shortage or defect in the commodity. Condition No. 11 is that if there is any illegalities or irregularities or fraud committed in the fair price shop, the salesman alone is responsible. The paid Secretary of the Society was entrusted with the responsibility of supervising the sales in the fair price shop and that he was to see that the distribution is being done properly and that he should take necessary administrative action in this regard. It is his responsibility to verify the daily collection and issue necessary cash receipts. He should verify the day-to-day accounts, including the accounts maintained by the salesman and the stocking register, cash book etc. and put up before the Special Officer. He is responsible for the cash and stock of the commodities. On 24-3-1986 also, a proceeding was issued by the Special Officer, wherein responsibilities were fixed on the salesman in the fair price shops and as many as 40 conditions and terms were issued.
5. Even in the complainant given by the Tahsildar which is registered as the first information report, it is stated that the concerned salesmen, namely, John Kennedy and Manavalan, who are working as salesmen in the respective fair price shops Nos. 1 and 2, have given statements that they are solely responsible for the excess or shortage of the above essential commodities. Even the Secretary whose statement was furnished along with the 173 copies and who took charge of the commodities would state that the stock verification would be done once in 15 days and that surprise inspection also used to be done. Further, the salesmen of the concerned shops are solely responsible for any irregularity or malpractice in respect of sale of the essential commodities. However, there is no whisper about this petitioner in any of the documents furnished to the petitioner except in the charge-sheet. There is absolutely nothing to show that the commission and the omission were done by the respective salesmen with the knowledge and connivance of the Special Officer who is arrayed as the second accused on the ground that the matter was brought to his notice and that in spite of that, he failed to take steps to prevent the commission of the offence. Even according to the complaint, petitions were submitted by Pitchai and members of all parties at Jayamangalam, to the Assistant Collector, Periakulam alleging certain malpractice in respect of essential commodities to the card-holders in respect of fair price shops Nos. 1 and 2. No doubt, as a Special Officer, the petitioner has got the over all control over the affairs of the society. In the circumstances, stated above, the question which arises for consideration is whether the petitioner can be prosecuted and the charge-sheet filed against him is proper and is not liable to quashed.
6. In this connection, the learned counsel for the petitioner drew my attention to various decisions. In the Public Prosecutor v. Karuppian, (1958) 1 Mad LJ 20 : (1958 Cri LJ 527), Somasundaram J. while considering the scope of prosecuting an Honorary Secretary of a Co-operative Society in connection with the offences committed by the vendor of milk of the Co-operative Milk Supply society, and while construing similar provisions under Sections 16(1) and 17(1) of the Prevention of Food Adulteration Act, 37 of 1954, observed as follows :-
"Section 17(1), Prevention of Food Adulteration Act 1954, clearly provides that where an offence under the Act is committed by a company, every person who is incharge or responsible for the conduct of the business of the Company shall be deemed to be guilty of the offence along with the company and is liable to be proceeded against and punished. Of course, it is open for such person under the proviso to that section to show that the offence was committed without their knowledge, etc. In a prosecution against persons in a charge of a company for an offence under the Act the prosecution should therefore establish that the offence was committed with the consent or connivance of the person in charge of the Company or that it is attributable to any neglect on the part of such persons.
An Honorary Secretary of a Co-operative Society who was merely checking the daily collections and was in charge of the day-to-day sales etc., cannot be held to be in charge of or responsible to the Society for the Conduct of its business and in the absence of evidence to show his connection with the offence charged, he cannot be held to be liable."
In Sri. Ram Dalmia v. State, , it was held :
"A Director of a sugar mills company cannot be held liable under S. 16(1) of the Essential Commodities Act ..... He can, however, be held liable under S. 16(1) of the Act if the offence was committed with his consent or connivance or if the offence is attributable to any neglect on his part. But if there is no allegation to that effect, he cannot come even under S. 10(2) of the Act."
In Abdul Moid v. State, 1977 Cr. LJ 1325 (at P. 1327) (All) it was held -
"Regarding offences by firms, reference should be made to S. 15 of the Essential Commodities Act and S. 34 of the Drugs and Cosmetics Act, which say that every person, who was in charge of the conduct of business of the firm shall be deemed to be guilty besides the firm itself. It would not be fair to convict all the partners of the firm, because there is always a possibility that all the partners of the firm may not even be knowing what is really going on in the firm."
Ultimately in that case the revision was allowed and the conviction of the partners was held to be not maintainable. In State of Kerala v. Noveen Chandra, 1978 Cri LJ 105, a Division Bench of Kerala High Court held -
"The duty or obligation to establish that the accused has exercised all due diligence to prevent the contravention of the provisions referred to in S. 10(3) would arise only after the prosecution establishes that the conditions mentioned in S. 10(1) are present in the case. Where, therefore, the charge for offences under sections 3 and 7 did not mention that the accused was in charge of or responsible for the conduct of business of the firm at the relevant time, the mere fact that he was one of the partners of the firm did not mean that he was in charge of the business of the firm. Therefore he was not liable to be convicted, even though offence punishable under sections 3 and 7 had been made out."
In Tulsidas v. State of Orissa, 1987 Cri LJ 664 (Orissa), it was observed (at page 667).
"It is distressing to note from the records of the case including the charge-sheet that two employees of petitioner No. 1 named, Prasad Kumar Swain and Ram Chandra Jens were implicated as co-accused and further charges were framed against them. Patently, they had nothing to do with the sale of kerosene. They were mere employees who carried out orders of their master and could not deny to do so. If they did, they would have lost their jobs. In such circumstances it was not lawful to implicate them as co-accused in this case and to frame charges against them under sections 7 and 10 of the Essential Commodities Act read with Section 109/34, I.P.C. It will be an abuse of the process of the Court if such persons in a case of this nature are brought before the Court to suffer the agony of a protracted trial. Therefore, although they have not approached this Court, patently on account of poverty in exercise of inherent powers under S. 482 of the Code, I deem it expedient to quash the charges against them."
7. In State of Madras v. C. V. Parekh, , the case was that there was sale of pig iron in contravention of Clause 5 of the Iron and Steel Control Order, 1956 by godown clerk of company in conspiracy with representative of another firm. The Manager and the Managing Director of the Company were also prosecuted. In the circumstances of the case, their Lordships of the Supreme Court observed (Para 2) -
"The circumstances that the two respondents were in management of the affairs of the company and the firm and were aware of the arrival of the goods could create suspicion against the respondents; but that suspicion could not take the place of proof. In order to justify conviction of the respondents, evidence was needed to show that they knew of the sale and were, parties to it. No such evidence was available. On this ground, the High Court set aside the conviction of the two respondents. The order of the High Court is obviously correct. No evidence on the record has been pointed out from which it could be inferred that the two respondents had any knowledge of the sale which was manoevured by Kamdar and Vallabhadas Thacker, nor is there evidence to show that they took part in the negotiations for sale, or in the sale itself. Consequently, it is clear that their conviction was not justified."
It is to be noted here that two respondents were convicted by invoking S. 10 of the Essential Commodities Act. That conviction was set aside by the High Court as well as the Supreme Court. Applying the ratio laid down in the above cases to the facts of this case, it can be held in this case that there is absolutely nothing in this case to show that this petitioner has anything to do with the alleged sale of the palmolein oil or with the false entries made by the concerned salesmen in the register as well as stock book as if palmolein oil was sold to card holders, though in fact no such sale was effected. There is absolutely nothing to show that they committed the above act with the knowledge and active connivance of the salesmen. There is nothing to show that this act of the salesmen was brought to the notice of the petitioner and that he failed to take any action against them. The mere fact that the petitioner happened to function as Special Officer and he had the over all control over the affairs of the Society by itself is not sufficient to implicate him with the criminal offences by invoking S. 10(2) of the Essential Commodities Act. It is a well established proposition that a proceeding against an accused at the initial stage can be quashed if on the basis of the complaint and the papers accompanying the same, no offence is made out; on other words, if on taking the allegations in the complaint as they are without adding or substracting anything no offence is made out, the High Court is justified in quashing the proceedings in exercise of the powers under S. 482, Cr.P.C. as already stated, in the instant case, except stating in the records produced that the petitioner is the Special Officer of the Society besides two other Societies, there is no material whatsoever to hold that the petitioner was in charge of or responsible for the conduct of the Society at that time or that the offence has been committed with the consent or the connivance of the petitioner or that there was any neglect on his part which was responsible for the commission of the offence so as to attract the provisions of S. 10(2) of the Act. If those things are not prima facie established, it is not obligatory on the part of the petitioner, Special Officer, to establish that the contravention of the provisions took place without his knowledge and that he exercised due diligence to prevent such contravention. In the instant case, by producing necessary records, the petitioner has established the same also. In the circumstances, if the prosecution is allowed to proceed, it is nothing but a clear case of abuse of process and that the petitioner, who is a responsible Government Officer, would be put to serious hardship, great mental agony and harassment on account of the protracted trial. No useful purpose would also be served by allowing the prosecution to proceed against him. Hence, I have no option except to hold that it is expedient to quash the proceedings against the petitioner in the exercise of the inherent powers under S. 482, Cr.P.C.
8. In the result, both these petitions are allowed and proceedings against the petitioner are hereby quashed. However, it is made clear that any observation made in this case will not affect the merit of the case in respect of the other accused and the trial Magistrate should not be carried away by any of the observations made in this order so far as this petitioner is concerned.
9. Petitions allowed.